The real estate market is in a state of flux, but there will be opportunities next year for savvy investors willing to take on some risk, according to AEW’s European CEO Rob Wilkinson.
Speaking to PropertyEU at Expo Real, Wilkinson said the backdrop to this year's Expo, with the recent real estate correction and higher interest rate environment across Europe, ‘will create opportunity for interesting conversations’ in Munich.
‘While the real estate market has reset, what the industry has experienced over the last 12 months is nothing like the GFC, and so I’m expecting the mood to be measured,’ he said.
He added: ‘While I’m cautious on the outlook from here and believe 2024 won’t be without its challenges, I think there’ll be attractive opportunities to invest at this point in the cycle, so we’re open for business.’
On the topic of ESG and climate change, a major theme at this year’s Expo, Wilkinson said he was interested in hearing what others have to say about the cost of bringing assets up to sustainability standards.
AEW recently published a research report on climate-related risk and the cost for real estate investors to mitigate it.
The research revealed that investors should factor in 19bps of annual capex to mitigate climate risks when investing in prime commercial property in Europe. For non-prime buildings, the premium - which takes into account both climate-related transition risk and physical climate risk - should be even higher, at 46bps.