INTERVIEW: CBRE GI eyes multi-pronged buying spree in 2015

CBRE Global Investors is gearing up to continue its spending spree in Europe in 2015 after completing roughly €8 bn of investment transactions last year, the company’s EMEA chief Pieter Hendrikse told PropertyEU.

‘We were very active on both the buy and sell side last year, and our investment volume in terms of sales and purchases was approximately equal. But we will be much more of a buyer than a seller in 2015.’

Hendrikse said the investment manager would continue buying on behalf of its Dutch office, European retail, core and Iberian strategies. ‘We also manage some interesting separate accounts on behalf of investors from all around the globe. Altogether we have a number of very concrete strategies and significant investment power.’

CBRE Global Investors announced last week that it is extending the life of its Retail Property Fund Iberica for a further five years in a move aimed at benefiting from Spain's ongoing property bonanza. The original fund duration was 10 years from 2000, with a two-year extension until April 2012 followed by a number of short-term extensions and a three-year disposal plan approved in December 2013.

The five-year extension will allow the team to focus on the execution of the fund strategy which is aimed at enhancing the value of core assets, including extensions and/or refurbishments, as well as disposing of non-core assets, CBRE GI said.

Institutional allocations to real estate will continue to increase as long as pricing remains attractive relative to bond yields, Hendrikse noted. ‘A lot of allocators are holding discussions at corporate level on how big the share of real estate should be in the total portfolio. That is not going to come to a stop yet. Real estate is very attractive given the prospects for GDP growth and the stimulating measures being prepared by the ECB.’

Asian capital flows
Amid an ongoing wave of global capital targeting Europe, Hendrikse said the Asian flows were particularly noteworthy. ‘The Americans have always been here, and the Middle Eastern investors are well-established too. But what is interesting is the number of Korean, Japanese, Singaporean, Chinese and Australian investors that are taking a closer look at Europe thanks to the quality of the real estate and current yield levels. The Asian flow will increase significantly over the coming years,’ he predicted.

While scarcity of product is becoming a growing concern for some investment managers, Hendrikse said he saw ample opportunities per strategy. ‘They differ per country and economy, and per city and region. We certainly won’t be holding off where we can perform well. In terms of retail, there are some very good opportunities to create value, not just in Western Europe, but also Southern Europe.’

In terms of markets, Hendrikse predicted that the Netherlands would continue to gain traction in the coming year. ‘We did a lot in the Netherlands last year, in retail, offices and residential. And the overall deal flow hasn’t come to a halt yet.’

Dutch deal bonanza
CBRE Global Investors sold of a number of assets in the Netherlands last year including residential packages to Round Hill Capital. The latest deal with the US investor involved the acquisition of a €54 mln portfolio and follows an earlier deal last year revolving around a €180 mln portfolio. Altogether Round Hill has forked out almost €800 mln on residential assets in the Netherlands in the past nine months.

Hendrikse said he welcomed the new wave of foreign buyers in the Dutch market. ‘We’re seeing a lot of deals and new buyers and owners, all of which shows that Dutch real estate is attractive from a pricing and quality perspective. This is good for the Netherlands from a long-term perspective as it will make the market more liquid.’

Pan-European logistics is another strategy CBRE GI will continue to build on in the coming year, Hendrikse said. Transport hubs across Europe are continuing to get bigger and consolidate per region. He conceded, however, that if the proposed ceasefire is not respected with regard to a further escalation of the Ukraine-Russian conflict this could have a negative impact.

‘We don’t have serious exposure to Russia but we are active in Central and Eastern Europe, in particular Poland, Czech Republic, Hungary and Romania. We don’t have anything in Russia, Turkey, Ukraine or Greece, but these countries are all very close and the conflict could have an impact on transport and deal flows and how some global real estate investors look at Europe.’

Judi Seebus
Editor in chief