Evli's results, published last week, show that investors are still attracted to alternative investment funds, which belong as part of a well-diversified portfolio regardless of market conditions. The EAB merger raised the total value of real estate under management by Evli to over €1 billion for the first time. Evli's experts believe that investors now have a better understanding and awareness of alternative investments, which makes them more attractive.
While the value of Evli's real estate investment properties has increased significantly, the total leasable area of the properties has already reached almost half a million square metres. Real estate investment and alternative assets are now attracting wider investor interest, as they have proven their ability to deliver returns even in challenging times.
"The continued popularity of real estate development funds, even in difficult times, is explained by the fact that they target good returns through persistent work, whereby short-term market fluctuations should not have a major impact on overall returns. The current market situation may also open up new opportunities for investors who have the funding to acquire sites and carry out development projects. In particular, real estate development funds, which seek both good annual cash flow returns and capital appreciation, are quite unique products in the Finnish market and are attracting more and more interest," says Jaakko Ristola, Head of Real Estate at Evli.
Evli has responded to the growing interest by strengthening its real estate asset management offering and expertise and is thus well-prepared to serve the growing demand.
"After the closure of our third real estate development fund at Christmas, we were already exploring the possibility of setting up a fourth fund in the near future. Our second residential fund, which builds rental housing itself, has managed to secure good investment opportunities despite the sluggish housing market. In addition, the EAB merger provided us with an excellent opportunity to expand our real estate team. The team now has 17 employees, compared to nine when it was Evli alone," says Ristola.
Increased understanding of alternative investments
Tero Tuominen, Chief Investment Officer of Evli’s alternative asset classes, has noticed that investors increasingly have a better understanding of the benefits of alternative investments.
"Demand for alternative investment products has remained strong despite the challenging market conditions. Investors have recognised the need for this asset class as part of a well-diversified portfolio and are seeking to invest in a manner that is programmatic and diversified in terms of timing over the market cycles. It is important that we are able to offer investors even better diversification in products whose mutual correlations vary and the dynamics, even in relation to inflation, are different. For example, the NCREIF Timberland index, which tracks unlisted forestry investments, rose significantly in 2022 while equity and fixed income investments fell at the same time. Real estate (NREIF Real Estate) and infrastructure investments (EDHEC Infra300) also delivered positive returns. We currently have a good offering of real estate funds with different strategies, as well as private equity funds investing in growth equity, private equity, infrastructure, debt, forestry and renewable energy," says Tuominen.
For more information:
Jaakko Ristola
Head of Real Estate, Evli Fund Management Company Ltd
Tel: +358 40 8201 422, jaakko.ristola@evli.com
