COMMENT: Keep calm and carry on

When it comes to real estate investing in Europe right now don't be naïve and don't be too scared either

Right now there are so many things to be mindful of when investing in Europe.

For starters, there are the current high prices for real estate in the region.

Then there is the possibility of Greece defaulting and leaving the euro, and further down the line, there is a vote in Britain on a Brexit. On the face of it, neither of those things look good for business in the Eurozone.

Also, interest rates must rise in Europe at some point – though no-one knows when. There are just mounting indicators like the Fed’s Janet Yellen this week hinting at a rate rise beginning in the US before the year is out.
These factors combined make life a little uncomfortable for both fund managers and investors alike because they present uncertainty and unknown risks – no markets like those two things.

But rather than become inert, the best advice on offer is to continue to operate without too much fear while at the same time maintaining discipline and not being naive.

Jeff Jacobson, chief executive officer of LaSalle Investment Management, said as much as he opened the two-day PERE Europe Summit this week.

The key takeaway from the event was that one just has to live with geopolitical risk and uncertainly. Certainly, you do not ignore factors such as a Grexit, but you cannot get too hung up about such things either.

Providing some reassurance about carrying on, CBRE's head of EMEA research, Neil Blake, showed a chart that suggested how single, large geopolitical events, including acts of terrorism, historically do not indicate how real estate as an asset class will perform.

Further, remember that Europe comprises an eclectic mix of markets – some large and transparent, others smaller and opaque – but each with its own specific set of opportunities when it comes to property investing.

And if you want just one example of fund managers doing as Jacobson suggested by not being too scared or naïve even in places of extreme geopolitical volatility, try this: we know of one firm tying up real estate deals in Greece itself.

We promised not to divulge details of the firm concerned, but suffice to say there are ways of structuring real estate investments without handing over money yet.

This is perhaps an extreme example of how very experienced firms with local presences are not being deterred from doing anything in Europe, while at the same time not being brazen either.

So long as fund managers use their experience, remain wise and operate with discipline, there is no reason to turn the lights off. Instead, they must, like the old British saying goes: remain calm and carry on.