With over 30 years’ experience investing in real assets, AXA IM – Real Assets is today one of the most active global real assets players and the largest real estate portfolio and asset manager in Europe1, with €82bn in AUM as at 31 December 2018.
Our approach to investing and managing real assets is built on our unique 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 600 people in 13 offices operating in over 20 countries, 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.
1 Source: IPE Top 100 Real Estate Investment Managers Survey – Nov./Dec. 2018
Industrial: The growth in e-commerce is expected to continue to have a strong influence on the European logistics market, and cyclical drivers related to the ongoing global recovery are also likely to benefit the sector in the short term. Whilst core assets in mainstream markets are starting to look expensive, logistics still offers a significant yield premium over offices and retail in many markets, and can provide a less volatile, more defensive option for low-risk investors. Prime yields are not expected to come under upwards pressure in the majority of key logistics markets until 2021. From a total return perspective, the European logistics sector is expected to outperform the office and retail sectors over the 2019–21 forecast period.1
Office: Improving underlying fundamentals continue to drive office occupier demand in Continental Europe. With above average take-up and relatively low levels of completions, vacancy rates have fallen to their lowest level since 2008. Occupier demand in the UK has slowed since 2016’s Brexit referendum, and slower economic growth and increased uncertainty is expected to weigh on occupier decisions over the next few years. Modest rental growth is forecast for the majority of Continental Europe over the 2019–21 forecast period with Spain and the Nordics outperforming. Given the large amount of capital in the market, prime yields on the Continent are largely forecast to remain stable until 2020. Core assets in mainstream markets are expensive but remain attractive to defensive, low-risk investors. We see value in emerging submarkets that benefit from the fast-growing tech sector or major regeneration projects.1
Residential: Ongoing urbanisation and decreasing household sizes are expected to continue resulting in increasing demand in the private residential sector in major European city markets. Meanwhile, new supply is expected to remain modest in such markets as a result of factors such as the low supply of suitable land and planning restrictions. Residential investors have traditionally benefitted from relatively stable income returns. However, the imbalance between demand and supply has generated sustained real rental value growth and capital value growth in many European markets in recent years. European residential markets are in different phases of the cycle but a focus on major European metros that can offer both dynamic household formation and a relatively large rental sector should offer a strong foundation for potentially attractive risk-adjusted returns.
Retail: The European retail sector should continue to be supported by solid private consumption, resulting from elevated consumer confidence, easy credit conditions, labour market improvements and rising disposable incomes. However, the impact of e-commerce shows no signs of waning and, with retailers facing squeezed margins, ever-demanding consumers and the need to prioritise supply chain investment, only modest rental value growth is projected over the 2019–21 forecast period. Structural shifts are forecast to exacerbate polarisation between prime and secondary locations and schemes. Regionally dominant shopping centres and prime high streets in European tourist destinations are likely to provide the best option for defensive, low-risk investors.1
1 Source: AXA IM – Real Assets Research, as at 25 September 2018
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, countryspecific to geographically-diversified, sector-specific to multi-sector. Its 360-degree multidisciplinary real estate approach allows it to combine different management styles and expertises, 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.
© 2018 AXA Real Estate Investment Managers and its Affiliated Companies. All rights reserved.
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Analysis from IPE Real Assets
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