The new best route from investment banking to private equity
If you're the sort of person who likes to plan your career years ahead, we have a tip for you. Go into real estate. Now. You could guarantee yourself an illustrious future in private equity.
"Between 2009 and 2011 banks hired almost no one onto their real estate investment banking teams," says Andrew Pringle at recruitment firm Circle Square. "They are now hiring again, but beyond analyst 1 there's a huge lack of talent. Anyone hired now will be promoted very quickly."
Matters are being made worse by real estate private equity funds, which are back in the market in a big way. Europe's distressed real estate loans are particularly popular. Blackstone, Cerberbus and Lone Star among the buyers. In 2014 European banks sold €65 billion ($68.9 billion) of commercial and residential property loans, up from €27bn in 2013.
"Everyone's crying out for both analysts and associates," says John Lenz, director at real estate-focused Caravel Search. "Experienced associates are as rare as hen's teeth. Banks are desperate to keep hold of them and private equity funds are desperate to poach them. It's creating a lot of pent-up demand for talent."
If you have the good luck to be going into real estate investment banking now, you will therefore a) find yourself promoted very quickly and b) find yourself hotly pursued by expansionary real estate funds. So says Pringle: "Rather than waiting for associates, the top private equity funds are actually hiring people directly into analyst positions - they really need analyst 2s and 3s."
One of the best courses for real estate professionals in Europe is the MSc in Real Estate run by Cass Business School. Tony Key, professor of real estate economics at Cass, says it's understandable that banks suddenly want to hire real estate expertise again: "We used to have close contact with a few banks which were very heavily geared towards taking our graduates. However, they fired all their real estate professionals after 2008 and we haven't heard much from them since."
Rather than going into banking or private equity, most UK real estate professionals want to become members of the Royal Institute of Chartered Surveyors, says Key. That's unfortunate for finance firms, but fortunate for real estate finance professionals, who will be all the more scarce as a result.