Bank of Ireland Private Banking yesterday announced a strategic partnership with AEW capital management to exploit real estate opportunities in the US.
Under the deal, AEW will source property deals in the US market on behalf of Bank of Ireland private banking clients. "Our view on the US is that investors need exposure to one of the most dynamic and deepest markets in the world," director Peter Collins said yesterday.
Mr Collins said rental growth and strengthening occupancy were taking over as criteria for shaping investment strategy.
Mark Cunningham, managing director of the investment arm, said the "easy money" in property markets had now been made.
"Our clients have been increasing their weighting of investments into equity markets and, with our funds delivering in excess of 20 per cent last year, it was a move that has been richly rewarded," he said.
Growth in new equity investment by the bank's private clients is predicted to accelerate from 16 per cent in 2005 to 57 per cent in 2006, while growth in property investment is expected to decline from 148 per cent in 2005 to 34 per cent this year.
Mr Cunningham said commercial property markets in most European countries were now "fully and fairly priced" and that the "easy money" had also gone out of eastern Europe, but added that property investment remained attractive in selected countries.
Pat O'Sullivan, economist with Bank of Ireland, pointed to US and Asian markets as areas of remaining opportunity.
"Asian markets are characterised by high yields and low vacancy rates. The region is attractive. US commercial property yields are strong, vacancy levels are falling and rental yields are growing," he said.
Mr Collins pointed to a shortage of grade A office retail and hotel properties in Asia as an opportunity for investors abroad "If you can get in at development level with the right kind of partner, that could be quite rewarding over a five-year period of more."
He said a drive by retailers to move to premises that were more efficient, spacious and modern was an opportunity to be exploited.
Bank of Ireland Private Banking manages approximately €3.6 billion in equity, bond and property assets. AEW Capital Management is a real estate investment service company and subsidiary of IXIS Asset Management Group and manages $32 billion (€26 billion) in real estate and equity.
