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News & opinion

24 FEB 2020

International investment panel signals market disruptions

Sustainable investments are on the rise, according to the panel of experts who spoke at the Sixth Annual RICS International Investment Panel held in New York earlier this month. The panel of global experts discussed the themes that have influenced the strategies they take in expanding or modifying their portfolios.

Setting the stage with the results of the most recent Global Commercial Property Monitor (GCPM), a quarterly survey that collects investor and occupier sentiment in all major markets, was RICS Chief Economist Simon Rubinsohn. According to data from the fourth quarter of 2019, investors were concerned by four disruptive forces: global warming, online retail, WeWork and Airbnb.

“Retail properties have been on the steady decline quarter over quarter as investors watch online shopping win over shopping malls and big box retailers,” said Rubinsohn. “We’ve seen a number of big brands in financial trouble, making investors leery of traditional retail properties. This is also driving up investment in industrial properties as retailers like Amazon require more space to operate.”

RICS has recently partnered with AFIRE, the association for international real estate investors focused on commercial property in the United States. The partnership will grow the network of investors responding to the survey and provide richer data for analysis. (Learn more here)

Investing amid disruption

Over the next few months, investors will watch to see how space-sharing apps like WeWork and Airbnb shift demand for office space and hotel rooms. Martin Lamb FRICS, Director at Credit Suisse, noted his company’s skepticism of WeWork-type tenants when managing its portfolio in Europe, North America, Asia and Australia. Still, he stressed there is opportunity in the major office markets in North America where yields remain better than what is usually attained on equivalent properties in Europe.

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Investors will monitor how demand for office spaces has been affected by companies like WeWork have impacted demand for office space

Dietrich Heidtmann, Director of GTIS, manages funds in North and South America where strategies differ quite markedly. In North America, he invests in industrial and residential properties. In Brazil, where the real estate market continues to develop, the focus is on mixed use properties, lower income housing, office developments and industrial properties in São Paulo and Rio de Janeiro. Brazil is a market with an undersupply of real estate and high barriers to entry, Heidtmann noted.

Elchanan Rosenheim, Managing Director of Profimex, rounded out the panel. Based in Israel, the fifth biggest investor in overseas real estate, the company invests primarily in North America with some investments in Europe with joint venture partners. Relying on joint venture partners to oversee their investments requires trust so his company performs very detailed background checks on their partners before investing with them. He sees great potential in alternative energy but is also focused on value-added properties in the multi-family, office and industrial sectors. 

Throughout the evening and while taking questions from the audience, the panel made mention of the growing importance of sustainable investment as the public and investors become more concerned with the warming climate. This is a trend that has grown in importance to underpin decision-making in all sectors. The shift to sustainable investment is unlikely to slow.

  • Julian Josephs FRICS is an Adjunct Professor at Georgetown University’s Real Estate Program at the School of Continuing Studies and teaches the Global Real Estate Transactions course. He moderated the International Investment Panel.