Delayed fund raising – but no definite investor flight. Such is the assessment from a number real estate investors EjendomsWatch has spoken to about the consequences of the corona crisis. Real estate provides security, says Thylander Gruppen, while Niam warns against excessive fear.
Like a brick wall in the middle of the motorway while you drive at 130 Km/h. That is just one imagery used by investors in the real estate sector to describe the corona crisis' complete paralysis of activity throughout most of Europe. It came like a stroke of magic, just like the "black swan", says Collier's CEO, Peter Winther. Several of the real estate investors AMWatch's sister media EjendomsWatch has spoken to do not conceal the fact that the crisis will have noticeable consequences. "It's going to make a huge difference in the real estate industry what aid packages the government presents, as well as banks and mortgage lenders' continued desire to fund the healthy projects already underway. Excessive fear in the market is probably where I see the greatest risk," says Michael Berthelsen, Danish country manager at Swedish Niam, which has invested billions of DKK in Denmark on behalf of pension funds in the US, among others. "We will have a recession in 2020. But a lot of it will depend on whether it becomes a V, that is over quickly and then on with it, a U, a W or an L, which is a sign of a long-term crisis," he continues. Niam primarily invests in residential real estate, which provides the company a great deal of resilience in a time of crisis. "A very large part of our Danish investments are in ordinary boring homes, rented out to regular people at prices that can also be paid by a normal budget, even for two people on short-term unemployment benefits. It's a robust investment case with a sensible financing agreement, so we are also prepared for the L-shaped crisis," says Berthelsen. He believes the far-reaching interventions currently being implemented will result in a sharp but short-term decline. "I actually think the interventions will work quickly. The government has proven that it is prepared with "the big hammer" in the fight against virus. I also hope that they are willing to fight for the economy in the same way," says Niam's Danish country manager. Niam also expects to see short-term effects on the real estate market as investors hate uncertainty. It may impact the possibility of establishing new funds, predicts Berthelsen. Thylander: Real estate provides security Monday, real estate company Jeudan had to retract its 2020 outlook due to the uncertainty brought on by the corona crisis. And according to CEO Per Hallgren, the crisis will "impact the real estate market negatively in a number of areas." At Thylander Gruppen, which like Niam provides real estate funds that wealthy individuals and family funds can invest money in, founder Lars Thylander is mostly positive. He points out that real estate, purchased and operated professionally, provides a high degree of asset protection in combination with a stable risk-adjusted return. Are you experiencing restraint or any other reaction from current or potential investors? "We haven't experienced any particular turmoil from the investor side. I think that many in these volatile times are comfortable with also having real estate in their investment portfolio. We remain unchanged in preparing fundraising for our new fund, but with the way things are looking right now it is probably realistic that the time frame will be spushed by a month," says Thylander. At pan-Nordic NREP the sentiment is somewhat the same: "At NREP we raises long-term funding, primarily from pension funds. Despite the situation, the indications we're getting from a broad palette of investors is that the interest and long-term perspective remains unchanged," says head of communications John Black Andersen.
This post originally appeared on AM Watch.
