The European commercial real estate is estimated to represent some EUR 7.27 trillion of assets. While still small compared to the US and Asia, it has been undergoing significant changes in recent years.
Studies show that when comparing the long-term returns of listed and unlisted real estate vehicles based on the same underlying assets, the listed sector is an effective proxy for direct property investment. However, listed real estate (LRE) has the benefit of higher transparency, diversification, unmatched liquidity and a lower hurdle to global access compared to direct property.
In this paper, we discuss the recent trends and developments in the European LRE and compare features of LRE vs unlisted real estate investments.
- New segments of real estate are emerging, reflecting changes in the economy; as a result, some traditional segments of real estate can now become available to a wider investor base via LRE vehicles.
- Listed and unlisted real estate vehicles can be complementary in a real estate portfolio due to the unique investment access to certain segments of real estate through specific vehicles and the possibility of tactical variation of real estate allocation through LRE vehicles.
- COVID-19 crisis had a different impact on different segments of real estate, having accelerated some trends and created new challenges and opportunities. It remains to be seen if these changes are transient or more permanent in nature.