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MIPIM 2016: Generali mulls entry into new US markets

The real estate arm of the Italian insurer is evaluating an expansion of its existing US property portfolio into two or three new cities.

Generali Real Estate, the property arm of Italian insurance company Generali Group, is considering entering two or three new US markets over the next few years, as it makes the world’s largest property market a bigger investment focus.

The expansion would be part of a broader diversification plan for its global real estate portfolio.

One of the world’s largest insurers, which began investing in the US about six years ago, has existing real estate assets in Boston, Chicago and Washington DC, including the Farragut Building in the nation’s capital. After the global financial crisis, Generali took a pause on real estate investing in the country, but is now examining other US cities where it might expand its property portfolio.

Jacques Plas, head of research at Generali Real Estate, would not be drawn on numerical investment targets. But he said the insurer is evaluating US cities that are starting to recover and are expected to exhibit strong growth in the future.

“Opportunities are in the cities with a mix of quality tenants, and sectors where they’re creating jobs and a certain level of wealth,” said Plas. Such industries, which could include healthcare, pharmaceuticals, biomedical and technology, would in turn drive demand for office and residential real estate, he said.

In Europe, Generali will be looking more closely at real estate opportunities in Central and Eastern Europe and the Nordic countries, as well as monitoring the region’s southern countries. “We can’t see Southern Europe as one region,” said Plas. “Greece and Portugal are still busy fixing their bad situations, Spain has a recovery in place, and now we see much more interest in Italy.”

Meanwhile, the insurer is cautious in regard to its growth in Asia. In the region, Generali sees opportunities particularly in Australia, a market that has shown resilience, Plas said. But “Asian markets are very heterogeneous, with most of them in a negative phase of the cycle, with a few exceptions, such as Japan and India,” he said. Still, he said: “I hope we will have an entry point not too far in the future.”

The Italy-based company currently holds approximately €500 million, or approximately 2 percent of its overall property portfolio, across six assets in the US. It has a total of €27 billion in real estate assets globally.