Generali Real Estate is one of the biggest real estate investors in the world, with €30bn of assets under management at the end of 2018.
Following a long-term investment horizon and leveraging on a team of 435 professionals, with operating units located in the main European cities, Generali Real Estate coordinates the Generali Group’s real estate portfolio across the globe, and makes use of its well grounded expertise to promote investment products for third-party clients, while Generali Real Estate SGR is the fund management company in charge of real estate funds, both reserved to the Generali Group companies and third parties.
By managing a unique portfolio in terms of asset quality and mix of historical and modern buildings, Generali Real Estate has developed best-in-class skills in the fields of technological innovation, sustainability and urban development.
The Generali Group is one of the world’s leading insurance companies, founded in Trieste, Italy, in 1831. It is present in more than 60 countries, with over €66bn of revenue in 2018.
Office: The European commercial property investment market ended Q4 2018 on a strong note, with nearly €94.3bn transacted. Therefore, the volume for 2018 as a whole amounted to €312.4bn, reaching its strongest annual level ever recorded. Germany led transactions in Europe followed by the UK where the investment activity remained resilient despite uncertainties related to the Brexit negotiations. Other upbeat markets included France, the Netherlands and Spain, which recorded their historical high annual volume in 2018. On the pricing side prime office yields compressed further in the top German cities, along with Brussels, Amsterdam, Lisbon and the main CEE markets.
Amid slowing GDP growth and political uncertainty, overall European office occupier demand remained strong in 2018 (with around 13.5m sq.m taken), recording its second best annual volume after a historical high in 2017. Therefore, the European office vacancy rate continued to decrease somewhat in Q4 2018 (-10 bps), to 6.3%. With regard to office annual rental growth, Barcelona and Berlin continued to top the league, with prime rents rising respectively by 15% and 14% in 2018.
With economic activity fading, particularly in core European countries such as Germany and Italy, we expect property income streams to stabilize in 2019 and 2020 while lower bond yields for an extended period of time will continue to strengthen the case for core properties during next quarters. In this context, Benelux and Nordics main cities, Madrid, Athens, Prague and Budapest should offer the most attractive prospects in terms of relative value.
Looking ahead, the continuous development of co-working and data mining should impact the office market and require more attention from the landlords, in order to secure and analyze critical tenants and premises info-flows, and deliver on the promise of big data exploration and tenant oriented approach.
Retail: The retail industry has entered a period of unprecedented innovation and disruption that challenges retailers’ and investors’ business models.
US retail bankruptcy and store closings have been a cause of concern and anxiety for European operators and investors, but it should be borne in mind that retail space density in the US is out of proportion with the European market standards. In addition, obsolescent department stores were typical anchor tenants in many American shopping centres.
Nevertheless, the competition from online shopping and discounters poses serious and imminent threats to retail premises in Europe. This said, the improvement of buying experience and the increasingly sophisticated use of data and technology should significantly increase the attractiveness of brick and mortar retail in experience driven shopping centres and prime high-street retail.
In this challenging environment, we are focused on dominant shopping centres and prime high-street retail shops in Central and Eastern Europe, Berlin, Norway and Iberia, whose markets are expected to outperform. Moving up the risk curve, Moscow and Athens could also be considered.
Investment principles & strategy
Generali Real Estate manages Generali’s real estate portfolio worldwide and is responsible for the implementation of the group’s real estate strategy. The company carries out research-based portfolio optimisation and diversification across geographies, asset classes and risk profiles.
The main appetite is for investing in core and core-plus assets in the largest European cities, as well as in Asia and North America, with a focus on prime office buildings, high-street retail and other retail space. Generali Real Estate uses a disciplined risk-return based investment and divestiture process to maintain a high-quality portfolio.
Strategic corporate development
In the next few years, Generali Real Estate expects to continue to invest and grow significantly its portfolio under management, leveraging on the new pan-European dimension of its fund management company, on the strong experience and market knowledge of its local teams, and on a highly effective portfolio strategy based on a thorough research-driven investment selection and sector monitoring.
Furthermore, the company will keep strengthening its fund management business, establishing new products and strategies in partnership with selected third-party investors.
Generali Real Estate periodically evaluates its performance against a number of benchmarks, according to best market practices. The performance of each fund is measured and analysed by independent third parties on a regular basis.
News from Generali Real Estate
Generali Real Estate and Poste Vita joint venture debuts with Marienforum acquisition in Frankfurt download
The recently completed acquisition of Marienforum, a prime office building in Frankurt am Main, is the first step of the joint venture that Generali Real Estate and Poste Vita announced in December, aimed at co-investing in the European real estate sector. The seller is Perella Weinberg Real Estate Fund II (PWREF II), one of the real estate funds advised by Aermont Capital in its capacity as investment adviser, and the developer of the property is Pecan Development GmbH.
Generali Real Estate, on behalf of Generali Europe Investments Holding (GEIH) Fund, has acquired Piękna 2.0, a landmark office building in Warsaw, from an investment fund advised by Griffin Real Estate.
Generali Real Estate, on behalf of Generali Real Estate Fund CEE*, has completed the acquisition of Palac Spork, a prestigious mixed-use asset located in Prague 1, from SEBRE.
Generali launches new real estate boutique to increase shopping centre investing capabilities download
The Generali Group (Generali) announces today the launch of Axis Retail Partners, a new real estate boutique focusing on shopping centre investments. The joint venture has been set up with two seasoned professionals with a strong investment track record in this asset class.
Poste Vita and Generali Real Estate have signed a frame agreement aimed at co-investing in the European real estate sector.
News from IPE Real Assets
Italian insurers sign framework agreement
Benson Elliot bought the Milan portfolio from BNP Paribas and Generali Real Estate
Generali Europe Investments Holding fund buys Købmagergade 39 in Copenhagen
Generali Real Estate hired HIH Property to manage its €1bn northern Germany portfolio
Generali bought Atrium Bercy and Montoyer 47 in Paris and Brussels respectively for an undisclosed sum
Analysis from IPE Real Assets
Coima CEO Manfredi Catella explains why Italy’s real estate market has reached a turning point