AXA IM Alts sees "glass half full," emphasizes diversification

AXA IM Alts believes that diversification is important in the current real estate market due to the varying performance of different sectors and countries.

Rainer Sutter

“I always say that the glass is half full and not half empty. Logistics and residential are performing well. The fundamentals are positive, and more so for residential and logistics. I’m pretty positive about the fact that we are in a situation where things can only get better,” Rainer Sutter, co-head of Core Strategies at AXA IM Alts, told CRE Media Europe at Expo Real.
Current leverage levels are relatively low compared to previous financial crises, indicating that investors are more diligent and risk-conscious. Banks are also carefully scrutinizing investments, ensuring that financing is directed toward sound projects, he added.
Sutter also emphasizes the strength of the Swiss market, which he considers highly competitive and liquid, even for substantial asset sales. Furthermore, he notes the positive economic trends in Southern Europe, particularly in Spain and Portugal, which are driving growth in property values and investor interest. “The retail sector in Southern Europe, previously overlooked, is now an attractive opportunity due to impressive turnover and visitor numbers,” he points out.
Sutter shares the generally more positive sentiment at Expo Real compared to the previous years, noting that despite economic challenges and uncertainties, the economy is performing reasonably well. There is substantial capital waiting on the sidelines, ready to be invested in real estate and other ventures. He believes that the limited number of speculative development projects is a healthy sign for the leasing market, which is crucial for maintaining property values.
Additionally, there is reason for optimism for the office sector, with companies investing to make both the employer and the office asset attractive. At the same time, the right location remains paramount, even more so than before.
Looking ahead, AXA IM plans to maintain a well-diversified portfolio, favouring the resilience of the residential and logistics sectors, which are driven by e-commerce and reshoring trends. While Southern Europe presents opportunities, they are awaiting the recovery of the UK market, particularly London. They are also optimistic about Germany, anticipating that government investments in infrastructure will stimulate a new economic cycle.
Equally important, according to Sutter, is political action to create a flexible, agile, and reliable legal environment to maintain investor confidence in Europe.
He also stressed the need to be mindful of trends in the US market, as they may impact Europe in the future. This includes being flexible and adaptable in investment strategies, such as investing in senior housing, multifamily properties, and student accommodation.

Branislav Pekić