1:21 PM, March 1, 2024

A transparent approach to property investment

| The European |

BlueRock Group meticulously tailors its real estate portfolio to ensure its values are aligned with the demands of corporate social responsibility

As a result of the Covid-19 pandemic, the past two years have seen a general shift in people’s priorities. Health, family, and security have become the things that really matter, over travel, leisure and indulgence. This has not been lost on the corporate world, which is also now conscientiously focusing on the human side of things as well. Companies and organisations across all sectors are waking up to the realisation that short-term profits and exponential growth are not sustainable, nor even valuable to shareholders in the long-term. Priorities are changing from simply achieving higher returns to delivering on sustainability and being more responsible. 

When it comes to the environment, the real estate sector accounts for a whopping 40% of global greenhouse gas emissions, and is unfortunately lagging behind many other sectors by quite some margin in addressing these issues. Also of paramount importance is the need for greater corporate social responsibility. In an article from February 2020, Forbes Council Member Bryan McLaren called real estate “the backbone of corporate social responsibility” and that “the world demands long-term value created in establishing community sustainability and community prosperity”.

This is very much in line with BlueRock’s approach to their biggest investment project to date. In the Berlin Residential Portfolio the Swiss firm is investing in multi-family houses in central Berlin. The development poses an interesting and significant opportunity, because Berlin presents a complex housing case: the unprecedented high demand for homes is further intensified by a worryingly small number of new-build developments and a heavily regulated market. The temporary rent cap, put in place from 2020 until 2021, did not help the matter as initially envisioned, as it mainly profited wealthier Berlin residents living in the upper class neighbourhoods. It also shifted the emphasis from renting, to many property owners looking to sell their assets. BlueRock positioned itself in an advantageous spot during this upheaval and has put together a project in response to these unique circumstances. With a portfolio comprised of 20 residential buildings, BlueRock answers the significant housing demand in the German capital by extending and adding new housing space for the everyday people of Berlin. The focus lies on creating new and affordable living space by building out available attic spaces or adding side wings and rear houses, wherever possible. 

Berlin is a very diverse city that wants to keep its charm and has implemented various regulations to maintain this melting-pot characteristic. The BlueRock Berlin Residential Portfolio is very much in line with that idea, as the company’s founding Partner Ronny Pifko says: “The baker and the banker should continue living side by side”.

Interestingly enough, CBRE has reported an unprecedented global boom in the multi-family house sector. According to their findings, the European multi-family house investment volume has had the highest jump recently, with an increase of 24% in 2020 compared to the 17% in the previous year. Investors are very confident in the multi-family house market across the world and have been noticeably active. The asset class has been the most resilient during the pandemic, with a comparatively low drop in investment volume. In its H2 2021 summary, the CBRE outlook sounds very promising, stating: “We expect declining vacancy rates over the next 12 months, which will lead to solid rent growth. The urban core submarkets that were most affected by Covid-19 will likely recover steadily as more workers return to the office. We also expect further cap rate/yield compression as the appetite for multi-family house investment rises globally.”

A return to normality
Although the residential market has been neatly incorporated into the BlueRock Group asset allocation, their long-standing track record of investing into office buildings in Germany remains an integral part of their business. Now that the lockdown situation is calming, with home office trends dropping, various major Core and Value Add projects in the German office market are back in the BlueRock pipeline and underline their faith in this market segment. The office will always be an integral part of day-to-day business all over the world and the take up of German office space was 12% stronger in Q1 through Q3 2021 than the same period a year before. After successfully completing the first investment into an office building since the pandemic, in the outskirts of Frankfurt in 2021, the next is currently on the docket and being prepared for potential investors. 

As a boutique investment firm, BlueRock has always had a holistic approach to its investors and investments as such. Working without any liquidity pressure gives them the opportunity to carefully select each venture according to current requirements and investment appetite. Instead of investing into whatever comes up first, they choose only what aligns with their extremely strict benchmarks, and each opportunity that arises must pass a rigorous due diligence analysis, whether technical, financial, legal or tax-related. This allows the company to present investment opportunities which have been refined to the last detail and gives the investor the security and assurance that nothing unexpected will arise during the investment period. This is further underlined by quarterly reporting on each investment and complete transparency on all sides. 

Headquartered in Zurich, the BlueRock department heads act as an integral hub function between administrators, banks, asset managers and presents a complete package for investors. Their 10-year track record shows an impressive average return of 16.64% p.a. on sold investments in Germany, and investors have always returned for new deals, happy to stay in the BlueRock investors pool. The boutique feel of this Swiss investment house is something not many others can offer and makes them stand out in the crowd. The group knows what its investors are looking for and can answer to their ambitious demands. BlueRock Group continues to maintain a rigorous investment criteria, with a focus on quality, transparency and sustainability – never making hollow guarantees or taking unnecessary risks.

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