Market sentiment has been shaken recently over fears of low growth in the Eurozone and a potential slide back into recession. The German government downgraded its economic forecast to 1.2 per cent for 2014; and this is meant to be the Eurozone’s powerhouse economy.
Nevertheless, pockets of growth are emerging for investors to exploit. “We are seeing an uptick in domestic real estate activity in Dublin. It has really picked up in the last year. International managers are looking to buy in to the recovery in Ireland and a number of them are choosing to do it through regulated fund vehicles,” confirms Clara Dunne (pictured), Senior Country Officer, Caceis (Ireland).
Caceis is France’s leading fund administrator and foremost depositary bank. As such, this increased activity in real estate fund formation – either through Reits or, increasingly, through QIAIFs, the Irish AIFMD-compliant regulated fund vehicle – places the bank in a strong position to support global asset managers as they look to respond to investor demand.
“We now have a number of clients whose underlying property investments are based here in Ireland. It’s probably been one of the first occasions where the domestic real estate industry and the funds industry – which in Ireland has always been international – have merged to come up with a product that is being marketed to international investors. Most of the managers we are working with currently are UK and US managers,” explains Dunne.
Some vehicles are a pure Irish play. Others are pan-European where they have a portfolio of properties including, but not solely, Irish properties. This is good news for the jurisdiction and for service providers like Caceis as regulated funds begin to be adopted by the offshore fund manager community.
Ireland’s economy has grown 7.7 per cent in the past year and finance minister Michael Noonan recently stated his hopes of Ireland growing at around 3 per cent “for the next five years”. Moreover, tight supply and high demand for both residential and commercial real estate has re-ignited Ireland’s property market.
“There’s so little yield out there at the moment that Ireland, and in particular its real estate sector, is a bit of an outlier in the Eurozone at the moment,” comments Dunne.
Pure real estate funds or Reits have been the typical launch vehicle in 2014 but the fact that the Central Bank of Ireland has now given its imprimatur to allow direct lending funds to be registered as AIFMD-compliant funds means that the real estate debt fund could well become a popular third vehicle.
“It should garner a lot of interest. It follows on from Ireland having been a well-established centre for securitisation products. Ireland has a lot of expertise both on the tax side and the servicing side with regards to supporting debt vehicles,” says Dunne.
On the depositary side, Caceis brings a depth of expertise to managers who need either a full depositary or depo lite solution under the AIFMD.
“We have approximately EUR50bn in PERE assets so we understand the specific concerns of those managers as they start to move towards regulated fund structures. For PERE funds we have client-specific teams; the same team will provide a full service to the client from depositary services to cash monitoring, investor relations, etc. Everything is managed by a dedicated team.”
