‘Operational models will become prevalent’

Operational models will become prevalent in Europe as more investors follow the megatrends and put their capital in alternative sectors, experts told Real Asset Media’s European Alternative Investment Outlook, which took place in Amsterdam recently. 

‘Residential is the biggest asset class to invest in at the moment in Europe,’ said Dirk BakkerHead of EMEA Hotels, Colliers International.‘Real estate is becoming more expensive, so more branding, more design and more lifestyle are used to drive value from buildings and new investment forms are coming in’. 

Dirk Bakker, Head of EMEA Hotels, Colliers International, Asli Kutlucan, Chief Development Officer, Cycas Hospitality BV, Ron van Bloois, Partner, HEVO, Samuel Vetrak, CEO, BONARD and Crispijn Stulp, Country Head the Netherlands, AXA Investment Management discuss the opportunities for investment in Hotels, Student Housing, Healthcare and similar sectors.
Filmed at the Alternatives Investment Briefing, Amsterdam, November 2019 by Real Asset Media.

The resi sector is in a state of flux. Now it’s tenants and customers that are driving change while investors and developers adapt. In future companies will no longer develop products and then find tenants, he said, but it will be tenants who demand a certain product which will then be purpose-built.

‘Brands really matter because we are witnessing the operationalisation of real estate, to coin a word,’ said Crispijn Stulp, Country Head the Netherlands, Real Assets, AXA Real Estate Investment Managers. ‘There’s a combination of factors all pushing investors into alternative sectors’.

As tenants or customers demand flexibility, companies have to become flexible themselves.

‘We operate 28 hotels and 14 brands, 50% of our portfolio is leases but we keep inventing different structures, creative and hybrid, we are very flexible on that front,’ said Asli Kutlucan, Chief Development Officer, Cycas Hospitality. ‘We like the open-mindedness of different capital structures. It is yet another sign that the boundaries are falling’.

One example of a successful innovation is the ‘double-decker’ hotel concept, which combines a trendy hotel, like Moxy, with an extended-stay such as the Marriott Residence Inn. As the lines between business and leisure travel become increasingly blurred, dual-branded hotels make sense.

In general ‘the outlook for hotels in Europe is very healthy, as more tourists come, especially from Asia, and more cities become interesting destinations’, Bakker said. ‘In fact the growth of tourism is our biggest problem in the Netherlands, as supply cannot keep up with demand. Keep in mind that only 2% of the Chinese population has a passport today’. 

Healthcare is another alternative sector that, supported by demographic factors, is attracting more interest. 

‘We see investors in the Netherlands, the UK and Germany paying more attention to nursing homes and medical office buildings,’ said Ron van Bloois, Partner, HEVO. ‘I believe the senior housing sector will explode. ESG is also driving demand for asset classes that have an impact like education and healthcare.’

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