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Real estate strategies in Southern Europe are shifting from opportunistic to value-add, panellists at the PERE Growth Forum: Spain & Southern Europe said today.
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“The opportunity is moving from opportunistic funds to more value-add,” Davide Arpili, partner at consultancy firm McKinsey & Company.
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One such firm hunting value-add returns in Southern Europe is Cornerstone Real Estate Advisers. The Hartford, Connecticut-based real estate investment manager has been rapidly expanding its European footprint to enable it to launch pan-European funds. One is expected to be a core, open-ended fund and the other a value-add product. The value-add, closed-ended vehicle will have a target return of 11-13 percent and is expected to be up and running first.
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However, opportunistic real estate investing is still in vogue within Southern Europe and panellists said that more attention is being directed at secondary cities in order to achieve returns.
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“A lot of investors who have been frustrated in sale processes in the major cities are focusing on the secondary cities. They are seeing a gap in Valencia, Bilbao and Seville,” said Javier Kindelan Williams, president, CBRE Valuation Advisory.
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“You are seeing a flow of investors moving into these areas and we expect them to continue to grow.”
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There is also still an opportunity to get access to real estate via non-performing loans, agreed panellists. But, Francisco Milone, managing director at Värde Partners Europe said it is not an easy route to real estate.
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“What has changed is that the opportunity has become much more granular. It is more complicated and management intense,” he said.
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