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How will investors’ strategies evolve?

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A large panel of investors and owners of office real estate were asked about their investment strategies as part of a survey conducted by BNP Paribas Real Estate to determine the effect of Covid-19. This one-off survey was carried out at the end of the lockdown (12th -26th May) and shed new light on the future expectations of investors of office real estate and their intentions in regard to their investment strategies.

We know that the first quarter of 2020 displayed exceptional growth, with €7.5 billion invested in France, an increase of 46% compared to the same period last year1 and an investment record of €66.2 billion in Europe2 in commercial real estate. This was up 37% from 2019, but what does the second part of the year and 2020 as a whole have in store?

Investor interest has not waned

From the panel of participants, nearly 50% of investors have decided to continue pursuing their projects, even succeeding in establishing new records. Even though most investors have liquidity and want to proceed with their investment strategy, nearly 60% of those surveyed said that the Covid-19 crisis has had an impact on their investment strategies.


The investors surveyed also stated that they are currently paying very close attention to the profiles of occupiers selected (77%), to asset typology (62%), to the upgrading and the restructuration of their portfolio (57%).


42% of investors think that co-working is shaping up to become an asset class of its own.
 

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International Investment Group

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Which assets are most sought after?

It comes as no surprise that investors continue to gravitate towards the most resilient asset classes by prioritising core and core + risk profiles. Nevertheless, value-add assets are still attracting a good amount of investment interest (33%). Moreover, speculative and opportunistic strategies are at 11%, up two points according to our survey.


In the short-term, 73% of those surveyed revealed that their selection process hasn’t been affected. The assets of choice appear to be: offices (24%), mixed commercial buildings, offices and accommodation (19%), logistics (18%) and business premises (18%). Offices continue to be popular but logistic assets and business premises are rapidly increasing in popularity, both of which represent 36% of investor interest. This is likely to be because these asset typologies were able to take advantage of the Covid-19 crisis by, for example, supporting supplier activities and e-commerce. 

[METHODOLOGY]


This recent study was conducted by the BNP Paribas Real Estate teams with a sample of 131 investors and/or office building owners, clients or prospects, from the 12th to the 26th of May 2020. The interviews were carried out using a questionnaire. The most represented investor category is private investors (22%), followed by family office (18%), asset and fund managers (18%), investments funds OPCI and closed funds (12%), insurance companies and banks (11%), promoters (11%) the SCPI, OPCI public and open-end funds (8%) and the sovereign funds (1%). These investors roll out their investment strategies throughout the world.