Laurent Saint Aubin, manager of the Sofidy Selection 1 fund, believes that the lights will remain in the red for retail and offices. The housing component is facing the uncertainty of the German elections, due to fears of rent controls. The fund is working on an SRI label with the Luxembourg agency Luxflag.
The gaps are widening between cyclical property stocks, which are still struggling, and the resilient segment, which should continue to do well. Laurent Saint Aubin, manager of Sofidy Selection 1, gave a clear assessment and outlook at a press briefing on Tuesday.
Visible dichotomy
For him, this dichotomy is visible in the performance of listed real estate, due to the weight of economically sensitive stocks. The benchmark FTSE EPRA Eurozone index has risen by only 8.23% since the beginning of the year, compared with 19.5 % for the Stoxx 600 index and 16.75 % for his own fund, which trails the benchmark at only 65%.
"Pricing power exists in warehousing and logistics. These segments are expected to see increases in occupancy and rents, which will be able to cope with stagflationThe manager of Sofidy, a subsidiary of Tikehau Capital, believes that "this is a very good thing.
Saturated geographical areas
He expects logistics to continue to benefit from the rise of e-commerce, which is expected to reach 25% of market share by 2025 in Europe, with the greatest potential for Southern Europe. It estimates that rents in this booming segment are growing at a rate of around 2%, whereas they tended to stagnate in the past. The vacancy rate is declining and some geographical areas are even saturated, such as the North of Belgium, near the port of Antwerp.
Laurent Saint-Aubin notes that storage and warehousing property, used by individuals and small SMEs, has also escaped the crisis. He cites stocks such as Shurgard and Safestore (parent company of Une pièce en plus en France), whose shares have risen by 40.% and 42.7% respectively since the beginning of the year.
Lessons from the health crisis
While he talks about a return to favour in listed property, the expert believes that the fall in lease prices will continue in retail and office property.
"The two lessons of the health crisis are that retailers have learned to sell online and that non-executives can also work remotely, shifting the telecommuting phenomenon from city centre real estate to suburban offices, with a drop in leased space and rents", he explained.
Uncertainties of the German elections
According to him, the major retailers, such as Zara and H&M, are reducing the size of their stores, a trend that should survive the health crisis.
The question of housing remains in the face of the uncertainty of the German elections. This election is very important for listed real estate, given the very high representation of German real estate companies in the benchmark indices.
"This component could change in the coming weeks depending on the probability of a victory for the coalition led by Olaf Scholz (SPD Vice-Chancellor), with some of its allies worrying investors because of their willingness to go further in rent control mechanisms. Fears are high, like those aroused by the Berlin authorities faced with the holding of a referendum to demand the expropriation of the large real estate companies in the German capital"Laurent Saint Aubin stressed.
Regarding the carbon footprint of the various segments and in particular logistics stocks, Laurent Saint Aubin indicated that he was working on the SRI (Socially Responsible Investment) label for the fund with the Luxembourg agency Luxflag.