European real estate has bottomed out, while the Brazilian market is similar to India several years ago, Blackstone’s global head of real estate told the Pension Real Estate Association (PREA) last week.
Speaking at the conference in San Francisco, Jon Gray, said: “We think that the real estate markets in Europe have bottomed out. We are seeing an improved performance with some of our assets.”
He cited 3% growth “in the regional mall assets that we own in the region”.
But Gray said there would still be investment opportunities in southern Europe next year.
“I believe there is still distress in that market and we will be looking to focus some of our efforts there,” he said.
Gray revealed Blackstone’s attention has turned to Brazil. “This is a country that we are doing some research on now,” Gray said.
”The current investment state in Brazil would be similar to where India was in the 2011-2012 timeframe.
”One thing about Brazil is that the current banking situation doesn’t allow for you to borrow on any deals,” he said.
Many of the discussions at the conference were about investing in global emerging and frontier markets.
Ernest Hunt, senior investment officer of real assets for the United Nations Joint Staff Pension Fund, said: “Our international focus for us has been with Europe and India.
“We have committed to placing capital into two commingled funds in India this year.”
Africa is a frontier market that some investors have been considering. Adam Gallistel, deputy regional head of the Americas at GIC Real Estate, said: “We have invested with a manager in Africa.
“We look at this as tuition and hopefully we will get a return in the future on our tuition.”
The United Nations Pension Fund has also looked at Africa. “The issue for us is what capital sources will be the buyers of any assets that you own,” Hunt said.
“This is one of the reasons why we haven’t committed any capital in this country yet,” said Hunt.