If the use of cars is going down, where will people want to live and how will they get to work and buy groceries?
André Zücker, managing director of KGAL Investment Management, likes to study all kinds of data to distill future trends. Although his firm has been investing in real estate for about 50 years, it is certainly not a traditional investor, he told PropertyEU at Expo Real.
KGAL, which manages €7.2 bn of real estate assets, focuses on the long term. ‘We like to watch basic trends, they don’t change from day to day. We look 15 to 20 years ahead,’ said Zücker, when asked about his expectations for interest rates and inflation.
The focus on data can yield interesting insights, which ultimately have a bearing on real estate. Zücker was struck, for example, by the car data in Stuttgart, home of Mercedes and Porsche. If people there stopped getting their driver’s licence and bought fewer cars, what would that mean? And is the same trend noticeable in other cities?
Said Zücker: ‘There is a new generation coming, we see it because we also employ them. They are keener to rent (their homes) and at the same time they are not so interested in that Porsche 911.’
Being aware of trends like these helps influence where and in what KGAL invests its money. The firm recently purchased an office property in London after not having bought anything there for seven years. Zücker: ‘We believe in offices, we like a good work environment and a vibrant city. It made sense for us to return to London.’
Last year the German executive looked at property in the UK capital but the timing wasn't right, so he waited. ‘London long term will always offer a perspective, it is one of a few world cities in Europe,’ he said.
KGAL ‘goes deep into its assets’, Zücker explained. The company uses architects and engineers to research prospective buildings. The investor is also a strong believer in cities with ‘10 minutes walkability’, meaning that shops and amenities, even schools, are within walking distance.
In Austria KGAL owns retail parks which incorporate healthcare centres and doctors' surgeries. Said Zücker: ‘You can have multi-use buildings with a school, kindergarten and shops.’ In the right location this could also work in big cities like Paris, he noted. ‘You just have to make the city as livable as possible.’