Capital markets find need to rethink in new environment

The rapid surge in interest rates after a prolonged period of low rates has led to a widespread belief in the capital markets that interest rates are going to stay higher for longer says Barbara Lewandowicz, founder of Molveno Investment Partners.

“I think this could mean a fundamental shift in the investment environment and that could mean that the investment strategies we’ve been implementing since 2008/2009 are not really benefiting as much as they used to do,” she told Real Asset Insight’s Richard Betts.

There is going to be huge discussion about capital allocation and, for instance, the real estate debt market has become very attractive. “It hasn’t been that attractive in a long time,” Lewandowicz said.

“I think the risk reward profile is very appealing. The combination of falling valuations, the reluctance of banks to finance projects and the relatively high nominal cost of capital makes this a fantastic environment for alternative lenders.”

And, while the mezzanine finance market has had a tough time in Germany in recent years “nowadays we have completely different risk profiles for this assets so we could find interesting opportunities there,” she added.