CoStar Column: Expectations for Expo.
Expo has become a ‘must-attend’ event for European property market participants, offering the chance to interact with a huge range of business contacts old and new, drawn, it seems, by the prospect of being captive in a warehouse a long way from the beach, writes Nic Fox, Europa Capital’s Partner Head of Middle Europe.
As with the longer-established MIPIM event, one can rarely point to this gathering as the defining moment a deal was secured, but I do again expect it to be marked by a new relationship being forged, an idea born, a discussion intensified, or an investor convinced.
Expo for me has always been about the unexpected discussions, chance meeting or new friendship started. I couldn’t begin to estimate how many business cards have been handed to me over the course of Expo Real since its inception, but many have eventually added value to an element of Europa Capital’s business in one way or another.
As we head to Expo 2017, we find ourselves in an environment characterised by a great deal of positivity, borne out of steadily improving economic fundamentals throughout most of Europe. This in turn is translating into growing occupier demand and increasing consumer spending, accompanied by continued low interest rates, diminishing political risk, a scarcity of quality supply in many key markets, prudent leverage and rising allocations to Real Estate from institutions seeking yields that continue to offer an attractive premium to bonds. The longer these factors prevail, however, the greater the chance that some uninvited guest will eventually come along to disrupt the party.
Looking beyond Expo, we may see markets start to wobble during the next six months in anticipation of possible unforeseen consequences of Brexit negotiations for both the UK and European Union. Nobody yet knows what the outcome will look like, whether a transition period will allow for phased adjustment or whether clear ‘winners’ and ‘losers’ will emerge, but as much as I still hope for an amicable separation, I think the signing of the ‘decree absolute’ will probably trigger a period of greater uncertainty for continental Europe and the UK, which will form a backdrop for the next decade of real estate investing.
But of course, uncertainty can present opportunity to the shrewd and experienced investor with capital or dry powder to invest.