Global Real Estate Not Being Judged on Fundamentals

10/12/2011 | By Matthew Bechard

Speaking with during the European Public Real Estate Association's annual conference in London in early September, Patrick Kanters, managing director and head of global real estate with APG Asset Management, said now is an excellent opportunity to get into the real estate investment market.

"Going forward, we think that entering the markets this and next year will provide very decent returns," he said.

The European listed real estate market has undergone a sharp correction, and Kanters said it is now trading at a discount to net asset value. He added that the correction is very much a temporary problem and not related to the underlying fundamentals.

"It has been a reaction to capital market events," he said. "As in any panic time, asset classes are moving in sync just like we are seeing right now. I think eventually people will take a more fundamental look at real estate again, and real estate will correct in a positive way to the values that they really embed."

Kanters said at APG they invest in both listed and non-listed real estate investments. He said if you compare the listed real estate market to the non-listed market you will see more value. However, he said over the long term it is more important what you are investing in and where than how.

"We just want to take a view on what is the best investment portfolio, what is the best management, what is the best governance structure," he said. "We take a long-term view, and by nature being a real estate investor you have a long-term view. On the non-listed view it is highly illiquid so you are a long-term investor. Listed is a full proxy for direct real estate."

Within the European real estate market, Kanters said stock picking and locations are more important than ever. He said that is because he does not see a strong population growth in most European markets, so it is really about specific cities and locations within those cities that can still be very promising.

"On the other hand, there is a large amount of more secondary real estate in cities that will show declining populations that are at severe risk," he said.