According to a new report from two property experts at JP Morgan Asset Management, 2013 will be a vintage year for property investors who are ready to be opportunistic.
In the report Carpe Diem, JPMAM’s Joe Valente and Peter Reilly say a key lesson of the market recovery in 2009 was its speed. They commented: “With hindsight, 200 was a great time to buy core assets, but this was not evident to all at the time, partly because of the inevitable lag between the emergence of some definitive piece of evidence pointing to a sustained period of economic recovery, and the upturn in real estate values.”
Reilly and Valente argue that 2013 may offer just such an inflection point to investors in the opportunistic sector, which has remained unloved as prime assets have recovered. They believe the real estate cycle is moving into the “relief” phase, where investor risk appetite begins to re-emerge, yet there is such a pipeline of distressed asset sales in Europe that the market is squarely in favour of the buyer.
Valente, who is head of research and strategy in JPMAM’s global real assets group, said: “Distressed sales from the banks are not only growing, but becoming increasingly politically charged. As a result, we would expect the pendulum to shift from the headline-grabbing large portfolio transactions to greater emphasis being placed on single-asset deals.” And Reilly, head of real estate Europe, said: “Just as 2009-11 proved to be a wonderful period to buy ‘core’ assets, so we believe 2013-15 will be the equivalent for the opportunistic segment of the market.”