There are always two sides to every story. And that’s certainly true of private equity real estate during these troubled times.
As industry professionals eagerly eye the distressed opportunities currently being seen in mature markets such as the US, Europe and Japan, they are also looking sideways to the growth stories of emerging markets such as Brazil and India.
And that’s exactly what GPs said they were doing during the PERE Forum conference, held in New York this week.
One GP said that although the industry – and the wider economy – was experiencing “totally unprecedented times” – and with it great distressed opportunities – interest in emerging markets was extremely strong.
It was a theme expounded by one of the forum’s keynote speakers, Michael Pralle, president and chief operating officer of JE Robert Companies, who told delegates Latin America represented a “very good window of opportunity” for real estate GPs.
Even though JER is also eyeing the US for opportunities, Pralle told the conference in downtown Manhattan, that the firm was still very much a part of Latin America’s growth story. And although growth has slowed in these countries in the wake of the global credit crunch, Pralle stressed that demand for real estate would remain strong in the long-term, thanks to the rise of a more affluent middle class.
Indeed, he went on to say, that the credit crunch contagion was helping to reprice properties in Latin America, which one year ago might have been deemed too expensive. Pralle though wasn’t the only one to talk up the emerging tale.
Real estate markets in emerging Asia also had their fair share of proponents during the two-day event, with one US placement agent telling delegates that Asia was still “resonating” very well with LPs – even given the state of the current fundraising market.
So while distressed opportunities in the US and other mature markets appeal to GPs in the near term, shrewd investments in the emerging markets are still firmly a staple in the portfolio of GPs as they look out to the horizon.