A focus on strong European cities with economies that will outperform will serve investors well, experts agreed at Real Asset Media’s Global Capital Flows & Winning Cities investment briefing, which was held at the International Investors’ Lounge at EXPO REAL recently.
‘If there’s anything we should have learnt from the last cycle, it’s that chasing yield is not an investment strategy,’ said Daniel Harris, Principal – Head of European Investments, CAIN International. His advice is not to go to secondary cities but rather ‘focus on Europe’s gateway cities, because when there are bumps in the road they bounce back the quickest’.
Large cities like Paris, London or Madrid are underpinned by solid macro fundamentals that will withstand economic fluctuations and they will continue to attract young talent, which will guarantee future growth. The same applies to the two clusters of Holland Metropole and the Rhine-Ruhr in Germany.
Many investors have adopted a wait-and-see attitude to London to see how the UK’s fraught departure from the European Union pans out, but this is creating opportunities for others.
‘We’re incredibly positive on the London story,’ said Andrew Angeli, Head of European Strategy and Research, CBRE Global Investors. ‘It’s generating returns in excess of Europe and now, because of Brexit, it’s a less competitive market, which is something we absolutely want to make the most of’.
Investors with a long-term view look beyond current instability, which in any case is not confined to the UK, said Harris: ‘We are big on London. Once the Brexit issue is resolved there’ll be a huge inflow of capital into the city’.
Money will definitely flow into London again, agreed Larry Young, Head of International Investment Group, BNP Paribas Real Estate: ‘Investors want to get back, it’s not a question of if but rather of when. The pricing is interesting, especially for value-add, and they know they can make very good money’.
Damian Harrington, Director, Head of EMEA Research, Colliers International said that the impact of Brexit has been such that ‘the UK is the most mispriced market in Europe’.