Investment Themes Value Investing in Real Estate
Investors are familiar with the approach of “value investing” in stocks and bonds. This investment philosophy was established by Benjamin Graham and David Dodd in their legendary textbook “Security Analysis”, published in 1934, and is also applied by famous and successful investors such as Warren Buffett. This principle aims to find assets that are underpriced by means of research analysis of company or market fundamentals.
As a real estate investment management platform that still manages assets acquired or funds launched as early as 1938, we firmly believe that a “value investing” approach can be consistently and successfully applied to real estate.
- Value-added strategies aim to generate higher risk-adjusted returns by applying active real estate strategies; they encompass investments in buildings with the need for leasing up vacancies, refurbishments or repositioning, or investments in development and redevelopment projects.
- We believe that a successful real estate investment manager needs to consistently apply a “value investing” approach – similar to the one known for stocks and bonds based on the legacy of Graham and Dodd from the 1930s – but specifically implemented in a real estate context.
- The key is to focus on markets with compelling valuations and a supportive rental-market environment. This needs to be combined with an ability to source assets with the embedded potential and successfully execute the business plans with asset management and construction teams.
In this issue:
- Introduction to “Value Investing” in Real Estate
- What Are Value Added Strategies?
- Global Approach vs Niche Strategies
- How to construct a global value added portfolio
- Markets and strategies we recommend in the current point in the cycle