NEW YORK (Reuters) - Real estate executives and investors from around the world met with Reuters reporters and editors this week at the Reuters Global Real Estate Summit, held in New York, London, Moscow, Dubai and Singapore.
While the guests had different specialties and regional concerns, we decided it would be interesting to ask all of them what they like, what they don’t like, where they’d spend their own money, and where they see the next bubble.
Some of their best comments can be found below:
CHUCK LEITNER, GLOBAL HEAD OF RREEF, DEUTSCHE BANK’S (DBKGn.DE) ALTERNATIVE INVESTMENTS ARM
What to buy: “I actually like Japan, I like Tokyo in the short-run. I like Japan in the short-term. The fundamentals are pretty solid and that’s one of those market where very little has been built.”
“So even though it’s not a growth market, the fundamentals are pretty attractive ... I’m a bit biased, but I do like New York, but probably not in the next six months.”
What to avoid: “In the short-run, I think you have got to be careful about China, so again if I had to do it right now, I might take a more of a wait-and-see attitude toward markets in China. A lot of the pricing is based on explosive growth.”
STEPHEN HESTER, BRITISH LAND (BLND.L) CEO
Like to buy: “As a factual matter, all the money I have invested in real estate is in British Land and British Land-related things. And I believe that our share price is cheap from a value perspective. And I haven’t sold any shares and I have no plans to sell any shares.”
Avoid: “I would be worried about ... areas where the risk premia is yet to correct, where the compression of risk premia of the last few years is yet to correct. And those tend to be the more exciting areas of the world, where you still have the excitement of possible economic growth.”
Next bubble: “I think India has a good shot of being there. India is a low-cost location generally and a relatively underdeveloped economy that’s growing rapidly. But the price of real estate is very high. High-end office space is the same price as New York, or maybe even London.”
Like to buy: “I’d put (my money) in UK property ... because I think it’s going to bounce back, and I would be very happy with the return that I will get out of it. I’m pretty sure I can make a lot of money.”
Avoid: “Well, I wouldn’t buy an apartment in Florida. There are so many nicer places to have an apartment rather than Florida. I have one in Majorca and it’s lovely. And I’m sure the value has gone down, but it is easy to get to.”
The next bubble: “You might argue that parts of the Far East, which are notorious for their ups and downs ... I do feel that some people are going to get into some mischief over there (in China).”
CITIGROUP (C.N) IN LONDON
The next bubble: “The area that I think needs to correct the most is to the east.
“India and China look very expensive. I absolutely buy into the secular trend in those countries just as I buy into the secular trend that we’re seeing in food, but that doesn’t mean that commodity prices are currently justified.”
SCOTT SCHWARTZ, HEAD OF COMMERCIAL REAL ESTATE AT MARATHON
The next bubble: “One area that is ... going to turn out very badly is Spain. Spain is like the European Miami Beach. It has been completely overbuilt and they are really doing nothing to kind of head off any of the pain.
“I think we’re going to feel some heat in hospitality and at retail and, to a certain extent, office.
“The hospitality and retail are probably the sectors that scare me the most. Retail, obviously, because you just don’t know where the consumer is going to end up ... “
What to avoid?: “Portugal, the Lisbon office market.”
The next bubble: “In a way, it’s in Madrid at the moment; the pipeline is bigger than in other cities, but I wouldn’t call that a bubble. What could be a bubble at the moment is Singapore; rents grew 300-400 percent in the last 3-4 years. That looks a bit unhealthy.”
NEIL LAWSON-MAY, JOINT CHIEF EXECUTIVE, PALATIUM INVESTMENT
If you had to invest in a house with your own money: “I might buy New York. I sense prices are now coming off in New York, sense there’s weakness and the currency is extremely favorable. The third factor is, fundamentally, I believe in America as an economy.”
Where to avoid: “Spain.”
The next bubble: “I think that there still seems to be a lot of interest in buying second properties, and that market has now become global. Whether that’s sustainable, I’m not sure. That could be an area of risk. Brits are particularly prone to buying second homes. There’s a sense of investing in property as a permanent store of value.”
MIKE HUSSEY, MANAGING DIRECTOR OF LONDON PORTFOLIO FOR LAND
Where would you buy a house: “I’ve always liked the idea of being by the sea as an investment proposition, and I also liked being central to an exciting city. I would be conscious of the ability to exit at some point in the future.
“So, I think I would buy in Aberdeen for investment purposes, because it’s by the sea and some of the greatest golf courses in the world.”
The next bubble: “London. The one thing to remember about London is if the whole world goes pear shaped, the markets that I would feel most comfortable about being around at the end of it all are London and New York ... those are the two cities in the world that will continue to bubble and burst in cycles. But they won’t disappear off the face off the earth, they won’t go off the map like Frankfurt.”
SCOTT LATHAM, EXECUTIVE VICE PRESIDENT AT CUSHMAN &
Where to buy a house: “I would say ... high-end Manhattan. Unlike a lot of the other markets, the downturn in the residential sector has not settled into the top end of this market.
“I would say probably the safest, and those that have the most correlation to each other, are the international gateway cities — London, New York, Tokyo. In the Middle East you have Abu Dhabi, and Dubai.”
Where to buy: “Waterfront. Malibu beachfront. It’s limited. There’s no new supply being added. Connecticut, Westport, the stuff on the water ... It’s expensive, but then again, it’s waterfront.
“I’d also buy on Fifth Avenue and Park Avenue (in New York City), where there’s no new supply being added. They’re not adding new apartments to Fifth Avenue.
“I live in a co-op on Fifth Avenue. My wife wanted to buy in TriBeCa. I said, ‘You’re nuts.’ It’s just as expensive. TriBeCa’s a little more expensive ... There’s a lot of cranes and a lot of new supply being added.”
The next bubble: “I’m worried about retail because of consumer sentiment. So, I think there could be some weakness in retail. I would certainly avoid Spain right now. I would avoid Italy.”
For summit blog: summitnotebook.reuters.com/