Q. How has Hines’ appetite for the real estate sector evolved in the last 12 months?
As a real estate specialist, we clearly have a long-term conviction for the sector which has a proven track record as one of the most resilient asset classes. In the current climate, we are finding our integrated operating platform is proving invaluable in providing hands-on management at asset level. This enables us to not only protect our investments, leverage income generation and drive value, but also gives us flexibility and agility in responding to a fluid and rapidly evolving market.
Q. Which sectors does Hines favour and why?
We are active across all the main sectors which enables us to piece together the different components of mixed-use, sustainable developments. We take a holistic approach in the creation of integrated work, living, retail and leisure spaces which best meet the needs of the communities in which we are operating. The common thread running through all our projects is putting people and their needs first.
Q. Which world cities does Hines favour and why?
In Asia, our focus is on the key gateway cities which offer good and growing investment in infrastructure, a large and expanding population bringing demand for real estate. We follow a data-driven approach to particular demographic trends in the region, where urbanisation continues on an upward trajectory.
Q. What returns does Hines anticipate making from real estate over the next year and the next five years?
Due to the illiquid and localised nature of the asset class, we can expect to make an additional return of a hundred basis points or more above long-term bond yields at the unlevered level. However, this is also a function of expectations on rental growth and conditions of the capital markets. At the levered level, return expectations are generally higher in the short term due to uncertainty in the economic outlook. Returns expectations may taper off as recovery cycle sets in over a five-year period.
Q. What is Hines approach to ESG?
We launched our ESG Framework in 2021 which includes a science-based operational carbon target of net zero by 2040. As we have a diversified portfolio in 30 countries, 395 cities and across property types, our approach is holistic yet systematic in action and getting the necessary systems, programmes, partnerships, and resources in place to reach them. We are also committed to leveraging our real estate expertise and partnerships to address the social inequities caused by climate change and promote human health and well-being in the built environment and beyond.
Q. What do you see as the biggest opportunities and concerns over the next year?
The resetting of commercial loans maturing in the current dislocation in the credit market is clearly a concern, alongside the monumental challenge and high expectations of transferring to a greener future and achieving net zero. However, both challenges can be flipped to opportunity, both in terms of the ability to source equity to facilitate the transition on the credit front, and to work together towards a greener and more environmentally and socially conscious society.
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