Axa gears to buy office space worth €800m in European cities

Axa Investment Managers, the French fund house, is not too worried about predictions that the post-pandemic world will see more people working from home and office real estates shrinking. Going contrary to these predictions, it is investing nearly  €800m (£692m) on a revival in demand for office working after the pandemic subsides, according to a report.

Axa IM Alts has raised €799m to invest in office spaces all over Europe, including in the UK, German and French cities.

The company wants to develop “high quality, flexible office space aligned with future working habits”. It believes that green offices with zero to no carbon footprints are the future of the world. Its plan definitely sees the revolution in working habits as a passing phase and does not believe big office spaces will become redundant.

“To launch this kind of development strategy you have to believe there’s a future for offices,” Ian Chappell, head of development and value-added funds at Axa IM Alts, told the FT.

Axa’s plans are announced amid many companies announcing hybrid work plans for the future where workers will be working part-time in offices and the rest from home.

“Occupiers are far more concerned about how buildings of the future will meet ESG [environmental, social and governance] requirements . . . those will be the building that investors will want to buy first,” said Chappell.

Many companies have declared that work from home will be the new norm now. Citigroup, PwC and the big tech companies are all open to remote work cum working from an office when needs.

Nationwide Building Society has said that its 13,000 workers can operate from anywhere they like. HSBC is shifting 70% of UK call center staff to permanent home working.

Chappell said the market for offices would be divided between falling rents at older, less desirable buildings and solid demand for newer workspaces that meet the changing requirements of corporate tenants.

Generally, city-centered high-end offices are in demand by investors during economic crisis times as they are a steady source of income, and rich and capital flush clients represent a steady income. Mat Oakley, head of European commercial property research at real estate company Savills, said: “I haven’t had a discussion with any real estate investor this year that hasn’t touched on whether offices are quite as core now [as a result of coronavirus]”.

All recent research figures show that more employers are ready to adopt home working as a viable move. “This whole 12 month has really put obsolescence in the spotlight . . . Inevitably there will be more pressure to repurpose offices,” said Chappell.

Experts believe that office rents will fall in low-end places but will remain high in newer developments. According to global real estate company CBRE, as much as £45bn of global capital is targeting the London office market — the largest volume since the company stared tracking investment in 2012.

The UK has performed better in the vaccine rollout.  “Take Brexit out of the equation and the emergence from lockdown is pretty much the only factor driving investors at the moment,” Oakley said. 

In a report last month about the post-COVID-19 office market in London, BDO wrote: “We would advise all stakeholders to take another look at their office portfolios. The aim must be to understand which offices are, or could become, the desirable, high-quality offices of the future and, to formulate a plan for dealing with those other office buildings that might be left behind.”

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

General Motors Q2 2021 Results Recap

General Motors Q2 2021 Results Recap

General Motors Q2 earnings and revenue missed Wall Street’s expectations even though the world’s leading automaker beat earnings projections.
3 hours ago
UK casts doubt over Nvidia’s Arm acquisition over security risks

UK casts doubt over Nvidia’s Arm acquisition over security risks

UK considers blocking Nvidia’s Arm acquisition due to potential risks to national security. The $40 billion takeover faces similar fate in America, China and the European Union.
10 hours ago
PepsiCo relinquishes control of Tropicana for $3.3 billion

PepsiCo relinquishes control of Tropicana for $3.3 billion

PepsiCo will sell Tropicana and other juice brands to a private equity firm in exchange for pre-tax proceeds of 3.3 billion dollars.
1 day ago
Sanofi bets big on mRNA future with Translate Bio acquisition offer

Sanofi bets big on mRNA future with Translate Bio acquisition offer

Sanofi’s CEO Paul Hudson is dead serious about mRNA technology and capabilities with a $3.2 billion acquisition offer to Translate Bio.
1 day ago
Top 6 Energy Dividend Stocks to include in your portfolio

Top 6 Energy Dividend Stocks to include in your portfolio

The entire energy sector yield hovers around 4%, according to the Energy Select Sector SPDR exchange-traded fund.
2 days ago
Monte dei Paschi performance below par in EU banks stress test

Monte dei Paschi performance below par in EU banks stress test

The depletion of capital at each bank under the test’s harshest scenario will be closely scrutinised, and could potentially lead to hostile takeovers
4 days ago