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European Real Estate Sector Enjoying Inflow of Funds

12/04/2013 | By Sarah Borchersen-Keto

Philip Charls, CEO of the European Public Real Estate Association (EPRA), joined REIT.com for a video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

Charls was asked if the European markets had turned a corner after the tumult of recent years. Charls observed that the European real estate sector has benefitted from a steady inflow of funds in the last 18 months, a trend that started in the United Kingdom and then spread into Continental Europe and the Nordic countries. This resulted in total returns for listed European real estate of roughly 14 percent in the last 12 months, Charls noted.

“I think it’s fair to say that the international global investment community has rediscovered Europe, and, in that sense, yes, we have turned a corner,” he said.

During the past year EPRA took a “massive step forward” by opening offices in London and Asia in order to facilitate investor outreach in areas where EPRA sees “huge potential,” Charls stated. The U.K. is traditionally a very solid pension fund market that is now in the process of moving from defined benefits to defined contributions, Charls explained. “That is a huge opportunity to grow the listed market, so we want to be in the front row,” he said.

Asia presents a similar opportunity, according to Charls. In the next 12 months, EPRA will focus on China, particularly the insurance market, Charls said, in light of new rules allowing insurance companies to invest in overseas real estate. China’s insurance sector is the sixth-largest insurance market in the world, according to Charls.

“Obviously, there’s a lot of potential for our members to play a role in that market. We want to be in the front row in Asia,” he said.

Meanwhile, Charls said he anticipates more REITs in the Irish market following the introduction of the first REIT in that country this past summer. Elsewhere in Europe, “the big game remains in Germany,” according to Charls.  He pointed out that since EPRA started an offensive in Germany about two years ago, the German market share of the listed European real estate market has grown by about 80 percent.