Generali Real Estate (GRE) is one of the world’s leading real estate asset and investment manager, with around €38.5bn of assets under management as of 30 June 2023. It leverages on the expertise of more than 360 professionals, with operating units located in the main European cities through five macro areas (Southern Europe, Western Europe, Central Northern Europe, Central Eastern Europe and Nordics, and logistics). The company’s integrated business model covers the full scope of asset management activities and the entire real estate value chain. GRE has recently launched a series of 13 cross-border investment vehicles, geographically diversified and specialised in terms of destination of use, allowing investors to build a ‘personalised’ portfolio. Strategies aim to create long-term value for investors with a core/core+ profile by investing in assets characterised by good locations, high liquidity and strong underlying leasing dynamics. By managing a portfolio comprising a unique mix of historical and modern properties, ranging from landmark buildings such as Procuratie Vecchie in Venice, to new architectural masterpieces defining the skyline of modern cities such as CityLife in Milan or Tour Saint- Gobain in Paris, the company has developed best-in-class skills in the fields of technological innovation, sustainability and urban development. Generali Real Estate is part of the Generali Investments ecosystem of asset management firms.
INDUSTRIAL: Logistics can now be considered as an established asset class where structural factors can drive demand for tenants and investors. There is a strong need to shorten supply chains and to increase inventories (switching from ‘just in time’ to ‘just in case’) to ensure stable delivery of goods and products.
With tenants experiencing effects related to supply chain increases in cost, the logistics market suffered a slight correction, with development activity slowing down as global economic uncertainty remains high.
On the other hand, the need to shorten supply chains to offset costs, and the chronic lack of infrastructure alongside e-commerce growth, are expected to be confirmed as a tailwinds for those assets located in the main European corridors, with rents supported by due to low vacancy and tight supply.
OFFICE: The continuous growth of the major European cities creates a favourable environment for an active demand by tenants that can provide cash flows to investors. Tenants are pursuing well-connected buildings with high quality to foster a positive environment.
Even if post-pandemic aftermath and cost-saving polices implemented by tenants resulted in slowing demand for this sector, offices still represent one of the irreplaceable work tools, especially if located in prime, talent-attractive cities. A prime building with a strong tenant is well-positioned to act as a solid inflation hedge. ESG is a key for tenants, managers and landlords, from reduced energy consumption to improved wellbeing.
RESIDENTIAL: The threefold action of interest rate hikes, lower household disposable income and local government action aimed at limiting market bubbling is expected to affect residential markets, stretching demand from ownership to lease. On the other hand, urbanisation and hunger for residential spaces should be able to offset downturns.
Residential destination of use is resilient by definition, characterised by limited volatility, allowing investors to benefit from its intrinsic guarantee and its granularity, preserving liquidity over the long term.
RETAIL: Retail is expected to have a difficult time ahead, with consumer confidence already at an all-time low. Rising operational costs, combined with lower revenues as a result of the cost-of-living crisis, are expected to crimp profit margins, and tenant defaults are expected to rise. In this context, retail rents will be vulnerable to declines, with fashion, consumer electronics and home furnishings appearing to be the most vulnerable to spending cuts.
Retail assets located in prime locations will continue to be an attractive and resilient asset class, especially when the assets will be able to provide a high-level customer purchase experience. Likewise, shopping centres located in prime locations continue to attract new tenants, and the current high-level yield of this segment presents a relative premium versus other property sectors.
Investment principles & strategy
Generali Real Estate manages the Generali real estate portfolio worldwide and is responsible for the implementation of the group real estate strategy. Leveraging on this expertise, GRE has launched a series of European cross-border real estate funds specialised by investment strategy, geographically diversified, and investing in high-quality underlying assets. GRE integrates environmental, social and governance (ESG) metrics in every stage of the business operations and daily activities, leveraging on best practices implemented during the overall asset lifecycle (ie, transaction, asset and property management), wrapped thanks to robust and transparent sustainable governance framework implemented at fund level. GRE funds are managed both on behalf of Generali Group’s companies and of other long-term institutional investors. The main appetite is for investing in core and core-plus assets in the largest European cities, with a focus on prime office, logistics, residential and CRE debt and with indirect investments in Asia. Generali Real Estate uses a disciplined risk-return based investment and divestiture process to maintain a high-quality portfolio.
Strategic corporate development
Coherently with Generali Group strategy, aimed at enlarging its external investor base, Generali Real Estate is currently developing a cross-border investment programme aimed to offer to investors a broader real estate investment exposure and diversification in terms of asset classes, geographies and risk-reward profiles. In this context, the specialised asset manager Generali Real Estate SpA Società di gestione del risparmio (GRE SGR) is currently managing 13 real estate investment funds, targeting external clients, institutional ones in particular, and in the next years will further enlarge its catalogue by managing additional vehicles. Moreover, GRE SGR offers its expertise to establish long-term relationships with like-minded investors through joint ventures and co-investments, leveraging on GRE’s long-lasting track record developed over decades in the management of real estate investment across all of continental Europe.
Generali Real Estate periodically evaluates its performance against several benchmarks, according to best market practices. The performance of each fund is measured and analysed by independent third parties on a regular basis.
Generali Real Estate conducts its real estate investment management activities through Generali Real Estate S.p.A. Società di Gestione del Risparmio (“GRE SGR”), in charge of managing both commercial real estate equity and debt funds through its seasoned professionals located in Italy and France. GRE SGR is passported and authorized by the Bank of Italy, the local regulator, to manage real estate investment funds in the EU under the AIFMD.