AXA Investment Managers - Real Assets [Europe]

2017 Real Estate Top 100 ranking: 11

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Manager Details

Real Experts, Real People, Real Assets

AXA Investment Managers’ teams have over 30 years’ experience investing in real assets.

Our approach to investing and managing real assets is built on our 360° view of the real assets market, together with the strong convictions we have developed over past economic cycles.

Our convictions drive our product development and shape our investment decisions. Together, they represent our long-term approach to value creation in real assets investment and management.

With more than 650 people in 15 offices operating in over 20 countries1, we are a truly global firm in scale and resources, yet agile and flexible to meet clients’ needs. Our teams enable us to combine global strength across the full real assets investment spectrum with a substantial local operating presence.

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1 Source: AXA IM – Real Assets data (unaudited) as at 30 June 2017

Sector forecasts

Industrial: The European logistics market is changing rapidly. The growth in e-commerce is expected to have a strong influence on the market. On top of the long-term structural changes, short-term cyclical drivers driven by the strengthening global recovery are likely to benefit the sector. Whilst core assets in mainstream markets are starting to look expensive, logistics still offers a significant yield premium over offices and retail, and provides a less volatile, more defensive option for low-risk investors. Prime yields are generally not expected to come under upwards pressure in the majority of key logistics markets until at least 2020. From a total return perspective, the European logistics sector is expected to outperform the office and retail sectors over the 2017-2021 forecast period.1

Office: Improving underlying economic fundamentals have continued to drive office occupier demand in Continental Europe. With above average takeup and relatively low levels of completions, the vacancy rates continued to fall to their lowest level since 2008. Despite the UK economy holding up better than expected since the referendum, occupier demand has, however, taken a hit and uncertainties are expected to continue to weigh on occupier demand. Modest rental growth is forecast for the majority of Continental Europe over the 2017-2021 forecast period with Southern Europe and the Nordics outperforming. Prime yields continued their downward trend and, given the large amount of capital in the market, are forecast to remain stable until 2020. Whilst core assets in mainstream markets look expensive, they are likely to provide the best option for defensive, low-risk investors.1

Residential: House price trends are strongly correlated to GDP growth and employment trends, and uncertainty and lower growth expectations have impacted house prices in the UK. London has a higher risk profile, being more exposed to regulation and affordability pressures, and strong price declines are possible. However, this could be mitigated to an extent by a weaker GBP supporting foreign investment, and a faster recovery within the UK’s most liquid market. Despite the presence of rental regulations in Germany, we remain positive on growth prospects here given strong internal demand. Population numbers continue to increase across major conurbations, partly due to positive migration balances, and this is supporting both rents and capital values. By contrast, the rent control regime imposed in France leaves investors with limited income uplifts whilst a slow-burning recovery has led to weak capital gains.

Retail: European retail markets have been benefiting from a low inflation environment and strengthening economic fundamentals, which have resulted in retail sales being the highest in 10 years. However, with the impact of ecommerce showing no signs of waning, the increase in retail sales did not fully translate into in-store sales growth. While prime rental growth, was nevertheless still evident in a number of European markets, the overall rate of growth is coming down fast with rental growth over the 2017-2021 forecast period only marginally surpassing inflation. Structural shifts are forecast to exacerbate polarisation between prime and secondary locations. Core markets are forecast to stay in highest demand, with retailers focusing on the best high streets of international city gateways and well-performing shopping centres that cater for convenience or experience.1

1 Source: AXA IM – Real Assets Research, as at 20 September 2017

Investment principles & strategy

AXA IM – Real Assets’ core business is real estate portfolio development and asset management. It aims to provide expert global real estate investment solutions throughout market cycles, supporting every client’s unique strategy.

AXA IM – Real Assets launches and actively manages or advises real estate 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-degree multidisciplinary real estate approach allows it to combine different management styles and expertise, to provide clients with individual investment solutions, delivering 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 with focus on its core business.

In a challenging environment for the industry as a whole, the company continues to pursue both its medium and long-term development plans and sees active long-term real estate investment management as its value-added area of growth. It focuses its strategic development initiatives on the following key areas:

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

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 constitute 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, estimation 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.
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.
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.
© 2017 AXA Real Estate Investment Managers and its Affiliated Companies. All rights reserved.

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Head Office
Tour Majunga
6, place de la Pyramide
Paris - La Défense cedex
Charles Daulon du Laurens Tel. +33 1 4445 5888
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