Savills was out in force at this year’s EXPO REAL conference in Munich and it felt like the busiest event for many years. The conference is an excellent way to find out what people in the industry are saying, including:

Interest in real estate is continuing to rise

The official EXPO REAL numbers show that it didn’t just feel busier that last year, it actually was. In total, there were 2,095 exhibitors from 41 countries. Attendee numbers increased by 6.6 per cent year-on-year, with 2018 seeing 44,536 participants from 72 countries.

South Korean investors are paying lots of attention to Europe

One big group we noticed out in force in Munich was South Korean investors. One member of our European investment team revealed that he had about 20 meetings over the three EXPO REAL days, with half of those with South Korean investors looking to invest in Europe. Recent market activity by South Korean investors include Korean Investment Securities buying 70 Mark Lane in London and South Korean asset manager IGIS, who bought the Fleet offices in Hamburg together with PGIM on behalf of South Korean investors, believed to be working on a ‘club deal’ to acquire the Trianon office tower in Frankfurt. 

Resi will be big

As we listened to panel discussions and conferences and also looked around the many German city and state stands at EXPO REAL, it was clear that the industry is of the view that the alternative areas of the residential sector, such as multifamily, care homes, co-living and student housing, are ones to watch and invest in, even for traditional commercial real estate investors. Population growth, an older generation requiring new types of accommodation and expected rental rises across Europe, all make the sector attractive. For example, the Dutch housing market’s share in the total investment volume has risen from 18.5 per cent in 2010 to 26.5 per cent in 2014. Currently, in 2018, the housing market accounts for no less than 33.6 per cent of total investment volume – a new record.

UK visitors are on the rise

While we have no official numbers to back this up, it certainly felt like the number of UK visitors to EXPO REAL in 2018 was higher than last year or the year before. Ongoing Brexit discussions clearly play a role, but it also confirms the trend we have seen for quite a while: clients are increasingly looking to their advisors to help them invest in assets and find office space in the UK and continental Europe on a city by city level. At the same time, a favourable exchange rate makes the UK an attractive option for investors.  

Europe and the UK will continue to be a safe havens

Europe, including the UK, continues to be seen as a safe haven for real estate investors with stable governments, population growth and a well-educated workforce. While yields in the office sector in particular are hardening, offices continue to be seen as a good investment opportunity, along with purpose-built student housing, logistics, hotels and other sectors, which may not have been the focus for core sector investors previously, but are now attracting those seeking higher returns. In Q2 2018 the average European prime CBD office yield was at 3.84 per cent while prime shopping centre yields stabilised at 4.5 per cent on average. 

Watch cities rather than countries for investment opportunities

Cities are competing for investment and human capital through local governance, infrastructure, innovation and quality of life. Winning cities such as Lisbon, London, Paris, Amsterdam, Berlin, Bucharest, Frankfurt, Barcelona, Copenhagen, Stockholm and Dublin will continue to grow, attract business and talent and become more defensive to market turns offering long term prosperity and stability to investors.

Further information

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