Brexit Uncertainty Creates European Opportunity9 Oct 2019
I see the current political and economic uncertainty as an opportunity for Avison Young as we set about building a disruptive real estate advisory business across Europe.
With the acquisition of GVA in February 2019, Avison Young made a significant investment into the UK despite Brexit. We have subsequently announced an ambitious continental European expansion programme, and in so doing, making a considerable contribution to doubling the size of the global business over the next 3-5 years.
Thus it is evident that Brexit does not frighten us. We see it as a short-term consideration whilst we are building for the long term in a highly disruptive real estate marketplace.
The starting point is our existing presence in the UK, Germany and Poland. We also have access to the former GVA Worldwide affiliate network which we will seek to transition across by the end of 2019.
In looking to Europe for investment priorities, we will follow the money. Germany remains the largest market by transactional sales, followed by UK, France and the Netherlands. We are well advanced on M&A discussions in these countries. Indeed we have recently completed the acquisition of Völckers & Cie Immobilien GmbH Real Estate Advisors in Germany.
Our focus will be on the major European cities initially. We will begin by building a ‘spine’ across Europe linking the main centres of London, Paris, Amsterdam, Frankfurt, Berlin and Warsaw. Dublin will play a key role in this spine given its link to the EU in a post Brexit world.
Cities drive economies. The impact of urbanisation is regularly articulated, and we are focused on understanding and influencing every aspect of city development in the interests of our clients - whether they be investors, occupier, landowners or developers in the public or private sectors.
The major cities represent significant opportunity regardless of Brexit and other challenges - especially for the distinctive offer that we will bring.
The Greater Paris Region, with a total stock of 52 million sqm of offices, is the third largest office market in the world after Tokyo and New-York. It’s also one of the most highly transparent and organised real-estate markets in the world. It has the biggest GDP in Europe and is also the first European market in terms of size of its stock or leasing activity (with on average 2.3 million m² take-up annually). It’s also the second biggest investment market in Europe. It is attractive to us because of its maturity, liquidity and diversity, and its appeal to cross-border investors.
Amsterdam is located within the Randstad- one of the largest conurbations in Europe with 7.1 million people. In addition to the four largest cities in the Netherlands, the Randstad also incorporates Schiphol Airport, Rotterdam-The Hague Airport, and the Ports of Rotterdam and Amsterdam. With English being widely spoken, fantastic communications networks, its central location in Europe and its obvious cultural strengths Amsterdam presents significant opportunity for us.
One city that is clearly benefiting from Brexit is Frankfurt. In 2018, the value of transactions in the city increased by 36 per cent to an all-time record of €10.4bn, turning Frankfurt into Germany’s hottest market for commercial real estate. 25 UK-based banks have chosen to move operations and staff from London to Frankfurt.
We also see Berlin as another priority German city. Its transformation has been – and still is- phenomenal. Arguably one of the ‘coolest’ cities in Europe, it’s also a start-up leader with over 500 start- ups per year, driven by the city’s creative culture and the influx of young talent. This all translates into a strong real estate market, but also the talent and innovation we are seeking to help drive our European business.
Further east Poland is currently one of most rapidly growing economies of the EU with a GDP growth rate of 4.4%. Warsaw sits at the heart of this economic growth and is an obvious location for investment and indeed as a stepping stone into markets further east.
Building from these hubs, we see huge potential in creating a truly integrated and seamless service in Europe that delivers clear, added value from the deployment of the best skills, utilising the most effective technology and fully understanding city by city dynamics. The fact that we have established this offer in the UK allows us to take this approach across the continent.
However the real ambition is not simply to build this platform and replicate what others are doing or have done. As we build our service across the real estate life cycle, putting the focus totally on our clients’ needs we are seeking to draw into our offer businesses and people that are changing thinking about real estate. We can, and will, be disruptive and we are well positioned to do take charge of opportunities that arise.
Technology, of course, is a rising tide and we will rise with it, but we remain focused on giving the best talent the opportunity to fulfil their potential in deploying that technology. As always, we are seeking to offer an attractive working environment for the most creative minds interested in our sector and indeed in the built environment generally.
I am already seeing a broadening of the range of professions coming into our business. We are recruiting into the business architects, engineers, economists, IT specialists, urban planners, considering and realising the value of the whole built environment in addressing our clients’ requirements.
Our ethos in Europe remains focused on the impact we can have on society and on people’s lives though the work that we do, and we will continue to ensure that we enable real social, environmental and economic benefit at the same time as fulfilling the commercial objectives of our clients.
Uncertain situations create opportunities for growth, although there are undoubtedly challenges for any business establishing, or growing at this time in Europe. The relatively weak pound against the Euro, may bring short term investment advantages in the UK, but does not assist financial flows in the opposite direction.
Equally, whist our plan is to create a joined up European business, the different legal and political backdrops country by country and indeed cultural differences present challenges to ensuring this seamless offer.
Despite these challenges, we strongly believe that Europe offers enormous potential for businesses looking at Europe as a potential growth area.