Blue Noble joins crowded European property funds sector

Competition for capital to invest directly in the property sector is set to intensify following the launch of a $550m real estate boutique in London, which comes to the market as a record number of funds also seek money.

Called Blue Noble, the London-based real estate investment management company is backed by Woodman Group, a Swiss asset and wealth manager.

It has been given control of a $450m portfolio from the $4bn Zug-headquartered group which is invested mainly in commercial property in Scandinavia.

But it is also raising capital for a new fund beginning with $100m from Woodman, which it hopes to at least double by tapping other investors before using leverage to take the fund to around the $500m mark, said Paul Forshaw, chief executive. This will be for investments in the UK and western Europe.

“For the first fund we’re planning on keeping it relatively close to home,” he said, adding he is interested in Germany and Italy in particular.

Investors have piled into property in the decade since the financial crisis in the hunt for better returns.

“In the ultra-low interest rate environment we’ve had for a decade people are looking for an enhanced return,” said Andy Pyle, UK head of real estate at KPMG. “You’ve [also] got a tangible asset that’s certainly attractive to some of the overseas investors.”

Real estate assets under management more than doubled between 2007 and mid-2017 to $823bn, according to data provider Preqin.

However, banks have retreated from managing property assets themselves since the financial crisis amid pressure to trim their balance sheets, creating a gap which new investment managers focused on the sector have filled.

“[Investor] demand for real estate is still growing,” said Henri Vuong, director of research and market information at Inrev, the European association that represents investors in non-listed real estate.

Ms Vuong added that there is also continued demand for the skills and knowledge needed to make and manage decent property investments. Mr Forshaw and the founding team at Blue Noble formerly worked in the real estate team in HSBC’s alternative investments division where they managed assets in Europe and the US.

However competition for raising capital is increasing, warned Oliver Senchal, head of real estate products at Preqin. About 550 real estate vehicles globally are currently fundraising, a record high, putting pressure on new entrants.

“Real estate fundraising has been pretty strong for the last few years [but] it’s now intensely competitive,” he added.