The investment arm of the French insurer AXA has announced plans to step up its UK property investment portfolio as it re-calibrates its exposure to post-Brexit UK. The investor has reached the conclusion its portfolio has become imbalanced as a result of several years of Brexit uncertainty.
The investor has held off on increasing its investment exposure to the UK property market in recent years and with the economic climate now more certain and predictable, AXO is back on the acquisition trail.
Speaking yesterday at the Mipim annual property conference in Cannes, Europe’s biggest real estate investment event, global head of AXA Investment Management’s real estate assets Isabelle Scemama, outline the investor’s plans. Commenting on the resilience of AXA’s existing UK property investments over the uncertainty of the past few years she said:
“Letting 62 storeys in the centre of London, with Brexit and then Covid — it’s bad luck for an office building of that size. But [it’s] 80 per cent-let and continues to generate traction.”
“The lesson is that, whatever the backdrop, there is a lack of these types of prime premises that can accommodate the needs of tenants.”
That’s given the insurer’s real estate investment arm the confidence to look at major projects in the UK primer commercial property sector. When asked if they would consider building another City of London skyscraper like 22 Bishopsgate, which Axa built and now manages on behalf of a consortium of investors, she answered in the affirmative with “yes, we could”.
AXA’s current UK property investment portfolio is valued at around £8 billion and encompasses assets from 22 Bishopsgate to shopping centres but is now considered “underweight” as a result of conservative new investment over the past several years. Ms Scemama said AXA’s investment strategy over the next few years will seek to rebalance that by increasing spending on UK property assets. She explained:
“The UK is the biggest market in Europe and the most transparent. The good news is that we are underweight in the UK so we could do more. We are going to increase [our exposure to] the UK and so we are reviewing a lot of opportunities.”
AXA invests in commercial property like offices, which account for around a third of its UK portfolio, and it is also keen to increase its exposure to growing and new classes of commercial property including logistics, data centres and laboratories. However, residential property investments are also very much on the table, with Scemama saying they also “make perfect sense” for AXA. Several major institutional investors have made major investments in UK-based ‘build to rent’ residential projects in recent years and it wouldn’t be a surprise to see AXA enter that sector given Scemama’s comments.
However, AXA’s approach will be opportunity based rather than setting fixed targets for the value of investment into UK property over the next few years, with Scemama concluding:
“The UK will represent an important part of our capital deployment over the next few years — but I don’t know if it will happen in 2022, 2023 or 2024. We want to maintain flexibility and wait for the best opportunities.”
