EXPO 2025 in review

Another year, another EXPO done and dusted. It was once again a lively event and one that brought to the surface some key themes. Retail is experiencing something of a renaissance, albeit cautiously, and investors are still wary of the office market. But perhaps most importantly, the supply/demand imbalance in the living sector is providing opportunities. 

Expo Real

CRE Media Europe met Holger Matheis, CEO Germany, and Per Erikson, group CIO, at Swiss Life AM, who shared their views of the market's state and Swiss Life AM’s future plans. Matheis noted strong opportunities in the residential market, with foreign institutional investors showing significant interest in German living investments.

He anticipated expanding their existing co-living JV model in London across Europe, adding that Swiss Life AM aims to collaborate with European partners for residential investments. Looking ahead, priorities include expanding in the living sector through potential JVs, specifically in micro-living and co-living. Two long-term development projects are underway in Düsseldorf and Frankfurt.

Alexander Möll, country head of Hines for Germany, Poland, and Czechia, also expressed a positive outlook, particularly for the residential sector, highlighting the recent acquisition of Marienhöfe in Berlin, the fund's largest in the sector, structured as a forward-funding deal.

And Florian Martin, co-CEO of KGAL, said that he is optimistic about residential because it is not directly linked to GDP growth, there is continued urbanisation, households are shrinking and there is a structural supply shortage, especially in Germany.

Rising interest rates and costs make homeownership less accessible, further driving demand for rentals. He believes the recent price correction presents a good investment opportunity, offering decent spreads to German government bonds.

Irina Stamate-Rocha, a senior partner at Patron Capital, meanwhile, said that their UK strategy involves upgrading existing purpose built student accommodation (PBSA) to provide more affordable options for students, aiming for an affordability ratio of 50–60%. The approach addresses the increasing cost concerns of both domestic and international students, as well as the rising costs of acquisition and marketing.

In continental Europe, due to the scarcity of older PBSA suitable for refurbishment, the focus is on new developments and assessing their feasibility, with Germany and Italy being particularly attractive markets. The company has also been exploring opportunities in Spain, where they have already invested in a co-living platform.

A panel session, entitled Student Housing: A Major Opportunity for Europe's Cities, emphasised the theme. It featured leaders from Amsterdam, Barcelona, PGIM Real Estate and BONARD, who discussed how student housing is transforming the housing landscape in European cities, attracting investment, and promoting balanced urban expansion.

BONARD presented data showing that student population growth is exceeding accommodation supply in major European study locations. Across 291 cities with a total of 13.5 million students, purpose-built student accommodation market saturation remains low, with examples such as 17% in Madrid, 20% in Berlin, 30% in Greater London, and 37% in Amsterdam. The figures indicated substantial market potential and room for further development.

With student enrolment increasing faster than the construction of new accommodation, the availability of PBSA in Europe's main university cities is significantly less than the total student demand. Market data suggests substantial room for new development before the market matures, with high absorption potential in cities like Madrid, Berlin, Greater London, and Amsterdam.

This year’s EXPO wasn’t all about living, however. Severine Maumy, head of asset and transaction management ar Redevco, pointed out that the company recently launched the Redevco European Retail Parks (RERP) Fund, a closed-end investment vehicle aimed at acquiring and managing convenience-oriented retail parks across Europe and the UK.

Maumy said that increased competition and renewed investor interest in the retail sector had been driven by yield decompression and lower rents. While the shopping centre market remains challenging, there is significant interest in Spain due to attractive yields.

And amidst much negativity around the office sector, some investors remained bullish, not least Jose Pellicer, partner, strategy, at Evonite, who said that the idea that offices are redundant in the post-pandemic world of hybrid working needs to be debunked.

“It is interesting how REITs and other fund managers are selling offices,” he said. “But things are more complicated. Firstly, occupancy is 97% of where we were at pre-COVID, this hardly sounds like a crisis. Secondly, decarbonisation is needed, but it is not as expensive as people think, so long as the price reflects the cost.”

He added: “Finally, the reduction in graduate recruitment could be more of a cyclical issue. Therefore, there is still uncertainty out there, and with occupancy nearing pre-COVID levels, it is not just the top 5% of offices in the city that are doing well.”

Adam Branson