Cobalt news
A Candidate Crunch?
Timothy Rowe
05/12/2007
As the credit market tightens and investors join the exodus from almost every market (a net outflow of €79bn in the three months to September) there is relative calm and some growth in property investment and other sectors where there are obvious tangible assets behind investment products.
The initial scare mongering of the early days of the credit crunch have subsided somewhat, as it is appreciated that after a sustained period of record growth economies and institutions are in a position to absorb recent shocks. Predictions are that recent troubles are a market correction rather than a reversal in trend which would see property values dropping into freefall. Moreover, established market players with a long term view and commitment to Real Estate are seeing recent problems as an opportunity to acquire some value in the market. We are seeing this across our client base of traditional property investors and developers in addition to the opportunistic investors.
This means that those institutions which specialise in real estate investment are continuing to hire and because other markets have tightened there is a larger and better quality pool of human capital from which they can hire. As several of the strongest specialists in the real estate investment space also operate in other buoyant markets, infrastructure finance being the most obvious example, there is still activity and cross fertilisation opportunities.
Many UK investors have continue to focus their attention on the European markets where interest rates remain lower and consequently yield arbitrage opportunities still exist.
Real Estate investment in the emerging markets is particularly buoyant with Central and Eastern Europe, Russia and China attracting the attention of investors, particularly those who are very liquid after the record gains of recent years, and whose expansion is not constrained by the current lack of liquidity in the debt markets. Individuals with market experience in these areas will find that there is still a premium available for their services.
CMBS specialists may be understandably nervous on what the next few months will hold. Of those seeking new opportunities, candidates with strong experience of the core fundamentals of Real Estate as an asset class will find themselves in a better position as banks return to a policy of holding loans on the balance sheet or syndication, rather than using securitisation as an exit route.
The demand for human capital in Europe usually drops away in Q4 as the majority of institutions approach their financial year end and the spring bonus period, this combined with the current market uncertainty makes for a relatively flat market in general terms. However, there are always opportunities in specific areas for those who understand the market well enough to seek them out. This is the case across the field of real estate and infrastructure investments. The key factor in the market is the long term business plans associate with the direct assets and portfolios that investors have acquired of the proceeding period. These plans are still on course with strong tenant demand and therefore the asset enhancement, development plans and operational management needs for these portfolios still require the expertise of traditional real estate professionals. We are therefore not seeing the increase in supply of these professionals as we expected and the driving factor in the recruitment market is still candidate led.