The second of EPRA’s two traditional New Year Insight events debuted in Brussels in January, after switching from Amsterdam, and placed the Belgian REITs firmly in the spotlight following a strong performance in 2018.
Jan Opdecam, Research Director at KBC Securities, opened the evening’s presentations and panel session with a comparison of the relative total investment return of the EPRA Belgium listed index at 8.7% last year, versus a negative -11% for the market overall represented by the Developed Europe benchmark.
The buoyant logistics sector, in particular, stood out, with Montea, which develops and manages warehouses in the Netherlands, Belgium and France, producing a total investment return of around 40% last year. Fellow Belgian REIT WDP, the largest listed logistics player in the Benelux markets, came in next with 29%.
Opdecam said he expected the Belgian logistics sector to maintain its solid performance through 2019, while there should be more dynamism in the main Brussels office market on the back of a shortage of quality assets in the central business district (CBD) and a forecast of rising rents.
Healthcare investments would continue to benefit from their defensive non-cyclical qualities with solid long-term fundamentals stemming from Europe’s ageing demographic. He added that the jury was still out on some of the upcoming alternative real estate sectors as values looked to be peaking in residential, the pricing spread between institutions and the private market in student housing remained wide and it remained to be seen whether the new player in town, self-storage, would take off in Belgium.
Marc Oursin, CEO of storage company Shurgard, which listed on Brussels Euronext last year, said he expected the European self-storage markets to follow the same strong growth trend as the US with life factors, such as ageing populations and smaller living spaces, driving expanding demand for the company’s lock-ups in the most densely populated urban centres.
Isabelle Scemama, CEO of Real Assets at AXA IM, added that self-storage is an interesting emerging real estate sector in Europe but is currently too small for the French investor to consider outside the listed market. “We really like everything around accommodation and logistics,” she said.
Serge Fautré, CEO of AG Real Estate and former Chairman of EPRA, concluded the Brussels Insight evening, criticising European valuers and many investors’ fixation on net asset value metrics, discounts and premiums, rather than the FFO income measure, which he said was far more relevant in judging the health of a listed real estate business.