Key takeaways from the INREV North American Conference 2024

By Tamas Mark, Global Head of Real Assets, and Bram Eijsbouts,  Chief Commercial Officer, Luxembourg and the Netherlands

We recently attended the INREV North American Conference, an annual event which brings together professionals in the European non-listed real estate industry. This year it was in New York and featured the theme: ‘Continental shifts: harnessing value from evolving European markets’.

Here are our key takeaways from the conference:

A shifting landscape across the globe

Every market has been affected by the current shifting investment landscape rippling across the globe. Rising geopolitical tensions have had an impact. The industry is predicting higher costs and slower growths – in other words, continued uncertainty will influence the short- and mid-term for investors.

However, it’s not all bad news. There are clear signs of recovery in the European market, with opportunities in niche sectors, such as life science, student housing, data centres, logistics assets and residentials.

During his presentation, Justin Curlow, Global Head of Research & Strategy at AXA IM Alts, highlighted that pricing pressure in continental Europe and Australia has begun to alleviate. He also mentioned that the capital value correction is anticipated to finish by mid-2024, with Europe leading ahead of the U.S.

The rise of data and artificial intelligence (AI)

The real estate industry, like many others, is recognising the importance of data. We’re seeing an increased demand for data centres as digital infrastructure requirements grow.

Another buzzword at the moment is AI. Large asset managers are under pressure to develop their own GPTs, and many are already using NDAs for simple tasks.

While AI has great potential in real estate management, we need to keep in mind that generative AI presents risks, for example, to privacy. It’s essential for teams to be properly trained in how to use AI in a responsible way before embedding the technology in their business.

The potential for success in certain asset classes

As previously mentioned, the recovery of the European market is creating opportunities for niche markets.

Hospitality has emerged as an interested asset class due to tourist numbers outperforming forecasts. We’re also seeing a focus on retail and build-to-rent, however, the latter may be at risk of political intervention and increased rent caps.

Unsurprisingly, new office developments with high ESG standards are proving resilient, but the office sector in general is facing risks with further potential value decreases in the short term.

European real estate debt remains popular, and senior and mezzanine financing continues to attract new capital. It’s predicted that many asset managers will continue with this trend by switching to debt from their equity products.

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