Europe is facing a multitude of geopolitical headwinds and the European Association for Investors in Non-Listed Real Estate Vehicles, alongside other real estate associations, is guiding members through a challenging landscape.
While there is little evidence to suggest that political risk has any discernible impact on investment decisions in the long-term, it is a factor that is impossible to ignore as Brexit’s undercurrent ripples across Europe, unlikely to subside for some time, and as elections across the continent loom. These situations across the region are diverse and so aiming for a sense of normalization is unchartered territory.
INREV has set up a Brexit focus group to identify the key areas where it poses challenges to the non-listed real estate investment industry. The group will explore how INREV can solve these challenges across the whole range of product and service offerings, and raise awareness with European policymakers in new and prospective regulatory and policy initiatives. INREV and 16 other real estate associations published guiding principles for future EU-UK relations, urging policymakers to avoid barriers and maintain market access. INREV’s leading role in the public affairs arena is essential to secure long-term value.
Our role is to drive the non-listed industry forward, ensure the asset class is accessible and attractive to investors, and, where possible, ensure no barriers to entry. Our dialogue with Europe’s policymakers, especially in times like these, is of critical importance. But so is not being unduly distracted from our current, core mission.
There are three important strands I feel are particularly relevant in today’s landscape: firstly, the importance of good data and global collaboration; secondly, how new technology will influence, but also drive our industry forward; and, finally, how we can combine best practice to enhance the sustainability of the built environment.
Data quality and quantity are powerful tools in decision-making processes and are indispensable to bring real estate on par with other asset classes. INREV continues to enhance the volume and robustness of data available to investors through improving and expanding the suite of indices available and to facilitate the increasing need for quantitative information. One such opportunity INREV is investigating currently is to build a global asset level index to enhance the breadth of real estate investment data at both a fund and asset level, encouraging global compatibility and greater transparency. We operate on a global playing field and, therefore, it is essential that we collaborate with other organizations to provide a global view. We do this in partnership with ANREV in Asia, and NCREIF and PREA in the US.
Hand-in-hand with robust data comes technology. New technologies such as blockchain will change the way our industry works and even how real estate is used – the need of tenants, the type of tenants. To support this, we are setting up a technology and innovation committee that will assess what lies ahead for the industry, explore the best practices to take advantage of new technologies, and find out how new technologies will change the way the built environment is utilized. As an industry, we need to be prepared for the future and share our knowledge.
Combining best practice and know-how to enhance the sustainability of the built environment is the last key focus point I’ll mention. Sustainability is an opportunity: there is future economic value in energy autonomy, there is occupier value in a healthy inner climate, and efficiency and economics to gain with the circular economy. It is also as a hedge for downside risk: avoiding stock being pushed out of the market because it does not comply to the needs and regulations anymore – there cannot be a better motivator than this to keep the build environment up to speed with sustainable developments.
The non-listed real estate investment class is stronger with an aligned, consistent and transparent approach towards data, technology and, of course, policy – the latter area being of near-term importance, but not of distraction to our long-term engagement with the former two.