Matthias M Brodeßer, Head of Transaction Management International, Warburg HIH Invest Real Estate
A defensive core strategy is compatible with investing in controversial countries like Poland and Hungary as long as the risk/reward balance is right, Matthias M Brodeßer, Head of Transaction Management International, Warburg HIH Invest Real Estate, told Real Estate Day.
‘We’re investing predominantly on behalf of German pension funds, who are probably the most risk averse in the European universe, so that means we’re a core investor’, he said. ‘We are a pan-European investor, but we feel that Europe has changed over the last couple of years, so we have adjusted our strategy’.
Warburg HIH now focuses predominantly on three countries and specifically on three cities: Vienna, Amsterdam and Berlin.
‘We focus on the office market in Vienna for defensive reasons, because our experience has shown that there is little or no volatility in terms of rent and pricing and it is a great place to be when you are expecting a downturn whenever the downturn,’ he said.
Amsterdam offers ‘more of cash return’,Brodeßersaid, while Berlin ‘offers tremendous growth on office rents and for that reason, given the current price levels throughout Europe, we feel that there are good grounds for investing there’.
Political risk is a concern but it can also offer opportunities as long as you balance risks and rewards, he said. ‘Clearly we discuss it with investors, because we make a decision now that will last for the next ten years. But we must also take into account the fact that countries that are controversial also offer better yields’.
For this reason, Brodeßer said, ‘in the last couple of years we invested close to €400 mln in Poland and now we have a deal under offer in Budapest, for the first time ever, which offers some premium on the yield’.
In terms of sector, offices are in Warburg HIH’s DNA, he said, ‘but over the years we have built up a great retail team, so offices and retail are the two asset classes we’re focusing on. However, there’s an increasing investor appetite for hotels for the long-term cash flow, and also because tourist numbers are increasing at a rapid pace in most countries in Europe’.
Another sector that investors are interested in is logistics, Brodeßer said: ‘These days you cannot avoid logistics, because of the success of e-tailing and the increase in online shopping. We think it’s a growth sector so investing in logistics is also a defensive strategy’.
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