Urbanisation set to underpin need for housing and distribution space going into 2021
Living and logistics have long been favoured sectors at Europa Capital and 2020 was no exception, with residential representing almost 80% of its investment activity during the year. Both sectors are anticipated to remain the subject of focus in 2021.
After three years of being a net seller, Europa Capital was a net buyer in 2020, transacting close to €500 million and reflecting a more modest level than in previous years, as it prudently selected opportunities in an uncertain market as a result of the COVID-19 pandemic. Acquisitions were secured across the risk spectrum on behalf of its value add and core investment strategies.
The majority of transactions (€380 million), including the largest sale, were in the residential sector, which continues to present value across the risk/reward spectrum and aligns with Europa Capital’s clients’ return expectations. Deals were signed in London and Copenhagen, adding to Europa Capital’s long standing track record in the living sector, into which it has invested c. €1.2 billion into purpose built PRS and student accommodation, totalling more than 10,000 beds, since 2012.
Having entered the start of the pandemic with no legacy assets and almost €600 million of investor commitments, Europa Capital’s latest value-add fund commenced investment activity focusing on the logistics sector in Germany and the Netherlands. This expands on the thematic strategies of its prior value-add strategies, which have successfully capitalised on the strong demand for logistics space due to the rise of e-commerce and businesses looking to locate close to major urban areas.
Europa Capital also continued to diversify its range of investment products, completing a first close of the Europa Diversified Income Fund, raising €350 million of equity, most of which is invested in residential and logistics.
Jason Oram, Executive Committee member at Europa Capital, commented: “Living and logistics remain preferred sectors for us in 2021, having proved durable and resilient from both an occupier and capital performance perspective in 2020. Our rent receipts across the entire portfolio, including offices, have been high and we continue to believe in the long term outlook for offices and the contribution they make to their occupiers. Our experience of investing through multiple economic cycles means we are in a strong position to identify compelling opportunities for our clients in 2021.”
Rob Sim, Managing Partner at Europa Capital, added: “As a result of our activity in 2020, we have established a diverse range of investment products for our investors, from core to value add, with the living and logistics sectors the focus of these. Despite COVID-19, we believe the trend of urbanisation, and the associated demand for housing and distribution space, is here to stay.
“In a year of social disruption caused by COVID-19, we have remained committed to our social responsibility strategy to help widen the access to the real estate industry. This has involved our scholarship programme at Sheffield Hallam University, which is now in its second year, and our outreach work with Uptree, an organisation helping young people to explore career opportunities.”