‘Value-add opportunities are shrinking day after day’

Guillaume Turcas, Managing Partner, Faro Capital Partners

Finding value-add opportunities is becoming more difficult because of intense competition and rising prices, Guillaume Turcas, Managing Partner, Faro Capital Partners, told Real Estate Day.

‘Value-add opportunities are shrinking day after day,’ he said. ‘A lot of people are trying to extract value and prices have been pushed up. There is still room for value-add in a few locations, but it is increasingly challenging’.

One solution is looking beyond France or Germany to other countries that offer better opportunities. ‘We are open to investigating other markets, like Eastern Europe and the UK,’ Turcas said. ‘A lot of people are cautious about the UK now, but for me London remains one of the top locations in the world and it has the advantage of being a fluid, liquid market’.

Provided that post-Brexit the climate remains positive for investors, ‘I can see may positive opportunities in the UK,’ he said. ‘I don’t expect crazy discounts or distressed sales, but at the moment prime properties in London are 100-200 bps above prime properties in Germany or France. It will definitely be interesting to investigate the London market more closely’.

Among family offices there are two very different attitudes to investing at the moment. Some are chasing value-add deals, turnaround plays, taking opportunistic positions in a larger real estate scheme, Turcas said. 

‘These opportunistic investors look for complexity in the asset, capex to be undertaken, a complicated lease situation or potential claims on the building from public administration or the tenant,’ he said.

Others are interested only in capital preservation. ‘These are the long-term investors who are looking for plain vanilla assets, beautiful buildings, long leases and very little capex required’, Turcas said.

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