Real Estate as a Financial Asset: Office building investment decision


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What Is a “Commercial Property?”

However, while economic developments in Europe have slowed down somewhat compared to the dynamic movements of last year, corporate demand for space has intensified. On a gross basis, in Q2 , around 3. It also reflects the trend toward coworking as well as economic factors. In most cities in Europe, the supply of new office space cannot keep up with the high demand. The consequence was another fall in vacancy rates.

Large companies are finding it difficult to find additional space to suit their requirements, but even markets such as Amsterdam, Frankfurt, Dublin and Warsaw, which reported double-digit vacancies over the past few years, are seeing a significant decline in vacancies. Aggregated over the 40 most important markets in Europe, vacancy rates over the past four years have fallen from JLL reports that in Q2 , rents in Europe rose by around 4. German and Dutch cities currently show the highest rates in rental price growth. In London however, vacancies are roughly stable and rents continue to be under pressure as tenants are still cautious.

In , the City of London submarket expects completions to be at a level of roughly 5. The beneficiary of the weaker trends in physical retailing is logistics real estate, as the multi-channel distribution approaches in retailing are increasing the need for storage capacity. In continental Europe, the rise in rents was less pronounced at 2.

However, the indicators of market demand are all positive and the volume of logistics space take-up is seeing an uptrend in many European logistics hubs. In Germany, the volume of logistics space take-up since has more than doubled according to our data, but construction activity in this sector was also strong throughout Europe as a whole. There are various reasons for this. The availability of development land in semi-urban locations and the preference of online platforms such as Amazon for new build, modern logistics real estate were factors that favor this type of performance.

Older and over-sized warehouse space is not a top priority for tenants. The situation in European commercial real estate markets remains comfortable. The current economic upswing is likely to provide a further boost to market rents in the office and logistics real estate sectors, despite their market situations differing. In addition to cyclical drivers, both segments are also being supported by structural factors such as the trends toward coworking and e-commerce.

Masterthesis - Asset Management AI/HCI

Although property transaction prices have already risen significantly in the past few years, the high yield differentials suggest sound valuation levels. The complexities of real estate investment transactions require indepth domain knowledge, high efficiency level and transparency. We adopt a proactive, transparent approach, backed by strong market intelligence and strategic advisory, to ensure maximum financial rewards for the clients. Our investment banking and corporate finance specialists are adept at navigating the complexities of equity and debt financing.

Armed with extensive knowledge of capital markets, our experts customize financial structures for clients, on a case-by-case basis, aligned to fund house dictates. We are skilled at structuring bulk residential transactions between property owners and investors.

About Principal Real Estate Europe

Land, the most expensive component of real-estate development, is increasingly scarce. The price of land has increased exponentially in the last decade, putting immense pressure on development costs. Acquiring land at the right location, the right time and the right price is the key determinant of real-estate developmental success.

Our expertise expands beyond land assessment to formulation of joint developments, joint ventures and development management structures for clients. Our experienced team, backed by robust Consulting and Research functions , provide informed feedback and an insight into latest real estate trends to facilitate decision making.

4 Simple Ways to Invest in Real Estate

Our core capability lies in executing specialised transactions like Built to Suit options for both corporate and industrial occupiers. We boast of our market reach to source yield generating assets like tenanted properties to cater to the investor community. Our asset management team ensure committed service and easy management of the property to obtain maximum property value on behalf of the client. We cover asset management across the various real estate asset classes including office, retail, residential, mixed use and industrial spaces.

We manage strategic, operational and financial aspects of real estate investments. We work with the UHNIs, family offices and institutional funds.

Office Building Investing for Beginners

We assess, track and monitor projects covering marketing, finance, legal, tax, technical and construction aspects. Our portfolio comprises of real estate assets such as land, commercial, hospitality and residential properties.

After all, you can't have your eggs in one basket, right? Investing in real estate presents challenges that do not exist in capital markets. Property faces the risk of damage, tends to deteriorate over time, and often takes a decidedly more complex process to buy and sell. Real estate asset management concerns itself with mitigating risks and promoting valuable improvements. It also navigates the complex legal and tax rules governing investment property in the United States.

Understand the advantages and disadvantages of investing in Commercial Real Estate.

Diversification is important in real estate investments just as in traditional capital market investments. Large investors build portfolios that consist of different types of property. They also make sure their holdings span a variety of markets. To demonstrate this point, you can see why a real estate investor would not want all of his property in New Orleans during hurricane season, at least not without substantial insurance coverage.

Portfolio management involves asset allocation and selection informed by experts in property development and maintenance.

Choosing the right assets—in this case, properties—should be compatible with the client's investment strategy, risk tolerance, and investment goals, just as with any other type of investment portfolio. There are several factors to consider when choosing properties for the portfolio such as purchase price, maintenance costs, potential repairs, any holding costs, and, if possible, a sales price in the future. An important point to note with real estate portfolios, though, is that most of the asset management takes place after the portfolio is chosen.

Asset managers in the real estate industry tend to specialize in particular types of property, regions, or operations. A very large role of the asset manager consists of market research, data analysis, and revenue forecasting. Leases and rental agreements need to be structured in a way that attracts tenants, provides flexibility, reduces vacancies, and limits liability exposure.

Resources need to be apportioned strategically—badly managed resources negatively impact portfolio value. In many cases, the asset manager selects a property manager.

INTERNOS and Principal

The asset manager specializes in financial matters, while the property manager specializes in the functioning of property. This relationship is a crucial portion of real estate investing, much like the way a board of directors must work closely with the CEO or COO of a corporation. A real estate asset manager is different from a property manager, who deals with the day-to-day operations of a property.

Real Estate as a Financial Asset: Office building investment decision Real Estate as a Financial Asset: Office building investment decision
Real Estate as a Financial Asset: Office building investment decision Real Estate as a Financial Asset: Office building investment decision
Real Estate as a Financial Asset: Office building investment decision Real Estate as a Financial Asset: Office building investment decision
Real Estate as a Financial Asset: Office building investment decision Real Estate as a Financial Asset: Office building investment decision
Real Estate as a Financial Asset: Office building investment decision Real Estate as a Financial Asset: Office building investment decision
Real Estate as a Financial Asset: Office building investment decision Real Estate as a Financial Asset: Office building investment decision
Real Estate as a Financial Asset: Office building investment decision Real Estate as a Financial Asset: Office building investment decision

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