What do your clients value in PATRIZIA?
With 17 offices in 15 countries, PATRIZIA is represented by more than 600 professionals throughout Europe. This enables PATRIZIA to have a high level of market penetration and to manage transactions and manage properties in geographies, segments and risk styles across the entire real estate life cycle and value chain. PATRIZIA thereby offers tailored investment solutions (e.g. commingled funds, club deals, separate accounts), that reflect the different requirements of its more than 200 global blue chip institutional investors (of these >50% are repeat investors).
In Q2 2017, PATRIZIA entrusted CACEIS Bank with depositary services for three funds on its PATRIZIA WohnInvest platform – in addition to the existing PATRIZIA GewerbeInvest. How did this come about?
PATRIZIA had already cooperated closely with CACEIS in the area of its commercial business funds prior to this commission. CACEIS proved itself to be one of our competent and efficient partners in the depositary business during this collaboration. The expansion of our fund mandate requires that our partners not only stay in sync, but that they anticipate problems along with us and jointly bring about a rapid solution. CACEIS fits this requirement, the logical consequence being the transfer of additional responsibility in the business.
It seems that universal banks with associated RE divisions cannot grow volumes as quickly as RE experts like PATRIZIA. Do you share this observation?
Local market knowledge and local market access is essential for the realisation of transnational investment strategies with the acquisition of solid investment properties. This limits successful growth to those RE experts convinced and willing to establish and continuously extend its network of locals. Besides flexible and quick reaction to market opportunities is key. Specialised RE experts tend to follow up with such strategy more unconditionally than universal banks with broad variety of business divisions.
How would you assess the existing IT systems in the RE industry? Do far-reaching global solutions already exist or do local solutions prevail? How will the market develop with regard to this?
We assess (and experience) the existing IT systems being developed quite heterogenously. This is however not surprising keeping in mind enormous external and internal effort and thus costs to implement solutions improving the service level. Larger companies thus tend to be more advanced in that field whereas smaller or rather niche providers often stick to easier solutions. Expansion of databases however forces us to develop solutions providing solid storage of granular data forcing them to pay attention to further developed products. Far-reaching global solutions generally cover broad fields like property accounting quite well, specialised requirements such as far developed real estate portfolio steering however require specialised if not built-to-suit and integrated solutions. This limits not just the number of available IT products but to an even larger extent demands a global and broad application. Presently we are observing a trend from reporting solutions having been in the focus for quite a while to portfolio steering solutions. We believe in following up with such demand to a high degree.
We are observing trends in outsourcing. In your view, what role is played by the outsourcing of an RE asset manager's individual divisions (eg. middle-office – fund admin) that are perhaps not among the manager's core competencies?
We consider it essential that asset managers scrutinise their business organisation on a regular basis and respond quickly to any inefficiencies. Increased outsourcing in the market in certain lines of business opens up economies of scale for insourcers that other partners cannot realise to the same degree. Further, the options must be examined if the lines of business are those not ranking among the asset manager's core competencies and if there is no danger of again diminishing supposed advantages through new interfaces. This is a continuous process for us that will generate long-term top performance for our clients and ourselves.
What is next for the real estate market in Europe overall?
We assume a stable economic environment in Europe that will continue to be supported by an expansive monetary policy in the medium term. As a consequence, the demand for real estate will continue to grow in coming years. The share of international and global investors will increase further in the process. The limited supply of new business space within the commercial real estate market will strengthen the trend of investment in top properties in secondary areas and in secondary and tertiary locations. Due to its economic robustness and high liquidity, Germany will also continue to be one of the primary target countries for institutional real estate investors.