Foreign investors are poised to come back to Europe as soon as pandemic-driven travel restrictions are lifted, experts agreed at Real Asset Media’s Global Capital Flows & Investment Opportunities, which took place online yesterday on the REALX.Global platform.
“I expect a boom in cross-border activity because it’s inevitable,” said Andy Watson, partner, Europa Capital. “We already see it happening in early 2021 in residential and logistics, with valuers moving things and prices rising for core products.”
When choosing where to go, investors are likely to take into account the strength of the economy and the way the country has dealt with the pandemic.
“‘I believe the economic stimulus will be more of a key factor over the longer term,” said Kim Politzer, director, head of research, European real estate, Fidelity International. “In the short term, it’s about how the vaccination programme gets rolled out.”
At the moment, the UK’s vaccine programme is ahead and there is some concern over how long EU countries are taking to roll out vaccines.
Vaccine roll-out comparison less valid long term
“Our clients tell us that vaccine programmes are a big driver in the short term,” said Tom Leahy, director of market analysis, EMEA, Real Capital Analytics. “But according to estimates, the EU is two months behind the UK. Real estate is a relatively slow-moving asset class, so two months won’t make a big difference. The vaccine roll-out will turn out to be more marginal than it looks now.”
Similarly, in 2020 investor decisions were guided by how Governments responded to the health emergency.
“Last year investors favoured Germany and the Netherlands because they acted quickly and provided economic support, and they held back from the UK and France that seemed more challenged,” said Politzer.
This year the vaccine roll-out is slow in Germany and travel restrictions make sourcing and concluding deals very difficult.
“There are so many investors who want to come to Germany but can’t because of the pandemic and the quarantine,” said Tobias Schultheiß, managing partner, Blackbird Real Estate. “There’s a lot of money out there which can’t get in.”
France, like Norway and Switzerland, benefitted from having a strong domestic base despite the problems in dealing with the pandemic, while countries like Spain and Portugal that rely on foreign investors saw a sharper slowdown in investment activity.
“Domestic investors represent two thirds of the Paris investor market and they have a competitive edge when it comes to closing transactions,” said Watson. “Paris remains a great opportunity because it’s all about infrastructure and what it can do for real estate, with the Grand Paris project and the Olympics driving housing construction and creating logistics corridors.”