INVESTMENT INTENTIONS ROADSHOW 2018

Transcription

1 INVESTMENT INTENTIONS ROADSHOW 2018 Key highlights Helsinki 25 January 2018 Henri Vuong INREV Director of Research & Market Information

2 320 respondents from 27 countries Nordics 12 investors 1 FoFs managers 13 fund managers 30.1 bn NORTH AMERICA 46 investors 62 fund managers bn AUM represents investors only 2 EUROPE 40 investors 7 FoFs managers 95 fund managers bn ASIA PACIFIC 21 investors 49 fund managers 56.3 bn

3 The pendulum swings towards riskier strategies 3

4 % of respondents A notable shift in appetite for value added and opportunity Investment style preferences 100% 90% 19 14,9 2,9 3,0 9,4 7,1 7,1 17,8 13,8 10,5 18,8 80% 35,3 37,0 28,6 30,3 21,9 70% 60% 50% 62 43,6 25,9 42,9 41,7 41,1 46,8 48,7 49,4 40% 30% 20% 10% 0% 58,8 68,6 66,7 68,8 50,0 51,2 41,5 37,0 41,1 39,4 40,8 31,8 19 5, Core Value added Opportunity 4

5 Total equity raised Total equity raised Total equity raised Capital raisings showing signs of deployment challenges 25 Asia Pacific 90 Europe 45 North America EUR USD EUR USD EUR USD Source: ANREV / INREV / NCREIF Capital Raising Survey 2017 Note: Capital raised by target regional strategy 5

6 Owing to increasing challenges of sourcing core product Achieving target returns Availability of suitable product Investment at planned rate Most challenging obstacles for fund managers 6

7 CAN WE EXPECT ANOTHER GOOD YEAR FOR REAL ESTATE?

8 * * * Total return (%) Total return (%) Total return (%) Real estate delivers strong relative returns, especially Finland 18,0 INREV Annual Index vs Euro area 10 yr Govt Bonds 18,0 Finnish Index vs Euro area 10 yr Govt Bonds 18,0 Nordics Index vs Euro area 10 yr Govt Bonds 13,0 13,0 13,0 8,0 8,0 8,0 3,0 3,0 3,0-2,0-2,0-2,0-7,0-7,0-7,0 Source: INREV Annual Index 2016; *INREV Quarterly Index Q3 2017; ECB (2018) 8

9 Another EUR 50 billion earmarked for real estate 47.7 billion 52.6 billion 51.1 billion

10 % of respondents Global investors plan to increase their exposure to real estate 60,0% How investor expectations of allocations have changed over time 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Percentage indicating increase over next 2 years Percentage indicating decrease over next 2 years 10

11 % of overall portfolio Targeting a total capital allocation of 10.2% Allocation to real estate 14% 12% 0,5% 10% 0,8% 0,9% 1,5% 1,3% 8% Increase to target 6% 4% 9,5% 10,8% 9,4% 10,0% 8,9% Current allocation 2% 0% Note: Equally weighted allocations 11

12 % of overall portfolio % of overall portfolio Finnish investors have higher allocation than neighbours Finnish Investors Nordic (ex Finnish) Investors 18% 18% 16% 0,3% 16% 14% 1,4% 1,0% 1,6% 14% 12% 12% 10% 10% 8% 6% 13,6% 14,2% 16,3% 12,7% 8% 6% 2,5% 2,0% 2,1% 0,1% 4% 4% 6,5% 7,0% 6,9% 7,9% 2% 2% 0% % Note: Equally weighted allocations 12

13 % of overall portfolio Europeans not the only ones with big ambitions Allocation to real estate 16% 1,1% 14% 1,2% 1,6% 12% 10% 8% 6% 14,0% 13,4% 12,7% 0,5% 0,1% 0,8% 0,6% 5,7% 4% 9,3% 7,9% 7,8% 7,3% 6,8% 2% 0% Germany (5) Canada (8) Finland (7) Australia (8) Nordics (ex Finland) (5) Investor domicile Netherlands (9) United States (36) Korea, Republic Of (3) Current allocation Increase to target Note: Equally weighted allocations; excludes speacialised investors with greater than 75.0% real estate allocations 13

14 Home sweet home for Finnish investors Amount expected to be invested in real estate in 2018 ( billion) Finnish investors regional real estate investments for ,9 2,3 2,7 0,3% 11,1% 4,8% 29.5 bn 24,5 8,7 83,7% Asia Pacific investors Nordic (ex Finnish) investors North American investors European investors (ex Nordic) Finnish investors Asia Pacific Europe United States Americas ex US 14

15 15 WHAT S HOT AND WHAT S NOT?

16 % of respondents Finland considered more attractive than its neighbours 70% Preferred investment locations for % 50% +1-1 = 40% 30% 20% 10% = = % United Kingdom France Germany Netherlands Spain Italy Finland Belgium Denmark Norway Sweden Investors Fund managers 16

17 Residential a hot favourite, logistics also on the up 1. Office (89.3%) 2. Retail (75.0%) 3. Residential (73.2%) 4. Ind. / Logistics (64.3%) 5. Development (33.9%) 6. Student acc. (25.0%) 7. Healthcare (21.4%) 17

18 Offices spear ahead in Finland Sweden Finland Office (80.0%) Retail (70.0%) Residential (70.0%) Office (93.3%) Retail (86.7%) Residential (60.0%) Denmark Norway Retail (62.9%) Residential (62.9%) Office (53.8%) Office (81.8%) Retail (63.6%) Residential (63.6%) Note: percentage of investors that expressed their interest of investing in each country 18

19 Strong support from locals in Finland Sweden 30.0% Finland 40.0% Other 70.0% Other 60.0% Denmark Norway 30.8% 27.3% Other 69.2% Other 72.7% 19

20 % of respondents % of respondents % of respondents Those targeting the region have appetites for riskier strategies Preferred investment styles for US investors 100% 90% 80% 70% 100% 90% 80% 70% Preferred investment styles for German investors 100% 90% 80% 70% Preferred investment styles for Finnish investors 60% 60% 60% 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% % %

21 % of respondents % of respondents % of respondents The intention is lower down the risk scale Styles that US investors plan to invest in % 90% 80% 70% Styles that German investors plan to invest in % 90% 80% 70% Styles that Finnish investors plan to invest in % 90% 80% 70% 60% 60% 60% 50% 50% 50% 40% 40% 40% 30% 30% 30% 20% 20% 20% 10% 10% 10% 0% % %

22 22 THE ROUTES TO REAL ESTATE INVESTMENT

23 Different views from different regions to accessing Europe Asia Pacific investors European investors North American investors Fund managers RE funds JVs & Clubs RE funds JVs & Clubs Separate accounts Directly held assets JVs & Clubs RE funds Debt RE funds Debt Separate accounts Directly held assets 23

24 Nordic investors prefer the indirect route to real estate Finnish investors Finnish fund managers Nordic (ex Fin) investors Nordic (ex Fin) fund managers JVs & Clubs RE funds JVs & Clubs Directly held assets Directly held assets RE funds JVs & Clubs Separate accounts JVs & Clubs RE funds Directly held assets Directly held assets Separate accounts 24

25 % of respondents Finnish investors don t shy away from securities 100% Expected changes in Finnish investors' European real estate allocations for % 80% 70% 60% 50% 40% 30% 20% 10% Real estate derivatives Other real estate investments Funds of funds Listed including REITs Non-listed real estate debt Directly held real estate Separate accounts Joint ventures and club deals Non-listed real estate funds 0%

26 Finnish investors consistent in approach JVs & Clubs RE funds JVs & Clubs RE funds Debt RE funds Listed JVs & Clubs Directly held assets Listed 26

27 Cost conscious investors in Finland and neighbouring countries All investors Finnish investors Nordic (ex Fin) investors Availability of suitable product Associated costs Associated costs Currency risk Availability of suitable product Current market conditions Current market conditions Sample for Nordics ex Finland too small to show alone Current market conditions 27 Availability of suitable product

28 Investors see different challenges in the European market Asia Pacific Investors European Investors North American Investors Availability of suitable product Transparency and market information Availability of suitable product Currency risk Resources Currency risk Current market conditions Resources Current market conditions Alignment of interest 28 Alignment of interest

29 Compelling reasons to invest in non-listed real estate funds Nordic (ex Fin) investors Access to expert management International diversification Access to new markets Finnish investors Access to expert management Diversification benefits International diversification 29

30 Concluding remarks Over half of investors set to increase allocations to real estate Targeting a capital allocation of 10.2%, up from 8.9% currently A minimum commitment of 51.1 billion to real estate, 2.3 billion of which is from Finland Increased appetite for value added and opportunity The well for suitable product is drying up 30

31 Where will you sow your seeds? 31