Great time to buy, says fund manager

Source : Business Times - 22 Jan 2009

First Property Group, a UK commercial property fund manager, may spend as much as £200 million (S$413.5 million) in the next two years on commercial property in central and eastern Europe as the collapse in prices creates buying opportunities.

‘All sellers on the market now are distressed and need to raise cash so this is a brilliant time to buy; you just name your price,’ chief executive Ben Habib said in an interview on Tuesday.

The London-based company has £200 million of cash and credit facilities available for purchases, Mr Habib said.

Eastern Europe’s economies are slowing as investors flee riskier assets in emerging Europe and richer trading partners in western Europe struggle with imploding demand in the aftermath of the global financial crisis.

The value of Moscow shopping centres slumped 36 per cent last year, according to research published by CB Richard Ellis Group, the world’s largest realtor. Kiev office prices plunged 40 per cent and the price of industrial property in the Ukrainian capital slid 34 per cent.

The company, which has about 88 per cent of its assets in Poland, has also looked at ’snapping up fantastic’ deals in other countries including the Czech Republic, Slovakia and Britain since the credit crisis started about 18 months ago, Mr Habib said.

First Property is working on a deal worth more than 50 million euros (S$97 million) which includes assets in Poland, the Czech Republic and Slovakia. The deal may close in a couple of months, the executive said.

The company is also in talks to buy a UK shopping centre worth £4 million, its first deal in the country in about three years, Mr Habib said.

‘The UK is in such a deep economic dive that you can get a good price here as well,’ Mr Habib said. ‘Ultimately, I’d still prefer to buy in Poland or the Czech Republic; they’ll recover from the downturn in a much better shape.’

Still, First Property is acutely aware of the need to reduce risk in the current global economic slowdown, Mr Habib said. ‘The biggest threat would be tenants that can’t afford to pay rent,’ he said.

‘We’re only looking at very low-rent and very high-yield properties or those that have so to say bullet-proof renters,’ he added.

First Property in November posted first-half net income of £1.33 million compared with a profit of £1.24 million for the same period a year earlier.