Pictet Group’s alternative investment arm has expanded its offering with the launch of a direct European real estate investment strategy and appointed Zsolt Kohalmi to head the fund.
Pictet Alternative Advisors (PAA) said it has appointed the former head of Starwood Capital’s acquisitions in Europe to lead a 14 person team to manage the newly created fund.
The fund will invest in European real estate assets and related companies across sectors such as offices, residential assets, student and senior accommodation as well as light industrial assets.
Its focus will be on the mid-sized segment of the real estate market, targeting investments in smart gateway cities in Western Europe.
Europe, on a risk-adjusted basis, remains a compelling investment opportunity in real estate, Kohalmi said.
”Asia has record low cap rates, translating to record high capital values, and the US is far along in the cycle, and has a higher interest rate environment that may eventually lead to cap rate expansion.
”Meanwhile, Europe has stable cap rates due to continued low-interest rates, and is finally seeing rental growth come through, making it, in our view, currently the most attractive global market for real estate investment on a risk-adjusted basis.”
PAA said the fund is supported by local real estate country heads in 6 European offices located in UK, Germany, Sweden, Spain, Luxembourg and Switzerland.
“Volatility in certain European markets over the coming years, for example in the UK due to Brexit, will lead to a ”variety of entry point opportunities, hence the importance of a local presence in our 6 offices to get the ‘first call’ for transactions,” Kohalmi said.
The underlying fundamentals also look interesting, Kohalmi said.
“Occupational demand for real estate has improved during the last two years, as unemployment in the Eurozone sank below 7% for the first time since the recession.
”This demand increase has led to certain submarkets facing sub 5% office vacancies, which in turn can lead to real rental growth.”