JUNE 2010 | www.opp.org.uk WORDS | Jos Short


INDUSTRY Funds opinion and news | 15 Developer profi le


Opinion Jos Short Investors will ride European shockwaves to safe havens


NEWS IN BRIEF David Lloyd launches funds


FORMER tennis star David Lloyd has launched two funds to buy discount holiday homes, as part of his plan to enter the resort development world. David Lloyd Resorts hopes to raise around £14.5 million to plough into 18 built and off -plan resort properties in Spain, Cyprus, Turkey, Thailand, Canada and Barbados.


Fund investors are likely to retreat to commercial properties in traditional safe havens as shockwaves from the European debt crisis hit. So funds targeting the Spanish hotel and leisure sector have reason to be nervous, says Jos Short


THERE’S a theme with any investors in real estate at the moment – they’re looking for income, low gearing and a relatively defensive asset class or product type. A lot of people were burned in the last 24 months, in opportunity funds and leveraged core funds gone wrong. Put that in a European context and investors will start gravitating to places like Germany and France, where assets are at relatively attractive rates and that would be safe havens if the euro were to fall apart – they’d rather have deutschmarks than drachma. By contrast the Iberian peninsular,


central Europe and possibly Scandinavia are likely to suffer and in that order. If I were marketing a Spanish retail fund right now I’d be very nervous but with a German fund I’d be more confi dent.


Global appeal Certainly there are also good reasons to invest in the UK at the moment, and that market started bouncing back in September. Although prices saw 40% falls during the downturn, they have


already come back by 20%. It’s a deep, liquid, transparent market with lots of investable stock and managers. For dollar-based investors the question


is whether will you get fewer dollars out than you put in. But historically the euro has done well against the dollar though and investors could make as much on the currency exchange as on the return on investment if they were unhedged.


“If I were marketing a Spanish retail fund right now I’d be very nervous”


While Asia is already fl avour of the


month, it’s still diffi cult and opaque to access. Europe has a massive, sophisticated and deeper market with many more managers. So, when it comes to investment in


real estate, as opposed to capital markets, Western Europe’s long-established systems of laws and property title look a lot safer to the international investor. All sectors of the market are affected by economic events because property’s


capital value and rental income are tied to GDP growth. But investors are likely to be particularly wary of the residential, hotel and leisure sectors, which will probably suffer more than offi ce, retail and industrial.


Immediate impact Higher taxes and wage freezes as countries try to cut their defi cits are likely to reduce the spending of the average European and impact on high-end retail centres, hotels and even residential property, which rely on daily activity. For existing funds what will happen


is a huge question – will they sell out of places like Spain? I don’t think so. Property is a very illiquid asset and to sell swathes of property in Spain or Greece would be very diffi cult. Investors will ride out the short-term volatility because property at its most fundamental is still a long-term asset.


Jos Short is executive chairman and co-founder of Internos Real Investors, and former CEO of Pramerica’s real estate private equity business.


Abu Dhabi tees off ABU Dhabi investors are providing up to half of the capital for a $1 billion fund targeting well-known golf courses around the world. Marc Player, the chief executive of The Gary Player Group, told The National newspaper that the company was seeking individuals and institutions to invest in over-capitalised resorts.


Qatar targets Russia


QATARI Diar plans to launch two $500 million funds to invest in Russian and Brazilian property. The First Investor, a company owned by the real estate arm of the Qatar Investment Authority, will partner with Gazprombank in Russia to start a $150 million fund. TFI has also made a soft commitment of $100 million to its Brazilian fund.


Midas to sell off shore


MIDAS Capital has announced that it wants to sell off £62m-worth of Guernsey and South African-based off shore funds during 2010 as part of the company’s plan to dispose of its non-core assets. The group wants to sell its Guernsey-based Midas Capital International and its Cape Town-based Midas Capital Asset Management to a consortium led by the off shore group’s CEO and former MitonOptimal joint managing partner Scott Campbell.


OPP enters fi nance sector THOUSANDS of fi nance professionals are set to get more involved with the international property industry as OPP launches its latest news service. The Property for Finance Professionals (PFP) online newsletter will keep the fi nancial services sector up to date with what’s happening in the world’s property markets.


INDUSTRY


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