Markus Arnold, CEO of Arnold Investments talked to Property Forum about the key drivers of real estate investment in Europe and he also shared where the company is opening up new locations next.
How did Arnold Investments perform in terms of brokered deal volumes in H1 2022? What is your outlook for the second half of this year?
In the first six months, we closed 60 deals and achieved €350 million in transactions, which is the best result in the history of Arnold Investments so far. We expect this positive development to continue in the second half of the year, but this, of course, depends on future economic developments.
Which asset classes are the most popular ones among investors?
Strengthened by the pandemic, there is still a very high demand for logistics real estate. Investments in the residential sector always sell and are therefore still in unconstrained demand. Retail is still strong in the commercial sector. However, these properties do not have to be exclusively in central city locations. Retail parks in rural regions are currently particularly popular, and hotels are also performing surprisingly well at the moment.
Did the war in Ukraine have any impact on your CEE-based operations? Have you observed any changes in investors’ sentiment since February?
Unexpectedly, not really. In our branch in Slovakia, we have had the best year since its foundation, despite the immediate geographical proximity to Ukraine. The war has certainly slowed things down but not changed them, and our investors are strategically interested in the long term.
Is ESG compliance becoming a core criterion in the closing of transactions?
The topic of ESG is becoming more and more relevant, not least because sustainability criteria are playing an increasingly important role in the financing of investments. Decency is anyhow one of our most important corporate values and we, therefore, appreciate this development.
Most European economies are facing high inflation, while interest rates are going up. What does this mean for the financing of property transactions?
Due to the current monetary policy and, among others, the increase in the minimum equity ratio, financing real estate is becoming more and more expensive and difficult. However, the past has shown that the demand for real estate investments has remained stable and that investors have mostly been able to achieve high increases in value. Even if this trend curve should flatten out in the short term, this asset class will remain attractive and profitable.
Which markets are driving growth for Arnold Investments? Do you plan any expansion?
The successful first half of the year encourages our expansion strategy. We are currently preparing our market entry in Scandinavia, the Benelux countries and Poland, and the establishment of branches in Amsterdam and Stockholm is just around the corner.
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