A conversation about forward-looking investments and attractive niche markets.
Georg Redlbacher, a partner of Multi Boutique Marketers S.A., has been active in asset management for over 30 years and can look back on many years of experience in companies such as Dresdner Bank, AXA IM or Credit Suisse. He also advises the Luxembourg-based RECan Global real estate funds, which invests in residential and commercial real estate in Canada with its German/Canadian team and asset management in two separate sub-funds.
Mr. Redlbacher, you are not only a partner of Multi Boutique Marketers S.A., but also active in an advisory capacity for RECan Global GmbH. What lead you to advise RECan?
First of all, we are a third-party marketer because we mainly deal with open-end mutual funds. But due to the demand from institutional investors, such as pension funds and insurance companies, we are also dealing more and more with classic institutional products. This includes, among others, the real estate sector. From our background, we prefer to work with a fund solution here as well. And RECan implements this fund solution in a Luxembourg special fund.
How did you become aware of RECan Global?
Some time ago, I met RECan partners Sven Matten and Bernhard Engelbrecht at an event of a capital management company, who took the opportunity to present their concept to me. I have to say: This convinced me.
Well, it starts with the way RECan Global is set up - both in Munich and in Luxembourg as well as locally in Canada. And as a third-party marketer, we naturally operate in the boutique sector.
We do not approach large market players who have their own sales team and have been managing large real estate funds for many years, but rather operate in the boutique sector.
And here, so-called "first timers" are also obvious for us. From there, it fits very well with RECan Global.
If you can elaborate on that a little bit, please.
We are specifically looking for the niche providers with appropriate potential and this is exactly what RECan fulfills in several respects. That is, on the one hand, they are "first timers", but on the other hand, they have a solid fund structure in Luxembourg and the partners have a long track record in asset management on the ground.
In addition, the company does not invest in a broadly based market such as Germany, Europe or even the USA, but looks specifically beyond its own nose to Canada.
Keyword Canada. RECan offers real estate funds for professional and institutional investors in Canadian metropolitan regions - as a trendsetter, so to speak, right?
Let me put it this way: Many of Canada's strengths are only now really being recognized in the current crisis. Its immigration policy, its economic strength, its overall stability. I recently took a look at the currency trend over the past five years.
You can see quite clearly that the Canadian dollar, in conjunction with economic growth and interest rates, offers particular stability and thus genuine diversification. That is particularly attractive for European investors.
We'll come back to Canada in a moment, but first we'd like to know how you assess external influences such as the Corona pandemic or the war in Ukraine in terms of investor activity in this country?
I'm actually seeing some paralysis across the investor spectrum - institutional to the smaller asset managers. In the early days of the pandemic, everyone was still adapting somewhat, for example, how do I work efficiently from my home office, how do I deal with the situation?
One constant from the beginning of the pandemic to now is that everyone is watching their portfolios very closely to make sure they don't get anything wrong. Whether it's the impact of the pandemic, whether it's inflation, whether it's the Ukraine war. Of course, that initially feels like a certain paralysis for product providers like RECan Global.
You don't feel much appetite at the moment to look at new managers, new products. This is where I initially see the biggest disadvantage for first timers or boutique managers.
In this situation, it is all the more important to focus on attractive niche markets or markets of the future - such as Canada.
Exactly. Especially if you're used to following the U.S. in detail - both economically and politically - it's just interesting to look "north of the border" now: What is actually happening in Canada?
And you can see that Canada is more stable than the U.S. in very important aspects such as immigration policy, unemployment rate, but also in terms of real estate demand and vacancy rates, where even today the financial crisis of 2008 in the U.S. still lingers to some extent.
If we also look at the rising interest rates and the suspected impending recession, we see circumstances that could have a much greater impact on the U.S. real estate market than on Canada.
In general, how do you see the investment market developing this year?
The current situation will probably not improve this year and will still be like this in 2023 - which, of course, depends on the following factors: Ukraine war, an upcoming recession and interest rate and inflation development. There is still a lot of uncertainty.
Most investors will probably act very cautiously, will try to protect their portfolios until it is clear where the journey is going - especially in terms of interest rate levels and inflation.
Do you expect some catch-up effects from investors then?
Well, I don't expect a real catch-up effect. I think economic developments will stabilize and growth based on sustainable criteria will dominate. People also talk about the effects of so-called "de-globalization".
In my view, that's where the strengths and opportunities lie. A reasonably positioned economy has the chances to develop well. Like Canada, for example.
What role do factors such as ESG and climate protection play in this context?
These already play an enormously important role and will play an even bigger one in the future. After all, investors are already required to invest green today.
This also applies to the real estate market and will become even stronger with the full implementation of SFDR, EET and the EU Taxonomy. This is an absolutely dominant theme with significant implications for those who invest. The likelihood of investing in real estate with a sustainability concept is significantly higher and more sought after than in a property to which no ESG criteria have been applied.
The same is true for the entire securities market, both the bond and the equity side.
Thank you very much for the interview!
The interview with Georg Redlbacher was conducted by Jan Kaulfuhs-Berger in German, and translated into English.
Director of Corporate Communications
RECan Global GmbH
T: +49 89 20 20 55 47