Since the turn of the year, a number of US-based private equity real estate firms have parked capital in European markets and sectors for the first time. The most established of the firms include Houston-based Hines, Chicago-based Harrison Street Real Estate Capital and Greenwich, Connecticut-based Starwood Capital Group, which all inked debut deals across Europe in January.
Some commentators have suggested the firms are trying to enter markets ahead of a critical 12 months that will see parliamentary elections, and potentially constitutional change, across the continent.
But Anthony Biddulph, chief executive at London-based real estate advisory firm Capra, believes that is only half of the story. “I think the other part is what’s happening at a macro level,” he said. “The sustained low interest rate environment has led to more capital being deployed into real assets, and real estate is getting a big chunk of that.”
Biddulph added that due to the finite amount of real estate in the US, and coupled with the fact that some of the commitments they are receiving come from overseas investors, it is logical to expand their horizons.
Hines: entered Danish market with €119 million acquisition of a portfolio of retail assets in Copenhagen
Harrison Street: purchase of a 10,000-bed portfolio of student accommodation properties in France for an undisclosed price
Starwood: entered UK student housing market by picking up a £120 million ($149 million;
€140 million) portfolio of purpose-built assets