Opportunity knocks
Much of #Week50 was given over to Christmas parties, as companies – Innesco included – gathered to thank employees for their efforts and mark the end of another year. Much like for retailers, December is the season for pubs and restaurants to capitalise on the Christmas spirit.
It is only natural for thoughts to turn towards the next 12 months, an impulse that is even stronger after a year that has been defined by challenges and uncertainties as well as successes and triumphs. Anyone making solid predictions about what 2024 will have in store for real estate risks being a hostage to fortune, but look closely and there are positive signs on the horizon.
Perhaps most interesting this week was BlackRock securing some €774 million of equity commitments for a new ‘value add’ fund – its European Property Fund VI (EFVI) – to target opportunities in the UK, France, Germany, Spain and Nordic regions. Focused on high-quality assets aligned with demographic shifts, digital disruption and low-carbon transition, the fund will look to take advantage of asset repricing across the continent. This is, said Thomas Mueller-Borja, global CIO of value-add real estate at BlackRock and co-portfolio manager of EFVI, the best real estate buying opportunity since 2008.
When the smart money starts getting its ducks in a row – and institutional capital doesn’t come much smarter than BlackRock – you know it’s time to pay attention. Fundraising has been generally subdued this year as market uncertainty and disruption has encouraged investors to wait-and-see rather than take the plunge, but the successful launch of EFVI could be seen to signal the turning of the tide.
Another notable aspect is the ‘value add’ element, and that speaks to the sort of recovery investors will hope to capitalise on. There are certainly cyclical reasons to buy now, but with so many real estate sectors facing disruption to traditional business plans, it is through repurposing and redevelopment that the best returns will be made. There are not many safe havens out there where investors can buy-and-hold before selling when values reach their next peak – proactive asset management will be very much the order of the day.
With buying opportunities appearing, it is those that best understand and adapt to changing fundamentals that will benefit the most. This is only right and proper, and could spark a bit of a talent grab as firms seek out those with the skills to turnaround obsolete or struggling assets into something more viable. The sector as a whole has a lot of work ahead of it, but the opportunities are clearly there to those able to grab them.
Wishing you all seasonal cheer, and the best of luck with finding those last few presents to buy.