Bahrain’s Investcorp Targets Push into European Property
Investcorp, one of the biggest foreign buyers of US real estate and an early backer of luxury brands like Gucci and Tiffany & Co., is planning to buy European property for the first time, said its recently appointed executive chairman.
" We want to do things we haven’t done before within our areas of expertise. We’re thinking about Europe now, " said Mohammed Al Ardhi, who took over the top job at Investcorp in June, in an interview with the Wall Street Journal. He added that Investcorp is assessing the right opportunities to target in European real estate, particularly in the UK and Germany.
The asset management firm is considering whether to buy an existing European real estate investment business or build one itself, he said.
Investcorp has$2bn invested in real estate assets on top of more than $8bn in hedge funds and private equity and has poured around $1bn into American property in the past year, including student housing in California and Florida and commercial property in the Northeast. It currently has no real estate investments outside the US.
Investcorp will focus on commercial and residential real estate but not on the trophy assets targeted by many overseas investors, particularly in central London and the firm will continue to expand its US property portfolio.
Investment in European commercial real estate is surging. In the 12 months through the end of the third quarter, investment volumes reached nearly €238bn ($263bn), the highest level on record, according to data from broker Cushman & Wakefield . The previous high of almost €235bn for the comparable period was in 2007.
With interest rates low, returns on property appear attractive compared with other asset classes like bonds and demand for real estate in Europe shows no signs of slowing. Investcorp’s push into Europe will also involve trying to target more investment from the region’s ultra-high net worth individuals and families, Mr Al Ardhi said.
Earlier this month, the firm bought eight residential properties in Las Vegas, Denver, Chicago, Atlanta and Dallas for approximately $400m. All eight were so-called multifamily rental properties, a sector Investcorp has been involved with in the past.
For property investors in Europe with smaller budgets, the entrance of big players into the arena indicates there is still value to be had in real estate markets, particularly in central London and in the five big cities of Germany where Investcorp are zooming in.
It’s always worth making particular note of investment activity in commercial markets to find the best value in residential property. As labour markets expand and companies fill newly constructed office buildings, retail and industrial sites, demand for residential property naturally increases as a result and a dynamic is created that presents value to savvy buyers.
The principal interest for large-scale investors in residential property has been in income generating assets in 2015. Properties that provide homes to specific groups like students, hospital staff and low-income families are generally the vehicles of choice for consistent rental yields.
Article by +Roxanne James on behalf of Propertyshowrooms.com
