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CapitalWatch

October 2017

• CIO of largest investor supports real estate
• Fundraising monitor
• Super themes for 2018
• The life of an investor relations pro
• FinanceWatch

If you picked up the inaugural issue in March this year, you will know CapitalWatch concentrates on how capital – institutional money – accesses European real estate. You might also spot that the cover is gold again! We could have gone for something else, but as readers will know, gold and real estate have something in common. 

At the time of writing this (September) gold prices have reached an 11-month high on concerns over a nuclear war breaking out over the North Korea crisis. But investors do what they do in times of fear – they go for safe haven asset classes: something that seems tangible, certain and holds intrinsic value. Sound familiar?

It is unsurprising therefore that the story continues to be that plentiful investor capital is being deployed in Europe’s real estate and since March I detect no slow down. However, within that overall trend, the narrative has shifted somewhat. It isn’t so much geopolitics that investors are thinking about. The main backdrop is more about the continued low interest rate environment and economic growth forecasts.

To gain a handle on what investors are thinking, read our interview with Swiss Life Group’s CIO, Stefan Mächler. As an insurance company, Swiss Life needs to match long-term liabilities, and no prizes for guessing which asset class it loves. It is interesting to note how CIOs of large financial companies are using the word financial ‘repression’ to set the scene for how they view Europe as an investment proposition. 

Central banks have clearly deliberately held down interest rates for a long time now to help governments and companies reduce debt burdens. We are only now talking about potential widespread rises after the Czech Republic increased its rates in August for the first time since the 2008 crisis – from 0.05 to 0.25%. Swiss Life, like many others, believes the low environment will persist. 

At the same time, investors feel valuations in real estate might have reached their zenith, so they must tread carefully and examine areas that play into longer term growth factors. To help them, there is a whole community out there, from fund managers and operating partners to placement agents, fund administrators, law firms, consultants and lenders. As I previously wrote in this column, CapitalWatch barely scratches the surface in terms of covering all the trends and participants in real estate. Nevertheless, I hope it gives you a sense of a world that remains so private.

In this issue, we take a look not only at capital market trends but highlight the life of investor services professionals , those involved in finance, plus we highlight 12 emerging managers to watch, and give a voice to market professionals via guest commentaries, and much more. Private real estate as an institutional asset class is alive and responding to everything around it. It certainly isn’t Fool’s Gold when accessed correctly.

Robin Marriott
Editor, CapitalWatch