03 November 2022
Sentiment in the real estate market in the U.S. has changed radically over the past six months, but Bert van den Hoek, head of Bouwinvest’s New York’s office, believes nevertheless that the outlook is better for the U.S. than for Europe: “In Europe, we see more geopolitical risk and have enormous energy and cost-of-living crises on our hands. There is a less optimistic or positive view of the prospects for the economy than I sense here in the U.S.”
Van den Hoek made the comments during a roundtable on the state of the U.S. real estate market held by PERE, the private real estate equity publication. He conceded, however, that the combination of reduced liquidity, tighter yield spreads and increased cost of capital is likely to impact real estate asset pricing in the U.S. as well as Europe. “The world has changed,” he admitted. “The denominator effect is definitely a concern. We will be taking stock and assessing the market, as it is changing very fast.”
So far there is little concrete evidence of falling values in the U.S., he added. “Spot market rates are definitely moving in everybody’s minds, behind the scenes, so to speak. But we don’t see it coming through yet in appraisals. We had a very quiet summer in terms of transactions, so we expect third-quarter valuations not to be too detrimental relative to the second quarter. A fall is definitely expected, but a bit deferred into the future.”
In terms of opportunities in the U.S., Bouwinvest remains focused on modern logistics and quality housing as well as growth sectors such as data centers, life sciences, self-storage, student housing and single-family residential. Van den Hoek: “We see those sectors as a way to invest in macro-economic trends and structural demand. We believe that sustainable investing, particularly in those sectors, yields stable, long-term investment returns.”
Asked whether the prospect of increased regulation such as rent control will deter European investors like Bouwinvest, Van den Hoek said: “Anywhere in the U.S. is light on regulation, compared to what we are used to domestically in Holland or elsewhere in Europe. We are used to dealing with regulation, and it helps to increase the number of affordable homes, so we will not shy away from it. Given the political system here, where regulation is State-driven, I don’t think it will ever get to that at a European level. You cannot really compare the U.S. and Europe in that respect.”
The other participants in the roundtable were: Larissa Belova, Portfolio Manager CBRE Investment Management; Jason Hernandez, Head of Real Estate debt, Americas Nuveen Real Estate; Stephen Rabinowitz, Real Estate Practice Co-chair Greenberg Traurig; and Justin Rimel, Senior Director, North America Invesco Real Estate.
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