The panel session, titled 'Investment Strategies of the Big Players’, was chaired by PERE and featured Jeremy Plummer, head of EMEA and chief executive officer at CBRE Global Investment Partners; Jonathan Harris, executive director Europe/UK at Macquarie Capital Real Estate Advisors; Timothy Horrocks, head of continental Europe at TH Real Estate; and Dennis Lopez, global chief investment officer at AXA Investment Managers – Real Assets. Between the firms, they accounted for approximately $260 billion of assets.
The panellists were quizzed on a number of topics but the focus of the debate regularly honed in on how increasingly difficult it is becoming to pursue to match the large amounts of capital chasing prime real estate with transactions. With many real estate markets, particularly in Europe, understood to be at or approaching their cyclical peak, the panellists were asked which which strategies made sense in this climate.
For Lopez, the traditional approach had shifted and “skiing off piste” to search for hidden gems was the more sensible approach. “I don’t think for us there are any geographic themes anymore,” he said. “I think now it is just about looking for needles in haystacks, and they can be anywhere.”
“We are looking at some of the alternative asset classes, student housing, assisted living, hotels and data centers. If you are going straight down the middle on very stabilized properties, it is too expensive right now. But if you look round the edges there are interesting options,” Lopez added.
One such country containing potential “needles”, the panel agreed, was Italy. However, Harris said he believed the country was a “very difficult place” to access real estate, while Horrocks said he thought the Italian market was “challenging”. Plummer asserted that the key to success in the market was finding a local operating partner, though he conceded that this too was “difficult”.
When asked about what dangers a firm such as his faced in the current market, Plummer was convinced that responsibly positioning debt in transactions was at the front of the queue. “The lesson from the global financial crisis is all about leverage,” he said. “Debt is relatively free at present, so you have to be careful with the many temptations of leverage.”
The 2016 EXPO Real conference is being held at the Messe Munchen conference center in Munich, Germany, and runs from October 4 until October 6.