Starwood Capital’s European debt fund, the £363.4m Starwood European Real Estate Finance (SWEF), views Ireland and Spain as offering the best ex-UK European commercial real estate (CRE) lending opportunities in the year ahead and even hints at a possible maiden investment in central and eastern European markets (CEE).
Brexit, despite all its uncertainties, could throw up some lending opportunities as multiple data points consistently show both the reduction in CRE finance last year combined with higher markets. SWEF points to a possible promising emerging trend in the performance of the UK hospitality sector, which could increase the appeal of the market to investors this year. SWEF reported that it is increasingly seeing opportunities outside the mainstream sectors, as investors look to alternative sectors which offer higher yields and, in the case of the UK, provide greater insulation from Brexit uncertainties, as assets are often correlated to demographics, rather simple supply, demand and occupier trends.
“The combination of these uncertainties and a more conservative mainstream lending environment, we do expect the group to continue to benefit from the opportunities such an environment presents,” wrote SWEF in its Q4 Quarterly Factsheet Publication. “We are seeing an increased interest from investors in alternative asset classes outside of the traditional mainstream real estate sectors of office, retail and logistics, with purchasers looking for opportunities in hospitality, education, healthcare and datacentres. The group is well-positioned to capitalise on these lending opportunities given the Investment Advisor's wide experience across the real estate spectrum.