Insurers ready to go where banks are reluctant to tread
Axa Real Estate is getting ready to invest up to €1.5bn in European commercial property, as banks withdraw from this market following the dive in prices and the credit crunch. Axa’s property unit has already raised €350m for its first dedicated debt fund, from several European insurance companies and from the Axa group itself. In addition, it has equity commitments of more than €1.15bn from insurance companies, taking its total firepower to around €1.5bn. It has already invested around €1bn in the sector.
Axa thinks that insurers are poised to become major investors in property once again, as banks retreat from the sector. Its new fund has an eventual capital target of around €1bn. The FT notes today that although the fund will invest across Europe, it will have a particular focus on the UK market after the recent bounce in prime property prices.
Isabelle Scemama, head of debt at AXA REIM SGP, which is adviser to the fund, said: “This increases our total underwriting capacity to some €1.5bn at a time when most banks have a very limited capacity to act. We see a clear opportunity to grow this market and believe that it eventually will follow the US example where around 20% of real estate transactions are underwritten by long-term investors such as insurance companies, leading to a far more liquid and transparent market in Europe.”
