Amundi, Europe’s largest asset manager by AUM, will not buy any UK real estate in the whole of 2018 as it ‘disengages’ from the UK scene amid Brexit, according to a news report by PropertyEU's sister publication EuroProperty.
Rumours about the French giant’s strategy surfaced in May when it emerged Cushman & Wakefield had been instructed to sell off its UK office portfolio mainly gathered in 2015 when it bought assets from Union Investment.
This week, the firm published a report with data provider Preqin in which its attitude towards Continental European real estate and the UK has been made clear.
Writing in Preqin’s Markets in Focus: Alternative Assets in Europe, June 2018, Jean-Marc Coly, CEO of Amundi Real Estate, said: ‘The link between economic recovery and rising rents is a key element to take into account, and countries such as the UK, which will bear the negative impact of Brexit, will be penalised. As a matter of fact, we prefer to disengage from the UK for now, while adjustments have not yet taken place. We made no acquisition in the UK in 2017 and we will not make any in 2018.’
The company is focusing on ‘high quality’ core assets. Furthermore, it has set its sights on peripheral countries given an ‘uncertain environment’. It favours countries close to Germany, France or the UK such as the Netherlands, Belgium, Luxembourg, Italy and Ireland that have ‘booming economies’ and real estate rates of return that still exceed major European markets by 50-100 basis points.
Amundi invested more than €6 bn with leverage in European markets in 2017 – 28% of that being outside France, mainly in Germany and the Netherlands. Rising interest rates would mean a downward adjustment of real estate values, but as economic recovery seems to be ‘here for good’ that should offset the effect via occupancy rates and rents, says Coly.
It is too early for the firm to expand beyond the Eurozone even in markets such as North America and Asia, much less Africa or Russia. If it does eventually invest outside of the Eurozone it will replicate its model of investing by forming partnerships with local players. Amundi manages around €27.8 bn of property as of March this year.