Birth of a Sector
As of the end of August, the Europe Middle East and Africa (EMEA) ex-UK constituents accounted for 11% of the FTSE EPRA/NAREIT Developed Index.
Their market capitalisation has doubled since the beginning of 2012, from €69.3bn to €141.5bn.
The regional composition of this group has changed markedly:
- France, which had been 45%, is just 23%
- Germany has gone from 10% to 22%
- The Netherlands has gone from 9% to 19%
- Spain is up from less than 1% to 4%
- Ireland, which was not part of the Developed Index at all until March this year, represents 0.7% and almost €1bn of market cap
We do not anticipate that 2016 will be a value opportunity like 2009 or 2012. Most of the low-hanging fruit had already been picked before this wave of new IPOs.
Nonetheless, Ireland and Spain are still very interesting to us, and the cycle for Continental European commercial real estate has lagged the US and UK cycles significantly.
For the first time, listed real estate investors can position themselves for the evolution in these cycles, and we believe they may want to consider doing so soon.