The notion of alternative investments in property will be redundant in 10 years time, argued Stephen Pyne, chief investment officer of ING Real Estate, speaking at a session at the world’s property jamboree MIPIM, held last week in Cannes.
But hotels have for many already entered the mainstream asset class. And few believe that this is a short-term blip created by excess liquidity in the market.
“We’ve been increasingly interested in non-mainstream,” said Pyne, distinguishing property asset classes that are retail, office or industrial as mainstream.
These traditional or mainstream markets were very hot and prices very high, he added. And ING had therefore moved into alternative assets.
“We’re looking for good performance and diversification as a fund manager and these can provide that,” he said.
Moving beyond the overheated traditional sectors does present problems. In particular, it means understanding that the performance was directly linked to the operational cashflow of the business housed in the building, he said. He grouped alternative assets under four basic headings: leisure, residential, infrastructure and agricultural.
Blackstone’s Chad Pike said that the opportunity for private equity in alternative investments depended on particular circumstance.
In the UK, for example, pubs were no longer interesting due to their high valuation. “But we are believers that the restaurant market will grow as people switch from alcohol to food,” he said. Backing this hunch, Blackstone has bought the Tragus restaurant chain in the UK, owner of the Bella Pasta and Café Rouge brands.