The upcoming US presidential election, the ongoing war in Ukraine, and the newly erupting conflict in Israel are just some of the challenges facing institutional real estate investors around the world when deciding where to park their money.
“This is not the best time to grow your real estate portfolio,” said Richard Squires, founder of Lennox Capital Partners, which has $1.4 billion in real estate assets.
Three of the five traditional real estate types (office, retail, and hospitality) are facing a variety of market threats, while yields for industrial and multifamily real estate have not increased and interest rates are still falling. Therefore, it cannot be said that the profit is satisfactory. Squires said.
“My conclusion is that values have to go down because interest rates are going up,” he added. “There is more downside than upside today due to the rapid rise in interest rates. The market needs time to adjust and prices continue to fall slightly.”
Mr. Squires spoke this week on a panel discussion at the Sovereign Wealth Fund Institute’s Family Office Roundtable in the Dallas area. This is the first time the organization has hosted this event in North America. Global institutional investors from around the world gathered to discuss private equity trends, the flow of family office transactions, and real estate investment.
The invitation-only event attracted investment and portfolio managers from around the world and featured keynote speaker Robert Kennedy Jr., who this week announced plans to run as an independent candidate for the U.S. presidential election. One of his panels included Stephen Kennedy Smith, principal of the Park Agency, and Joseph P. Kennedy Enterprises, the Kennedy family office.
The real estate market is currently “complex,” especially with $1.5 trillion in commercial real estate loan refinancing looming in 2025, said Kim Diamond, director of Homz Global. Homz Global is building a portfolio of sustainable and viable housing developments. US.
“We know that real estate is a cyclical business, but we see significant changes over time. [since] The coronavirus in the form of hybrid work has dramatically, and perhaps permanently, reduced demand for office space, contributing to a loop of doom in some American cities, particularly San Francisco. Mr. Diamond said.
But Diamond believes that out of turmoil can come opportunity and that, ultimately, “real estate is worth it.”
Lennox Capital Partners’ Squires plans to focus on high-quality real estate in growing markets that are insulated from possible future economic downturns. His advice is to “invest for the long term with plenty of time to spare.”
The Patels’ office is built on the lodging and hospitality industry, and they have seen first-hand the challenges of this part of the real estate industry, which struggles with occupancy, labor issues, supply chains and bond market constraints. said Deepika Patel. Chairman of the family office.
“We have a lot of buyers, but we know we’re not borrowing enough,” Patel told the audience. “With borrowing available and sellers unwilling to lower prices, we have started to diversify and have pivoted to other geographies since the pandemic.”
The Patel family firm, based in Dallas, has been purchasing hotels and lodging properties in the Middle East, particularly Saudi Arabia.family office Recently launched a $5 billion hotel fund. We are also working towards growth in the Middle East, North Africa and Egypt.
Scott Warbel, managing director of acquisitions at Ardent Koss, said interest rates that were once considered “unthinkable” in the U.S. have become the norm and are likely to remain at these levels for the next 12 to 18 months. said that it was high.
“Investment is very slow when it comes to commercial real estate,” said Werbel, who oversees real estate acquisitions and originates bridge loans around the world for the Atlanta-based company. “We’re still very active in retail,” he said, with investments in Charleston, Nashville and London.
Ardent is actively raising a total of £250m of funding from its London office to capitalize on some of the current disruption in UK real estate, Warbel said.
“During the bank hiatus, we have been much more active in the debt financing space than we have been in the equity space,” Werbel said.