Canadian real estate investor Ivanhoé Cambridge remains bullish on the US, despite the growing geopolitical risks stemming from the inauguration of Donald Trump as the new US president, the company’s executive vice-president and CFO Nathalie Palladitcheff told the ULI annual conference in Paris on Wednesday.
The real estate division of the Caisse de Dépôt et Placement du Québec already has about 40% of its investment in the US, Palladitcheff explained. ‘But,’ she added, 'we are more of a cities player than a country player. We don’t think about the US as a whole, we look at cities like New York and San Francisco and areas like Silicon Valley. And we don’t think choosing the right cities will be impacted by the election of Trump.’
That said, investors that are concerned about geopolitical risks should think about backing residential properties, she advised. ‘One asset class that is really a hedge is residential – we have invested a lot in this asset class.’ Indeed, the Canadian company has seen its residential portfolio in the US and the UK increase 10-fold in recent years to some C$10 bn (€7.1 bn), Palladitcheff noted.
‘When the economic environment becomes more difficult, more people want to rent rather than own their own home. The fundamentals and demographics will remain whatever Trump’s policy,’ she added.
Surprisingly upbeat
Palladitcheff struck a surprisingly upbeat note during a panel discussion entitled ‘Capital markets: profiting from uncertainty’. ‘I feel positive looking forward. There are definitely more options and choices than 10 years ago in the real estate world. Capital markets and investors have changed a great deal post-crisis and there are now some interesting real estate opportunities in emerging countries that we didn’t have a decade ago. Also residential is now an institutionalised asset class in this part of the world – three years ago it wasn’t.’
While interest rates remain at a record low, Palladitcheff warned that investors should not take this for granted. ‘We have become used to low interest rates, but what we should not do is become addicted to them. In any case, it is possible to make money in different ways.’
Ivanhoé Cambridge currently has more than 25,000 residential units worldwide. At end-2015, multi-residential accounted for over 16% of the total portfolio valued at some C$46 bn.
