As reported by the real estate industry experts during the first day of the 16th RED Meeting Point, real estate performance - despite the prevailing uncertainty from the end of 2022 due to intense inflationary pressures, geopolitical tensions and hurdles in the supply chain - retained a positive sign.
The market players, with the main speaker being the CEO of the Association of Listed Real Estate Companies, Dominique Moerenhout, appeared modestly optimistic, stressing that the "key" for the next six months is the "risk management" according to which institutional and private investors create their portfolios . Reviewing the previous year, Mr. Moerenhout stressed that "the war in Ukraine was for European investors too important for the risk they could take. A few years ago we had yields of 3.5% now that has fallen a lot the valuation is lower when we are going through periods of great uncertainty. Apart from Logistics in all other real estate industries valuations have been at very low levels. There is still uncertainty. In recent decades we have seen a decline in valuations. Also in the past we have seen great gap between supply and demand up to 20%. Last year this gap closed a bit."
"Listed REICs seem to have overcome the risk emerged during 2022 and now everyone expects that they will have a better operation. Convergence of individual sectors in real estate is also expected so that returns are more balanced and more stable . This will bring more opportunities for investment. We now believe that investors want to see stability to invest with the expectation of profits."
The investors mindset
According to the EPRA CEO, investors are "strategically optimistic" but in their tactics they are... careful. "They have 'opening' to listed and unlisted and they are careful about what they put in their portfolio. They diversify their portfolio. When we talk to investors (and we do this every day) we see that there is a big rise and prevalence of Asian investors who are all over the planet. American investors are much more active in the market and investors from the Middle East are quite bullish," he said.
However, "diversification" in the investment portfolio remains important for Mr. Moerenhout, but hedging is now done in different terms. "In the Greek market we want to attract more investors. However, Europe has smaller portfolios compared to the American ones. And this provides an opportunity," he underlined.
