Please tell us about QuadReal
Headquartered in Vancouver, Canada, QuadReal Property Group is a global real estate investment, operating and development company.
The company has a portfolio worth CAD 27.4bn portfolio spanning 23 global cities across 17 countries.
QuadReal was established to manage the real estate program of British Columbia Investment Management Corporation (BCI), one of Canada’s largest asset managers with a CAD 145.6bn (GBP 88bn) portfolio.
QuadReal’s aim is to deliver prudent growth and strong investment returns, and to create and sustain environments that bring value to the people and communities it serves.
What is your mandate in Europe?
I started at QuadReal in March 2018 with a mandate to invest across European real estate.
So far, we have invested across a combination of city centre office developments such as the City of London’s 22 Bishopsgate, logistics joint ventures across the United Kingdom and Europe with GLP Gazeley, and value add office joint ventures in London and Paris.
We have also formed a joint venture with Unibail-Rodamco-Westfield in the private rented sector at Westfield Stratford, as well as programmatic joint ventures in the private rented sector with the Realstar Group and RoundHill Capital in London and Dublin, respectively.
Why do you favour accommodation-focused real estate?
I think we’re at an interesting inflection point of housing affordability issues, housing shortages, and a general secular trend that favours renting vs. ownership. This makes for an interesting time to seriously consider multiple forms of “living” real estate.
As the industry is generally still in its infancy across many European cities compared to markets like the US and Canada, there is an interesting opportunity to define what consistent and professional management could mean in these markets.
We’re currently quite active in the private rented sector, but we’re also keen to find an entry point into student accommodation, particularly on Continental Europe.
The key for us is finding an experienced partner with whom we can scale, which is proving challenging given the fragmented and nuanced nature of these markets.
But we also know that as with any real estate sector, there are risks to manage in the residential world.
While short term interest rates seem to be steadily holding low for now, I worry about an eventual rise against the backdrop of potentially low inflation and the current ultra low yields at which residential is trading. Your margins for error are thin, and your worst case scenario could see your development spreads vanish.
Finally, in an increasingly stringent regulatory environment, I worry about “stroke of a pen” risk blown in from unpredictable political processes. Housing is a hot button issue, and there is unpredictability in the current political climate.
How do you judge what to develop and where?
The key debate isn’t `what do people want?’, it’s what will people pay for?’.
In a new build-to-rent market like the United Kingdom, market standards are still evolving, and investors and developers are still trying to establish whether pools, gyms, common rooms, etc will actually resonate with residents in the long term.
We’re selecting locations that have robust transportation links, amenities and real reasons for people to be there.
What is the future for residential?
Housing is one of the last sectors to be disrupted by technology, but there is so much opportunity for it to do so.
In my electric car a dashboard tells me everything I need to know about what’s working and not working inside of my car – so why can’t that be the same in my home? Apps will sort out delivery from nearby retailers, and allow us to report and have maintenance issues addressed. I think we’re only scratching the surface in terms of how technology will enhance our living experience.