Global Quarterly | February 2023

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We are pleased to share the new issue of Ferguson Partners' Global Quarterly newsletter, highlighting key transactions, people moves and industry trends impacting the global real assets industries across North America, Europe, and Asia Pacific.

In 2022, rising interest rates, high inflation, and geopolitics all impacted real estate activity in the Asia Pacific, European and North American regions. While private real estate funds that closed in 2022 raised a similar amount as funds closed in 2021, with global bond and stock markets losing US$30 trillion of value over the year, the denominator effect will weigh on near-term real estate allocations and capital raising in 2023. This was evident in the recently published ANREV, INREV, and PREA Investment Intentions Survey, where globally current allocations to real estate are only 20bps below target allocations.

The aggressive hiring practices and associated compensation packages of 2021 and 2022 have subsided and some firms are looking more critically at resourcing, workloads, and staff costs, given the latter accounts for around 75% to 80% of business operating costs. We do however see continued hiring for operational asset classes, both structural driven opportunities (e.g., data centers and healthcare) and cyclical strategies (e.g., hotels) as well as private credit. There will be demand for talent with asset management and value creation expertise, as well as those who have successfully navigated previous downturns. With the improved outlook for China, so too the Asia Pacific region’s outlook improves. For those with capital, there will be opportunities to acquire quality assets at a lower basis and 2023 may ultimately prove to be an excellent vintage.

Succession planning continues to be a critical issue for firms. Not only are there fewer candidates for many senior roles thanks to the exodus of talent during the global financial crisis, but talent ready to move into more senior positions may not have experience managing during a market correction. As owners, operators and developers evolve into real estate investment management businesses, these firms not only represent new competitors for talent but they could also become sources of new talent in the industry.

Please enjoy this issue of our Global Quarterly newsletter. As always, we are available to discuss the challenges you are facing and the talent that can help your organizations identify and take advantage of the imminent opportunities.

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