“I think we can say in 2024 that the worst is perhaps behind us,” Cédric Kaison, head of advisory Luxembourg at BNP Paribas Real Estate, said during an interview at Mipim 2024 in Cannes. “Not everything is going well yet, but the current signals give us a good idea of the future dynamics of the investment market.”
The major property trade show is an opportunity to pick up on international market trends. “We have had a positive response from opportunistic investors and value-add investors,” which add value to existing properties, stated Kaison. “These two categories of investors have been able to raise funds and are currently active on the markets, which is good news, because it means firstly that it is still possible to raise money to invest in real estate and secondly that--from their point of view--the outlook after property revaluations will be positive.”
Seizing opportunities
The current commercial property market offers them investment opportunities: some products are more at risk, with tenants leaving, vacancies, poor environmental performance and a lack of appetite on the part of banks to extend financing, and therefore offer higher returns for short-term investments. “For them, there are opportunities offered by the current market. And, if they invest now, it means that they feel the market will be flourishing again in two to four years’ time. That's a positive signal for the professional property market.”
On the other hand, core investors, such as insurance companies, and core-plus investors, have not yet returned to the market, as government and corporate bonds still offer more attractive yields than the properties they are targeting. “These categories of investors are looking to dilute the office component and are more inclined to look at logistics, hotels, retail or residential property as a whole.”
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But another category of investor is also present in the market: private individuals and family offices, Kaison said. “This category of investor now feels less in competition with institutional investors than in the past, and is more comfortable positioning itself in the context of invitations to tender. They are now the ones driving the European market. This is also the case in Luxembourg, with two flagship transactions that we recently closed on behalf of the owners, namely the Allianz Life headquarters and Corec SA, which owns Royal Park. Generally speaking, we can see that the amounts invested are more modest than they were three years ago, and that diversification of the type of asset class is favoured.”
Originally published in French by and translated for Delano