GLOBAL - Core real estate prices are compelling institutional investors to target a more international real estate exposure, according to Partners Group, which this week announced it had raised more than €600m for global strategies.
Claude Angeloz, co-head of private real estate at Partners Group, told IP Real Estate: "Two years ago, a lot of investors were saying, ‘Why should I invest globally? I can get a 10-12% yield with core investments in my home country. I don't need to go to global markets.' That has changed."
Pricing on core assets has reached levels seen in the 2006-07 period, according to Angeloz, despite not being supported by fundamentals.
"We're back where we were five years ago. So now we're seeing consultants and investors looking again at global investment," he added.
His comments came as the global private markets investment manager announced that it had raised closed its Partners Group Global Real Estate 2011 programme at $800m (€631.4m).
Although private real estate co-head Pamela Alsterlind pointed to additional opportunities for investment from continued distress in developed markets, Angeloz ruled out "distressed assets that are in a downward spiral or are on the edge of becoming obsolete".
He said: "Many of our borrowers and owners come to us because we're lending against assets that don't necessarily need to be eligible for a Pfandbrief.
"We can live with dents and scratches if the asset is fundamentally sound and supported by a solid business plan. We like assets that have lacked love, care and tenderness but where the real estate is fundamentally good and where a new owner can add value."
Of 2,200 investment opportunities it investigated last year, Partners Group executed 43. "Compared with other GPs, our investment teams are set up to handle above-average deal flow," said Angeloz.
"One reason we look at a lot of potential investment opportunities is because it gives us a direct view into the market that you can't get from research that uses six-month-old data. The noise from the street tells us what's really going on now."