More than two-thirds of the world’s sovereign wealth funds have increased investments in real estate during the past 12 months as they shift from volatile equities and low-yielding bonds to alternatives that offer higher returns. With a technically unlimited time horizon on their investment commitments and a willingness to accept lower yields, the implications for other real estate investors could be significant.
From the Current Issue
Three of the topics that persistently come up at our Editorial Advisory Board meetings are “performance measurement,” “valuation” and “transparency”. This past board meeting for The Letter – Europe, conducted during the week ending 19 September at Powerscourt near Dublin, was no exception.
Poland continues to be the jewel in the central and eastern European crown. While Warsaw’s office market continues to be popular with investors, other Polish markets are also now attracting attention.
It is one of the commercial real estate industry’s latest buzzwords, but what exactly is “resiliency,” and how does it figure into an investor’s commercial real estate portfolio?
Fundraising activity in September focused on the United Kingdom and Germany.
In the past two years, investment activity in Spain has increased dramatically. Two separate Spanish property portfolios recently sold for a total of €192 million.
200 investors at Knight Frank’s European Breakfast on 17 September heard that investment volumes across Europe are set to increase further, despite a mixed economic picture. The case for European property remains strong, the firm says, with rental growth and yield improvement forecast in key cities across the continent.
Genoa is the capital city of Liguria, one of the smallest regions of Italy, located in the north of the country. The Genoa investment market is currently facing a misalignment between vendor and buyer pricing expectations, resulting in a slowdown in the market and a lengthening in the time needed to close transactions.
Commercial real estate deleveraging in Europe has unwound at greatly differing paces across jurisdictions to such an extent that some early-mover markets are now entering the final phase of legacy disposals, while in other jurisdictions the real work is still ahead.
Breaking up is never easy, particularly when a rump of underperforming real estate assets looks set to drag out an unhappy relationship. The strong alignment of interests between fund manager and investor is tested, with investors facing the prospect of an exodus of investment professionals before a portfolio’s full realisation.
On 15 October 2008, the failure of Lehman Bros forever changed the financial landscape. With Lehman’s failure and the onset of the global financial crisis came a nearly complete retrenchment of liquidity in the commercial real estate market. Then a funny thing happened. Governments around the globe flooded the economy with free money, lowering rates, buying assets (toxic or otherwise) and making promises of doing “whatever it takes” to keep global financial markets afloat.
Following a period of recessions and extremely weak growth, emerging Europe seems to be experiencing a recovery. The weather in the market across central and eastern Europe is still unstable, but rather pleasant. The region’s economic forecasts for 2014 look a lot like its weather forecasts. It is clear that the continuing confrontation between Russia and Ukraine is inflicting severe pain not only on both economies — and their people — but is also derailing further recovery in eastern Europe and the countries of the former Soviet Union.