Jon Gray, The Blackstone Group's global head of real estate, sees the best current opportunity for investment in a beleaguered country across the ocean from his keynote interview Tuesday.
If he had just $1 to invest anywhere, he told PERE New York Summit attendees that he would put the money into Spanish real estate.
“The most compelling values are still in southern Europe,” Gray said. “We've seen home prices go up for the first time in eight or nine years. To me that seems like pretty good value.”
Citing a huge decline from the peak in real estate prices and new home construction, as well as continued strong demographics, he noted Blackstone's active plays in the Iberian Peninsula.
The world's largest private equity real estate manager has deployed a significant amount of capital in the area through its European funds in acquisitions ranging from three shopping malls in Spain and Portugal in May to $858 million worth of defaulted real estate loans in July. The New York-based firm is also currently bidding for 1,500 rental homes in Spain from the country's largest real estate investment trust.
Elsewhere, the longtime Blackstone executive highlighted the firm's plays in Brazil and Mexico. He said, in terms of Latin America, Blackstone has hesitated to expand outside those countries because neighboring areas' economies are too small to offer many opportunities for large-scale capital deployment.
“We're building up our track record,” Gray said. “I think Latin America is a possibility but it's not happening overnight.”
One area that will take a bit longer than the US' southern neighbors, Gray said, is sub-Saharan Africa. That area needs more rule of law and development before the sector giant moves in.
Earlier in the interview, Gray noted the advantages of Blackstone's size, which allows the firm to deploy more capital than nearly all other private equity real estate firms. He also said his real estate team benefits from having a global footprint, and from raising and investing its European funds in euros, which leaves it without currency exposure.
That way, even with fluctuation between the dollar and euro, Gray's last dollar would be safer to invest in Spain.