The U.S. real estate market offers lucrative opportunities for European investors. What makes the market so attractive and in which segments the best opportunities lie, explained three experts at the "777 Capital Talk – Must have America?".
There is much to be said for investing in the U.S. right now. The real estate market there is not only the largest and most transparent in the world, it also offers more attractive opportunities than the European and is far from a bubble. That, in a nutshell, is the assessment of three connoisseurs of the US real estate market:
- Ralph Winter, Founder and Principal of W5 Group and 777 Capital Partners,
- Burkhard Varnholt, Chief Investment Officer of Credit Suisse (Switzerland) AG, and
- Matthew Scholl, Head of Investment Management America at Union Investment.
They were participants in the virtual panel discussion "777 Capital Talk – Must have America?" at 16. September 2021, hosted by the Leipzig-based real estate communications and networking event agency IMMOCOM.
Real estate market USA: A completely different order of magnitude
"The real estate market in the U.S. is just as booming as that in Europe, but on a very different scale," said Ralph Winter, who invests in U.S. residential real estate through his family office, W5 Group. The order of magnitude involved is made clear by real estate market data from CBRE: according to this, a total of 79 billion euros was invested in Germany in 2020. In contrast, the transaction volume in the U.S. was $383 billion, according to consistent reports from various portals. In addition, according to Ralph Winter, the USA is the most innovative capital market in the world. "It's the home of venture capital, private equity, cryptos – all the innovations come from there, all the big capital hubs are there."
According to Burkhard Varnholt, this innovative strength is also evident in the way the Americans are dealing with the zero interest rate policy: "There is no economy that so opportunistically-actively turns the dilemma of zero interest rates into an opportunity as the US economy does."And this opportunity lies in the capital-intensive sectors. This would include "the whole bricks and mortar business". This represents "an opportunity probably underestimated by many investors" in the coming decade, is the assessment of the Credit Suisse CIO, who assumes "that we will continue to have to do without interest on savings in the 20s."
Shift from owning to renting
Matthew Scholl of Union Investment also sees the U.S. real estate market as "very positive". It is the "largest and most transparent real estate market in the world". Add to that the diversity of microeconomies and development drivers in the U.S., he said. The economy in New York is very different from that in L.A. "We see this as an opportunity," said Matthew Scholl, who, in addition to offices, is currently "extremely focused on multi-family houses". The reason for this is "the shift from home ownership to renting. Young people are coming out of college burdened with debt, marrying later and wanting the flexibility to change cities for jobs, he said. For them, he says, renting is more advantageous than buying a house.
W5 Group founder Ralph Winter has analyzed which rental apartments are particularly in demand and therefore interesting for investors. Based on the question of what tenants of the future will expect from innovative living, he defined six criteria that are now the basis of his investments: Technology, Community, Value, Densification, Flexibility and Design. Millennials in particular, he says, are very interested in living spaces that support mobile applications, and in genuine social contacts that are created in the house community. "I'm not currently investing in logistics or hotels, I'm investing in Innovative Living. Because Millennials, who still have years to pay off their student loans, can't afford to own a home. They have to go into the rental market," said Ralph Winter.