19FEBRUARY 2024Investment management is a wonderful job that can be summarized in two words: resilience and thoroughnessOver the past decade, what significant changes have you observed in the real estate investment landscape? How have these changes impacted your investment strategies?After the GFC of 2008/2009, the commercial real estate market was a complete wreck. Assets were trading as very high yields (7-8 percent for core office buildings). Then the ECB began its `quantitative easing' strategy, which lasted more than originally anticipated. With this incredible liquidity influx in the markets, the real estate sector beneficiated from very cheap financing, and buying real estate began to interest many investment firms. With more and more players on the market with unparalleled fundraising, assets were trading at lower and lower yields which, eventually, created a kind of bubble (with a peak at 2,75 percent for the office prime yield in Paris).Real estate developers, such as Bouygues Immobilier, built numerous office buildings even in B+ locations, where rental demand was not as strong. These buildings, sold to institutional investors are now deserted and we have 10 to 20 percent of our real estate stock that is ripe for transformation.To summarize, we have been building office assets for the past 10 years with little to no consideration for the product (location, specifications, tenant grade, etc .) as investors were lining up to buy newly developed assets at record prices. Things slightly changed with the ESG policies rising within investment companies. Developers had to adjust the way they were building office assets (to comply with the EU Taxonomy, or article 8/9 of SFDR, or just to benefit from a certification such as BREEAM or LEED). Our construction methodology had to adapt.In 2023, we are not even considering building office assets anymore, even if the contemplated product is 100 percent ESG compliant as we fear our exit price will not be as high as before as investors have difficulties pricing assets and financing is more and more expensive.What advice would you give to young professionals who are interested in pursuing a career in investment management?Investment management is a wonderful job that can be summarized in two words: resilience and thoroughness. Investment managers are constantly shifting from one project to another, and it is mandatory to have a good methodology in order not to miss and element. As we are in the spotlight, we must take responsibility for our underwriting and it is easy to make mistakes when we are juggling 15 projects at the same time. Therefore, being thorough is of the utmost importance.Furthermore, we are working on acquisition projects all day, and only 1 out of 100 can be materialized. Resilience is very important to remain unaffected when a project is suddenly killed for any sort of reason.Author's BioI have a Master's Degree in Business Law (5 years within multiple universities Paris 11, Paris 2 (Assas) and in Leicester in the UK) and I completed my education with another Master's Degree in Management and Finance at Dauphine University.I started working in 2015 as a valuer at JLL. My job was to provide valuation reports and guidance to institutional investors.In 2018, I moved to Cushman & Wakefield as a senior analyst, working in the investment brokerage department. My job was to write pitch, teaser and investment memorandum to support our senior brokers.In 2021, I joined Paref as an investment manager, a subsidiary of Fosun Group (a Chinese conglomerate). It is an investment management firm with around 3BN AUM throughout Europe. I stayed around 1 year before being poached by Bouygues Immobilier. During this time I have the opportunity to do acquisition for an open-ended fund that was investing in Poland.Ever since summer 2022, I work at Bouygues Immobilier, where my main mission is to buy obsolete office buildings, either to regenerate them, or to transform them into hotels, or serviced apartments. INSIGHTS INTO INVESTMENT MANAGEMENTThis article is based on an interview between Financial Services Review Europe and Sebastian Hoepffner, investment manager at Bouygues Immobilier, where he discusses about his role in the real estate industry.
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