Fund Management Companies & Real Estate Market

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Fund Management Companies and the new-born Real Estate Market 

October, 2014


The main Companies of the mutual fund industry are returning to the Real Estate market, Let’s see how Schroders, Henderson and Fidelity address this challenge:

Schroders:

Schroders created recently a dedicated team for real estate investments. This is the last effort of the company to strengthen its real estate investment area, but it is by no means the only one. After years of collapse following the bursting of the housing bubble, the asset class has already been cheap enough to re-attract the interest of investors, especially in an environment of low interest rates.

The new team focuses on three main areas: industrial assets, offices and retail. In the first field they highlight: "firm evidences of a sustained and general recovery of the economy. The rents rising has already started, and this sector is expected to perform better than the global market in the next 5 years"

As for the rental of offices, strong competition in the centre of main European citiesalong with the flexibility to tenants to change their locations make the team to focus their bets in suburban areas. 

Finally, in the retail part they are especially interested in the opportunities Benelux, Sweden and Switzerland, the low cost shops in Germany and southern Europe and the assets of luxury in the centre of large cities and tourist destinations.

Henderson:

Another firm interested in this asset class is Henderson Global Investors. Guy Barnanrd, one of its senior fund managers points out the suitability of the real estate market in a low interests rate environment: “Unlike a bond, a real estate asset has also the potential to increase revenues, providing an equity-like growth. We expect revenues and its growth to be the key drivers in the coming years."

Henderson also notices signs of rental growth in many of the markets where they operate.

Fidelity:

Finally, Fidelity Worldwide Investment bets on listed real-estate companies. For example, through its Fidelity Worldwide Investment Fund managed by Dirk Philips. This is a global fund and by “global” they don’t only mean geographical diversification, but a complete holistic point of view. This makes the management team to focus not only on real estate assets but on all the activities linked with the Real Estate Marke such as: Hotels, Entertainment complexes, builders, banks and retail sellers etc.


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