French fund manager AXA Real Estate Investment Managers (AXA REIM) has said it expects to invest a record EUR 6.3 bn this year, demonstrating that it is not doom and gloom in Europe's property market. The planned volume represents an increase of 15% on the EUR 5.7 bn volume last year.
French fund manager AXA Real Estate Investment Managers (AXA REIM) has said it expects to invest a record EUR 6.3 bn this year, demonstrating that it is not doom and gloom in Europe's property market. The planned volume represents an increase of 15% on the EUR 5.7 bn volume last year.
The fund management group said it will invest the funds on behalf of a broad range of clients, including closed-end funds, insurance companies and German open-ended vehicles such as Immoselect. European markets will continue to be the focus but AXA intends to extend its activities in Asia. The group has allocated about EUR 1 bn for investment in Japan, India and other Asian markets.
The asset manager also announced it will further develop its retail business in France with the launch of a OPCI (property investment mutual fund). OPCIs are the latest in the line of tax-friendly vehicles created in France to promote investment in property stocks, after SCPIs (non-trading property investment companies) and SIICs (French real estate investment trusts). AXA said that the new vehicle will complement the group's major retail funds in the UK and Germany.
The German property market will continue to be one of AXA's target markets in 2008. The company believes that the occupier fundamentals in the German office market will continue improving against a background of steady economic performance. AXA REIM will also focus on the German healthcare sector, as occupancy rates remain high in the sector and demographic trends will stimulate demand for additional capacity.
AXA REIM said it is also positive about the prospects for parts of Scandinavia. The Finnish and Swedish office and retail sectors will continue to feature on its buy list in 2008.
'We believe that some traditional office markets such as Paris and Brussels will offer fair short-term value and in retail, Barcelona and Madrid are still seen as potential best performers. On a cautionary note, even in the midst of sub prime concerns, we believe that demand for assets in these core locations will remain strong and acquisitions will be selectively pursued in the context of stubbornly unyielding prices', said Stephen Smith, global head of Asset Management and Transactions.
'We are also seeing some very significant arbitrage opportunities developing between the listed sector, derivatives and the direct market, which could provide interesting opportunities as the year unfolds. We are also actively engaged in sourcing real estate debt opportunities for our clients and given current pricing we expect to develop significant volume in the next period.'
In 2007, the company made acquisitions for around EUR 5.7 bn, a 54% increase on 2006 volumes of EUR 3.7 bn. Disposals in 2007 accounted for EUR 3.9 bn, nearly 100% up on 2006. AXA said that around 50% of all acquisitions occurred in the second half of 2007, after the US sub-prime crisis started in the summer.
AXA REIM, a wholly-owned subsidiary of the AXA IM Group, is a specialist in real estate world-wide with around EUR 42 bn of assets under management.