Real estate: Paris, London or Geneva?
2 October 2017
The geographic diversification of a real estate portfolio makes sense. Private banks know how to play the opportunities of different European countries
"There is no typical asset allocation in real estate, especially when you are a client of a private bank. We make tailor-made according to the needs, the financial capacities and the desires of each one, "says Inès Reinmann-Topper, associate director at Edmond de Rothschild Corporate Finance. On paper, the weight of this type of illiquid assets should not exceed 20 to 30% of the assets. In reality, the situation is mixed. This will depend on the profile of investors, their taste or not for real estate.
"For some of our customers, stone can represent up to 50% of their assets, including primary and secondary residences and pure rental investment," says Anthony Dumont, head of the real estate department at Banque Neuflize OBC. "The distribution of assets and especially their choice will also depend on whether they want to have immediate income or not. The strategy differs depending on whether you want to quickly obtain high returns or build on long-term capital appreciation. "
The size of the asset can also be very variable: "We can find goods to buy ranging from 5 to more than 200 million euros," says Claire Roborel de Climens, Global Head of Unlisted and Alternative Investments at BNP Paribas Wealth Management.
European playground. When slipping multiple assets into a portfolio, the strategy is to diversify. In real estate, the most obvious distribution key is geographical diversification. After France, Paris and other major regional capitals, Europe remains the favorite playground for investors. Not only because of the single currency, but also because their professional activities lead them to frequent certain countries more than others. "Although there is a tendency to homogenize European real estate markets, there are specificities that should be taken advantage of. We have local teams in different countries capable of decoding the market, identifying interesting assets and responding to requests, "notes Inès Reinmann-Topper.
Germany, where the market is less atomized than in France and is spread over 5 to 6 large cities, prices are lower than in France with slightly more attractive yields. On the other hand, the prospect of a complicated exit from the European Union "makes the British market too volatile, especially as prices are still high," says Laurent Desmoulière, head of the patrimonial engineering department at Meeschaert Gestion Privée and Managing Director Deputy of Meeschaert Family Office.
On the other hand, in the opinion of many professionals, opportunities exist in the Iberian peninsula in offices as in residential. In Spain and Portugal, residential property continues to rise. "The demand from international customers to buy high-end accommodation in Madrid is high. On the Spanish market, foreigners realize 20% of real estate transactions, "comments Ivan Barrondo at the head of John Taylor Spain.