In Part 2 of this article on Turkey, the authors discuss how favourable demographic and economic trends have resulted in growth in consumer spending and widespread real estate development, particularly in the retail sector and the shopping centre subsector. Part 1, in the July/August 2012 issue, looked at the country’s macroeconomic and political environment.
Today's economic environment — which presents an acute problem for pension funds that are squeezed between low and falling asset returns and higher and increasing liabilities — calls for rethinking, or at least challenging, the way in which some pension funds approach real estate investment. This short article is intended to be a bit provocative and to challenge some of the common wisdom.
Arguably, the economic context for institutional investment has never been more uncertain. This is particularly the case in Europe, where the euro zone sovereign debt crisis overlays substantial additional risk. Normally, an illiquid asset such as real estate would be out of favour under such circumstances, with investors looking for highly liquid assets to maintain flexibility. Yet the underlying qualities of real estate mean that in many ways it is well suited to cope with today’s volatile economic environment.
Cross-border investment in real estate raises the question of movements between the currency of the country in which the real estate assets are located and the home currency of the investor. Should investors hedge, or is the strength of the currency in a foreign location all part of the attractiveness of overseas real estate investment?
MGPA has acquired the KOMM shopping centre in Germany from Hochtief Projektentwicklung GmbH, on behalf of a North American institutional investor.
This is what happened to German open-end property funds — a favoured long-term investment vehicle for conservative, prudent German retail investors — which went through a period of heady returns in the first part of the 2000s; which saw high inflows of new monies from both retail and institutional investors seeking those returns; and which then experienced a rush for the door when the market turned, from both the long-established and the newer investors.
Union Investment Institutional Property GmbH has created two funds with a target volume of €250 million to consolidate the existing indirect property investments of health insurance company Süddeutsche Kranken- und Lebensversicherung (SDK Group).
EPI, a fund co-advised by Tristan Capital and AEW Europe, has sold a shopping centre in Lappeenranta, Finland, to its anchor tenant.
Cushman & Wakefield Investors (CWI) and Scottish Widows Investment Partnership (SWIP) have acquired a shopping centre in Dijon, France, on behalf of the Pan-European Urban Retail Fund (PURetail), which is managed through a joint venture between CWI and SWIP.
Prologis, on behalf of the Prologis European Properties Fund II, has acquired three fully-let distribution facilities in Barcelona from the Morgan Stanley P2 Value open-end real estate fund.
Orchard Street Investment Management LLP, on behalf of St James’s Place property funds, has acquired an industrial estate near Heathrow airport for £6.15 million (€7.7 million).
Natixis Asset Management and AEW Europe have partnered to launch a Senior European Loan Fund with a first close of €240 million in equity.
AXA Real Estate Investment Managers, on behalf of its European Added Value Fund (€AVF), has sold a 15-property portfolio in Sweden to FastPartner.
Kennedy Wilson has acquired The Alliance, a luxury residential high-rise in Dublin, marketed by Savills on behalf of receivers Grant Thornton.
IVG Immobilien AG applied for admission to the Munich Stock Exchange of a German REIT, IVG Immobilien Management REIT AG, in July.
Many major global markets have now recovered to pre-recession levels, particularly those cities with commodity-driven economies. Canada’s energy boom has spurred capital value appreciation in Toronto and Vancouver above other North American markets.
Internos Real Investors has held a first close of its Internos Hotel Real Estate Fund with €75 million in equity from four German institutional investors.
A joint venture between Hines and HSBC Alternative Investments Ltd (HAIL) has acquired the Broadgate West office complex in the City of London from a private company owned by Peter Marano and Michael Dennis.
Henderson Global Investors is launching a German Logistics Fund, which will target good quality German logistics assets in locations such as Stuttgart, Bremen, Hamburg, Munich, Frankfurt, Düsseldorf and Cologne.
Hannover Leasing, on behalf of a closed-end real estate fund, has acquired a class A office building in Rotterdam for €34 million.
Forum Partners, through its Forum European Realty Income Fund III, and Office Space in Town, a specialist serviced office operator, have made the first investment through their joint investment vehicle, London Serviced Offices Ltd (LSO).
Cordea Savills has held a first close of the Prime London Residential Development Fund with £25 million (€31.5 million) of initial equity from a major global private bank.
Commerzbank is winding up its commercial real estate financing and ship finance segments into a new Non Core Assets (NCA) segment.
Boots Pension Scheme has hired Schroder Property Investment Management Ltd for a diversified UK property mandate.