Greece is a dark cloud hanging over Europe, but not just for the real estate sector, Barbara Knoflach, CEO of SEB Asset Management, said in an interview with PropertyEU at Expo Real. In fact she added, a Greek default will hit fixed income and equity the hardest. ‘We could see a big uplift in demand among major investors for tangible assets, like real estate.’

If Greece does default on its loans, risk premiums could rise by as much as 200 basis points, Knoflach said. ‘We’re already seeing a rise in London and France, so it is likely to spread to Germany. At the same time, if Europe does enter an economic downturn, interest rates will actually fall.’

Knoflach is optimistic about the outlook for the German real estate market, and sees little of the overheating others are predicting at EXPO REAL.

‘The German market is a safe haven for investors. It’s still very fairly priced and that’s keeping the market liquid. Economic uncertainty is making big corporates very cautious on expanding, however, so there will be fewer big deals and it’s taking a lot longer to finalise big leases. The biggest challenge right now for investors is getting financing for deals. And that situation is likely to worsen with the introduction of capital requirements legislation like Basel III and Solvency II.’

The gap between core and non-core property (or prime and secondary) has widened recently, Knoflach said, adding that the gap could actually narrow if demand for property does increase in the wake of a Greek default. ‘We’ve let upwards of 120,000 m2 of space so far this year, and I don’t really see that slowing.’

SEB is still very active, on both the buying and selling fronts. The company recently bought a EUR 16 mln property in Helsinki and a EUR 38 mln property in Warsaw. Knoflach said SEB is in talks on a number of projects, but declined to give any details. Knoflach does expect to see a sharp cooling of all European markets outside the major core markets such as London, Paris and some German cities. ‘The place to be right now is Asia, and SEB is in a great position as we got into the Asian market early. We’re currently preparing to launch our second Asian fund and I expect to see healthy interest in that fund.’

PropertyEU filed 70 news stories, published three Daily News magazines and conducted 15 PropertyTV interviews from Expo Real. Click on the link below for the full overview.

 

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