Institutional investors in Europe, especially in countries like Germany, France and Switzerland have been showing a keen interest in investing in property driven investments. Although Brexit was a dampener and the property market became somewhat unstable, what with the new tax regimen adding to the woes of property owners. However, the current scenario seems to have changed with investments in the property sector steadily rising.
Investment house Fidelity, with the help of its group of faithful investors has managed to raise £111m through the Fidelity Eurozone Select Real Estate Fund. It took them just 12 weeks to complete the process with funds pouring in from financial institutions across Europe. Countries like Germany, Ireland, France and Switzerland have evinced keen interest and the investors probably still have faith in the real estate market, which showed some signs of sluggishness until recently.
With yields hovering around 6 to 7% at the outset, the fund seems to be quite popular with investors, both small and large. Clearly, real estate fundamentals seem to be on the rise making landlords a happy lot. The capital sector too seems to be in favour of investing in the property sector. Fidelity International is already busy with the next round of exercise for raising capital, and this time around the target is not only countries in Europe but several cash rich countries in the Asia-Pacific region, including Australia.
The focus still is on institutional investors, who are quite happy with the returns they have got until now. When compared to the returns generated by another fund, namely INREV Continental Europe Funds, Fidelity International fares a lot better with the returns from INREV hovering at a dismal 4%+. While INERV is liberal while picking stocks to invest in, Fidelity exercises a lot more caution, going into details of every single property and its merits.
According to Neil Cable who heads Real Estate at Fidelity International Fidelity’s focus on generating good income has been received well by institutional investors in Europe. Post Brexit, the investors see sense in the tactics deployed by Fidelity and favour investing in alternative sources of income through investments. They also believe that the Eurozone strategy offers minimum exposure to the UK and peripheries of Europe.
Fidelity has already invested in 5 prime assets with the investment totaling £129m. The properties include two DIY retail stores located in Germany and a logistics property in Paris and Germany.