Ralph Winter (CORESTATE Capital AG) on European real estate and the biggest challenges

Ralph Winter

Investments into Europe remain strong, despite the drama of a Grexit, UK referendum, Russia. How much bearing will such uncertainties have on real estate activities in Europe going forward?

It is difficult to predict what development Greece will go through or what direction the recovery of the Spanish economy will take, and it will certainly not be without challenges. One challenge could indeed include political changes such as regulations brought by a new government.

However, you would have to weigh the strengths and opportunities of a given market against its weaknesses and threats with any kind of investment. For us for example the opportunities outweigh the threats that we see on the Spanish real estate market. Facts such as pending property sales worth 40 billion euros at drastic discounts over the next 15 years by the bad bank Sareb, or the virtually flat-lining construction activity, suggest high potential.

UK and Germany are investment magnets. Which other markets hold the best opportunities at the moment in your view?

Spain for example is now the only country other than UK to draw capital from all global regions. The Spanish real estate market shows good potential and initial yields are clearly above the European average. Housing Price Index and land prices are at a historic low and developments are almost non-existent. Therefore we are focusing on development projects in Spain, where other investors have only the capabilities to acquire operating rental assets, but we develop them ourselves. This investment profile makes a lot of sense since the sector has experienced a general reluctance to invest and subsequent lack of funding for several years.

Exit Strategies, Raising funds, identifying product, finding the right partners – What is your biggest challenge?

The biggest challenge nowadays for us is to find product. But our strength lies in the fast recognition of market niches and luckily we are in a position to find attractive opportunities, even today. The biggest mistake you can make as an investor is to hold on to established business models without adjusting the variables. Especially with fast changing market conditions and global money flows you need to be flexible, because it is crucial to adapt a given investment to the latest market conditions. In addition our firm’s success lies in its unique international investment and asset management platform that delivers local operating capabilities and, ultimately, value creation to the assets in which the firm invests.

Join Ralph at the upcoming GRI Europe Summit in Paris on 10-11 September to further discuss these topics, and more, amongst fellow investors, developers, property companies and lenders.

To see who’s participating and more topics of discussions, visit: www.globalrealestate.org/europe2015

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