In his debut finance column in Estates Gazette this week, Richard Dakin, managing director of CBRE Capital Advisors, warns that fierce competition for European real estate could lead to investment mistakes as property companies venture into less well-known areas.
“The availability of capital and the requirement to deploy makes decision-making in the current environment ever more difficult,” he writes.
Dakin, who was previously managing director and head of the corporate real estate business support unit at Lloyds Banking Group, says many of his conversations with property company chief executives “revolve around a concern that business models, which have worked so well over many years, may no longer be appropriate in the current market”.
He continues: “As a result they are looking to challenge the very foundation of their businesses – requiring far more strategic thought around company structures, funding, locations and business partners – a precarious position for those who are inexperienced and at best far more risky for the remainder.
“The industry is, therefore, at an interesting point in the market cycle where, almost certainly, it is far easier to make mistakes with firms starting to venture into less well-known areas and increasing their risk from both a value and strategic perspective.”
