The first open air tourism site under the plan is located in the Venice region of Italy – the country where PGIM is focusing initial attention. Over time, other countries, most notably Spain, could be added as the investment firm aims to assemble a European camp site portfolio of between €250 mln and €300 mln.

It is currently busy assessing both single assets and portfolios, focussing on large open air tourism sites generally understood in the industry to be those containing more than 500 pitches and mobile homes and typically valued at between €20mln and €50 mln each.

PGIM Real Estate’s European value add strategy primarily targets mainly much larger asset categories such as urban logistics, residential, and prime offices. But its value add strategy has an allocation to ‘alternatives’ into which bucket open air tourism belongs.

Nabil Mabed, head of France, Spain and Portugal, and manager of PGIM Real Estate’s European value-add strategy, said he liked Europe’s open air tourism industry, partly because of its steady growing. Today, it generates approximately €2.5 bn of revenues. It also remains an environmentally friendly investment that plays into a leisure trend of “going-back-to-nature” among some age groups of holiday makers.

Another relevant trend is the growing demand among quite high-income-bracket 25-40-year-olds opting for camp site holidays, perhaps also encouraged by better quality mobile homes and on-site amenities such as restaurants. At the same time, such holidays remain affordable.

In addition, the business case seems compelling as gross operating profits trend at around 50% - perhaps as much as 10-15% higher than for other forms of hospitality assets, noted Mabed.

PGIM Real Estate is bringing relatively simple capex improvements to bare on its assets in order to generate value add returns by increasing revenue for example by replacing mobile homes with upgraded versions, and making improvements to swimming pools as well as F&B and adding various services.

Although France is Europe’s largest open air tourism market with an estimated 30% share, it is Italy – Europe’s second largest market - that PGIM Real Estate is primarily targeting.

PGIM Real Estate has created a management company to curate Italian assets, beginning with the debut one at Cavallino, Veneto, added Mabed.

Though private equity funds have been active in the sector for years, it remains a fragmented market. Many assets remain under family control with little prospect of them shaking loose anytime soon. This makes it challenging to source assets, but the firm is having success and is optimistic.

Several reports have been published into the global camping and caravanning market. In March, Research and Market estimated the market to be worth nearly $44 bn in 2020. It said millennial campers, rising participation in outdoor activities, rising expenditure on leisure, and government initiatives were expected to drive the market, whereas the impact of Covid, political uncertainties, climate change, and other major factors could hinder it.

It too noted the highly fragmented market given the large number of small players. The report cited Bourne Leisure, Parkdean Holdings, and European Camping Group as being among the major players.

Europe is the second largest market behind North America.

In 2020, KKR acquired Dutch holiday park group Roompot for €1bn for its core investment strategy.