Banks staff up to work real estate markets
While homeowners on both sides of the Atlantic are revelling in higher house prices, financial services firms are also benefiting from a healthy real estate sector, and adding staff to deal with demand.
Real estate-related financial services jobs fall into three broad categories: M&A advisory, financing, and real estate fund management. Recruiters report recruitment across each one.
Ghada Sousou, managing director of Armstrong Sousou, a New York City-based real estate executive search specialist, says hiring is inspired by banks' attempts to fuse M&A and financing real estate practices, and by funds' need specialists to identify local investment opportunities, particularly in Europe: "There's been a lot of capital raised, but not many deals done," she says. "There's a real need for local real estate specialists."
Citigroup is the latest bank to attempt a fusion between real estate financing and advisory. Last week it emerged the bank is creating a new global real estate division situated between its global investment banking and global fixed income divisions.
Sousou says Citigroup isn't the only bank looking to combine the financing and advisory elements of the business. "A lot of banks are reassessing their real estate strategy and looking to upgrade talent as a result," she says.
The head of real estate banking at one US bank says senior management teams are increasingly prepared to put money into the business: "There is a lot of excitement about real estate, particularly in Europe where a cyclical upturn is being strengthened by governments and corporates, which are selling off large amounts of real estate to recapitalise and finance spending requirements."
The rude health of real estate sector is statistically confirmed. According to Jones Lang LaSalle, a Chicago-based commercial real-estate services firm, global investment in commercial real estate rose 12% in 2004 to $457 billion. Meanwhile, data provider Thomson Financial says banks globally earned $996.3 million advising on real estate deals in the first half of 2005, making it the fourth most lucrative sector, behind financials, telecommunications, and energy and power.
Sousou says European banks are adding talent to real estate M&A advisory practices: "The past six months have seen more activity than the past few years combined, and there's more to come." Jonathan Baines, a managing director at search firm Whitehead Mann in London, confirms the trend: "Real estate hiring has been very active this year, particularly in continental Europe," he says.
France drives Europe's real estate engine
Recent real estate hires in Europe have largely been a question of musical chairs. In July, for example, Citigroup poached Nick Jacobson from Deutsche Bank as head of European commercial real estate banking. This followed the departure of a team of senior real estate bankers to Merrill Lynch in April.
In December 2004, HSBC hired Ahsan Allahi, a senior real estate banker from Eurohypo, the German real estate investment bank, prompting Eurohypo to poach Philip Ward, a real estate banker from Bear Stearns, in July. This followed the appointment of Philippe Tannenbaum as head of property research at Credit Lyonnais in May.
Tannenbaum points to France as the motor behind recent European real estate activity: "France has been the leading market in European real estate over the past couple of years. Tax changes under SIIC have raised the profitability of French real estate companies and encouraged investment and consolidation." Landmark deals include the $7.1 billion purchase in April 2005 of Gecina, a French real estate company, by Spain's Metrovacesa Group.
Antoine Morgaut, head of financial services at recruiter Robert Walters' Paris office, says real estate hiring in the country is healthy, particularly in the financing and asset management sectors.
French recruiters say Barclays Capital is expected to build a French real estate financing team from this September.
US: Deutsche, Harris Nesbitt and Calyon among hirers
US real estate recruitment is equally healthy. In the past month, Harris Nesbitt hired two real estate equity research analysts, and Deutsche Bank appointed Devin Murphy, a managing director in its US real estate banking team, global head of real estate investment banking. This followed the recruitment of Milton Chacon from Moody's Investor Service as a director in Deutsche's commercial real estate group.
In April, Calyon, the corporate and investment banking arm of the Crédit Agricole Group, hired John G. Christensen from HSBC as a managing director in its US real estate finance group.
Unlike Europe, where activity is driven by structural changes, the strength of the US market is largely cyclical. The global head of real estate banking at one US bank says: "The US real estate market is mature, but interest rates are low and non real estate equity performance is lacklustre, so demand for REITS is high."