GLOBAL - Dutch-headquartered real estate investor ING Real Estate Development is planning to invest in and develop projects over the next few years which provide secure but mixed origin revenue.
Speaking about the company's strategy going forward, Menno Maas, CEO of ING Real Estate Development, said: "Projects that combine retail and residential and mixed use lettings are the core of our business, and that is where we will concentrate our efforts over the next three years while we weather this crisis.
"We have to be selective and stick to what we know because we are operating with a smaller balance sheet as a result of our deleveraging process. However, we plan to maintain our position as one of the top three pan-European developers," he continued.
Maas noted significant investor appetite had returned to the market for what h considers to be really first class assets, and stressed investors would take a more active role going forward.
"In future, investors and developers will work much more closely together," he said. "I envisage all sorts of deals with top-level investors including performance-driven delivery and profit-sharing, although we're not likely to go as far as a joint venture arrangement. It is now a buyer's market and investors are in a position to stipulate how they want to work with the developers," he added.
Maas explained that while the company had significant new projects in the pipeline - with definite commitments worth some €3bn and options on a further €6bn in assets - "the difference now is that we have to chase for funding. It's a whole new ball game: in the past we did everything with ING funding; now we will behave more like other developers in that we will use more money from other investors, and will seek it earlier in the development process."
At the same time, however, Maas has also voiced concern about the longer-term viability of government stimulus programmes.
"They have succeeded in stabilising residential markets, especially in France but also in Germany. The big question is whether these states, given their indebtedness, can maintain this help. For the next year and a half at least, the downside risk is higher than upside potential."
There has also been much talk about consolidation in the market, but Maas stressed the emphasis would be more on cooperation, as he added: "I don't expect mergers between big developers. The financially-driven firms will be gone; the longer established firms will survive but they will be smaller. The result will be that fewer, smaller firms will need to work more together."