We have just completed our tenth annual editorial advisory board meeting, held in Stresa, Italy, which was attended by more than 20 LPs and other capital-sourcing firms, including consultants and fund-of-fund investors, and which included some incredibly frank and open dialogue with nearly 20 fund managers.
Over recent years, Chinese capital has been the engine of European real estate investment, but are we now at a turning point in the investment cycle? With all of the recent press speculation about the long-term health of the Chinese economy, the spotlight will inevitably turn to whether Chinese capital, which for the past five years or so has been the engine of the investment market, is starting to dry up and whether the fuel for this engine can be as readily available as it has in the past.
When the people of Scotland decided in last year’s independence referendum not to seek to split away from the United Kingdom, by 55 percent to 45, it was thought that that was a once-in-a-generation decision safely dealt with.
The first quarter of 2015 saw the highest fundraising volume since Q3 2008. The quarterly volume of €27.8 billion ranked as the highest Q1 total since FundTracker began collecting data in 2007.
At the annual conference of EPRA, the European Public Real Estate Association, held in Berlin on 9 September, Tim Leckie, real estate analyst at J.P. Morgan Chase & Co, told delegates that investors in European listed property companies will benefit from around two years of low interest rates, broadening rental growth and rising asset values.
By 2030, the purchasing power of the E7 group of countries will overtake that of the G7, and Asia Pacific’s middle class will be larger than Europe’s and North America’s combined this year, according to PwC.
It is hard to believe that that was only a year ago, particularly because China has recently become what many investors fear most from an economic superpower — unpredictable. In the past few months, the country’s image of stability has fractured because of a combination of financial missteps and economic underperformance. Meanwhile, US real estate investors have been watching things unfold safely outside the impact zone of this economic malaise, treating it primarily as a peripheral issue. In all likelihood, that is the right approach — but what if it’s not?
How do you make big decisions? Do you study the data, or are you more likely to decide based on instinct and past experiences? Maybe it depends on the size of the decision. When making multi-million dollar/pound/euro real estate investment decisions, surely investors dismiss instinct in favour of more thorough, reasoned analysis?
As summer draws to a close and we return to our desks, it is at this point in the year that we remark on what has and what hasn’t changed, realise just how much we still have to complete and brace ourselves for the shift in seasons.
Europa Capital has launched its fifth pan-European value-added fund. Europa Fund V is targeting €750 million in equity commitments.