As much of Europe labours under a double-dip recession and the euro crisis stretches on with little end in sight, it’s easy to see why investor confidence has continued to fall over the past few months.
But while this heightened risk aversion means fewer investments are taking place, there are rewards out there for those who are willing to seek out opportunities and take risks.
Now more than ever it is vital for investors to adapt to the times, rather than simply sticking with what they know. As well as investing in high-growth areas such as the technology sector, we at PMB Holdings have continued to develop interests in spas and sporting clubs in continental Europe, including the Harbour Club in Milan and the Aspria group’s operations in Germany and Belgium.
In 2006-07 we sold around 80% of our portfolio, enabling us to reinvest back into the UK market during the downturn. The UK market has come to be regarded as something of a destination for international investors looking for a safe haven. London in particular seems to be a favourite for foreign investors, and many of them love the city, educate their children here, have homes here, and enjoy all the benefits that London has to offer alongside its strength as a safe place for their money.
Seeking new markets
But while it might be tempting to confine new investments to seemingly safer and more stable locations such as the UK, it is important to balance this out against the chance for growth and high returns. The ongoing economic uncertainty has made the market risk-averse, but riskier ventures can offer some of the best yields.
This is true as much for individual sectors as it is countries. Investors continue to look for new growth opportunities, and it was with this in mind that we at PMB Holdings first looked at the data centre market three-and-a-half years ago.
As a market it is not particularly well understood by the property sector, but investors felt it would be an excellent way to tap into the growth of the technology sector. Technology has really exploded over the past few years, and it is arguably the growth sector for property investment today. The demand for data storage space is growing exponentially, and this is a trend that will continue.
Securing finance
While there are opportunities for investment in the property sector today, gathering the financial support necessary to take advantage of them is easier said than done. Banks are still notoriously reluctant to offer credit, particularly for riskier ventures. This wariness frequently extends even to more reliable investors with solid ideas, and European banks also tend to be reluctant to get behind international ventures.
Those that continue to face a financial brick wall despite a sparkling background and well-laid plans may be able to find a solution by looking further afield. In January 2010 PMB holdings funded the purchase of a large City of London office redevelopment with Bank of China – that bank’s first UK real estate deal.
Many overseas banks such as this are faring much better than those closer to home and may be more willing to offer credit where European banks have refused. This is not to say that foreign banks such as Bank of China should be considered an easy route, however; the gloomy economic outlook understandably causes many investors to be cautious about new ventures and risks, and to stick to safe, familiar ground. But while the rest of the market hesitates, those who take the time to seek out new markets and are willing to take risks can discover new opportunities with highly attractive returns.
Edward Jones is chief executive officer of PMB Holdings
