AXA Investment Managers – Real Assets is part of AXA IM Alts, one of the global leaders in alternative investments with €154bn of assets under management1, across real estate, infrastructure, private debt, alternative credit, private equity and hedge funds. AXA IM – Real Assets has €103bn in assets under management, including €73bn in direct property and infrastructure and €27bn in real asset finance1. It offers a 360° approach to investing in real assets, which comprises opportunities in equity or debt, across different geographies and sectors, as well as via private or listed instruments. Its teams have been managing funds and mandates for over 30 years and comprise over 600 people in 14 offices that operate in over 20 countries around the world, providing us with in-depth knowledge of countries, cities and sectors.

1 Source: AXA IM – Real Assets data (unaudited) as at Q2 2020.

Sector forecasts

Industrial: The structural shift towards omni-channel retail and supply chain optimisation (upgrade and consolidation, technological advancement and infrastructure improvements) have supported, and should continue to support, the sector. Above trend rental value growth, resulting from occupiers’ focus on new, efficient space, is expected to slow as affordability becomes a concern. While purpose-built space accounts for most of the supply, speculative development is rising. However, despite being home to some of the most developed countries in terms of online sales penetration, modern logistics stock is comparatively scarce, particularly in markets such as China and South Korea, providing opportunities to develop at an attractive yield- on-cost. 

Office: Despite the macroeconomic backdrop, office market fundamentals remain relatively healthy. Vacancy rates across gateway cities, while rising, remain low relative to history and supply is largely in check. Although the pandemic has created uncertainty for occupiers leading to a reduction in immediate demand, we expect this to be short-lived. Prime rents are expected to see positive, albeit weak, growth in Japan and South Korea while in Australia, which has been more significantly impacted by lockdowns, we expect modest headline rental declines in the range of –0.5% to –4% in the near term. With government indebtedness and central bank balance sheets ballooning, the likelihood of short-term yield rises has diminished, and spreads to bonds should continue to provide an attractive relative return.

Retail: Population growth across the region and rising wealth per capita in China and ASEAN countries are supporting continued retail sales growth. However, the structural shift towards e-commerce is diverting sales away from traditional retail formats, limiting retailer demand. In addition, increasing occupancy costs and the burden of adapting to an omni-channel strategy are limiting occupiers’ ability to pay higher rents, holding back rental value growth. Prime CBD retail yields have reached new lows across most markets and, with investor interest in retail waning in favour of logistics, prime yields could come under upward pressure.

Investment principles & strategy

AXA IM – Real Assets’ core business is real asset portfolio development and asset management. It aims to provide expert global real estate and infrastructure investment solutions throughout market cycles, supporting every client’s unique strategy. AXA IM – Real Assets launches and actively manages or advises real asset portfolios, seeking wide-ranging opportunities through a variety of investment strategies along the risk spectrum: from core to opportunistic, country-specific to geographically diversified, sector-specific to multi-sector. Its 360°, multidisciplinary real asset approach allows it to combine different management styles and expertise, to provide clients with individual investment solutions and deliver targeted returns commensurate with specific investor risk profiles and objectives.

Strategic corporate development

AXA IM – Real Assets’ strategic objective is to become a global player, answering clients’ needs through a 360° view on real asset investing. In a rapidly evolving environment, the company continues to pursue both its medium and long-term development plans and sees active long-term real asset investment management as its value-added area of growth. It focuses its strategic development initiatives on the following key areas:

  • Strengthening its relationship with clients;
  • Growing its geographic presence;
  • Pursuing selective product line expansion and innovation to meet client needs;
  • Reinforcing its governance, operational excellence and risk management frameworks

COMPLIANCE STATEMENT

Restrictions on use
The information, answers, statements and analysis (together the “Material) provided herein by AXA Investment Managers – Real Assets (“AXA IM – Real Assets”) are provided in good faith for the sole use of the company to whom it is addressed and at its sole request. The information contained herein is to be treated as confidential. It is not for use by retail customers under any circumstances. This Material does not con- stitute an offer or solicitation, nor is it the basis for any contract for the purchase or sale of any investment, security or product. AXA IM – Real Assets disclaims any and all liability relating to a decision based on or 
for reliance on this Material. Analysis and conclusions express the views of AXA IM – Real Assets and may be subject to change without notice. All information, analysis and conclusions herein present AXA IM – Real Assets’ current knowledge and market estimation at the time of its production. Nevertheless, it can come to unintended erroneous statements or presentations and the information may change at any time without previous announcements and/or notices to the recipient of this Material. Thus, a liability or guarantee for the up-to-datedness, correctness and completeness of the allocated information, estima-tion and opinion cannot be assumed. Where past performance, past experience and track record information is provided, this is not necessarily representative of future results: performance is not constant over time and the value of investments may fall as well as rise. No representation is made that any results or other figures indicated in this document will be achieved and that investments will achieve comparable results that targeted returns. Due to simplification, this Material is partial and thus the information can be subjective. The information set forth herein does not purport to be complete and is subject to change without notice.

Responsibility
This document has been prepared and issued by AXA Real Estate Investment Managers, Marketing and Communication Team, Tour Majunga - La Défense 9, 6 place de la Pyramide, 92908 Paris La Defense Cedex.

Sources
The information and data used in this presentation has been sourced from a number of recognised industry providers. We believe it to be accurate and have taken reasonable care to confirm this but cannot offer a guarantee that this is the case. Details of these sources are available on request.

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