Apparently, we are in the second wave of the coronavirus epidemic, which is a special time. But if we were talking about the real estate market at the end of 2019, we would probably deal with how much growth awaits us ...
Back in the spring of last year, no one knew what effects the first wave of the epidemic would have on the economy, office work, or the general behavior of the people and what it would bring. I would say that some people are doing just as well and some even better than last year, which is good. Unfortunately, this cannot be said of everyone, there are also sectors that have been relatively negatively affected by the overall situation associated with the covid.
What surprised you in 2020?
I feel that real estate seems to be a completely relevant opportunity for people who are currently looking for assets to invest in. Real estate is still considered a relatively ‘safe-haven’, with a lot of money flowing into it. When it comes to investing in real estate, I was certainly surprised by the minimal impact on sellers' expectations. I had the feeling that the development of the real estate market will be a little different, but the prices are completely stable, despite the fact that it could be expected that even the seller must accept the risks associated with current developments.
How are the office buildings on which the BHS Real Estate fund is focused doing at this time?
How they thrive depends on many factors - the location in which the building is located, starting with the length of the leases and tenants, which must be distinguished according to the fields in which they do business.
But definitely, in this case, there will be some differences between corporations and start-ups, for example.
I would not like to dishonor smaller companies, but they are likely to be trying to save at the moment, wherever possible. They usually have no or very little financial reserve. It is therefore quite logical to assume that such a smaller company, such as a start-up, with a lease for an indefinite period, decides to terminate it in the event of an unexpected situation. Or at least try to agree with the landlord to reduce the rent. On the other hand, I think that large companies that are financially secure and have signed leases for five or more years are usually not affected by this issue and the landlord's relationship with the tenant will not be disturbed in any way.
What do you think about the currently quite popular home office?
Depending on how the trend of working from home is currently being publicized, one could get the impression that this is a new standard. When you want to know the relevant opinion of working from home of one of the owners or directors of companies who are responsible for generating adequate results, almost most of them will tell you that they can not imagine not having personal interaction with their employees and colleagues in the long run.
Looking from the outside, the real estate market is not moving much at the moment. Do you feel the same way?
The fact that the real estate market is not moving at the moment is due, on the one hand, to the fact that we always have huge surpluses of money, mainly because in the Czech Republic there is no growing need for large-scale liquidation of invested funds. So people are not suffering from a basic deficiency for now. The fact that several domestic funds of qualified investors, which are looking for long-term investments for five, seven, or more years and who firmly believe in the domestic environment, have also had a positive effect on stability, also has a positive effect on its stability. We must realize that there are companies that hold their properties firmly and are satisfied with their tenants who pay rent responsibly.
Are there any new opportunities on the market at the moment?
Definitely, but it must be carefully searched, and at the same time it is essential to consider with whom you decide to enter into a new transaction. I recommend that not only these transactions always take place between trusted partners. The real estate market offers countless opportunities, but they are circulating in a certain narrow group of people, so it is quite evident that the range of potential buyers will be limited for transactions in the order of hundreds of millions or billions of Czech crowns. It is therefore very important to build a good reputation, both on the part of the seller and on the part of the buyer.
BHS REF completed the last transaction in June this year. How do you perceive its timing?
This is a newly built office building, the Hamburg Business Center in Pilsen. We have been working intensively on this transaction for several months, and we have begun before Europe was hit by the covid and the associated restrictions. I think that this whole transaction, which brought another 7,700 meters of leasable space to the fund's portfolio, was at the end of the negotiations a lot about fairness and the determination of both parties to successfully complete it.
What types of investors is the fund intended for? What are the benefits of a fund of qualified investors in general?
The fund is intended primarily for investors interested in long-term investments. A fund of qualified investors is then defined by the fact that the investor is not only able to invest a certain amount of money but is also able to prove that he has some other financial background, experience, knowledge and of course adequately understands the product in which he invests his money.
What is the minimum investment amount?
Until three years ago, it was an amount of at least 125,000 euros or the equivalent in Czech crowns, which needed to be invested in a fund of qualified investors. However, the amendment of the legislation also adjusted the minimum invested amount, which is currently set at CZK 1 million, provided that the investor meets the other conditions already mentioned above.
To what extent do your colleagues, business people, and psychologists have to be?
Being empathetic can help them communicate with the client and establish new relationships. But we are definitely not going in a direction where we try to sell people a specific product at all costs. We focus primarily on ensuring that our clients, investors, have a well-diversified portfolio. Today, we offer six funds of qualified investors, which are focused on various areas from real estate, through private companies, growth opportunities, options trading, bonds, to exclusive cars.
What is the current position of securities in the investment market?
Some investments are currently extremely good compared to the levels in the spring of this year. If we focus on the stock market, it is in the slight deficit, but it is an order of magnitude 10% on the PX index, which is, say, such a representative of the Prague Stock Exchange. I don't think the decline is huge, and I would say that stocks are basically doing well, especially in the United States, where index values are above the levels at the beginning of the year.
Is it still worth investing in gold?
As far as gold is concerned, it does not bring anything in itself, but for millennia it has been considered a store of value, so investing in it definitely helps to stabilize and diversify the investment portfolio. Investors who have held gold for the last two or three years now have an appreciation in the tens of percent. Among other things, gold is also perceived as a kind of protection of property.
How do you view investment trends in cryptocurrencies?
If someone asked me if it was good to take all my money and invest it in cryptocurrencies, I would say with absolute certainty that it was not. I think that the risk in the case of such an investment would be really huge, moreover, this market is not regulated in any way. Cryptocurrencies are certainly not something to invest in a significant amount of money. On the other hand, I'm talking about some diversification, so if a person has more capital assets and can afford more exotic investments and cryptocurrencies would be interested in why not try it to a lesser extent.
In your opinion, will the type or ratio of investments in which it would be appropriate to save money change due to a pandemic?
This is very difficult to estimate at the moment. I think that everything will start to show only at the end of this year, and only in the course of the following year will we see all the real impacts.
Source: // Estate