Wenceslao Bunge considers the role of real estate investment banking expertise as the market faces up to repricing.

More than ever, real estate investment banking expertise and professionals sit within?real estate investment advisory firms rather than investment banks.

It’s been a gradual evolution; step back to the late noughties and pretty much every major global investment and commercial bank had a real estate investment banking division, typically focused on capital raising, both private and public, and complex M&A.

For the most part, the global financial crisis of 2008 was the beginning of the end. Logically, given the long cycle of stability for most of the subsequent decade, real estate teams at global banks were reduced. You could count on one hand how many people sat in any remaining teams. Consolidation and restructurings resulted in a very fragmented market.

We experienced some growth when interest rates were low, and a series of cash-box vehicles were raised around the world. With a more conservative approach to balance sheet use in place at banks, less activity in the listed sector and exponential growth of private vehicles, more traditional real estate investment banking expertise has gradually looked for new shores.

But this is not a history lesson. It’s 2024 and the market is drastically different after a global pandemic and in a completely different interest rate environment. Once again, and with repricing underway, it’s time for real estate investment banking experts to roll up their sleeves and tackle some pressing scenarios, from platform repositioning to refinancing and corporate consolidation, to spin offs of non-core businesses.?

Investment banks remain broadly focused on very large global industries and sectors, making it more challenging for them to provide the same level of local expertise and specialization that the real estate industry now requires. Real estate advisory firms have a local approach and capability. Coupled with investment banking expertise it makes them uniquely positioned to excel in both the current and future market conditions, by providing a much deeper understanding of local property trends, regulation and markets. This specialized knowledge means more valuable advice can be offered to investors and corporates.

Partnership between brokers and banks of course remains important and can provide investors with a range of expertise and resources. But most of all, and it’s something I can already see myself, despite having only recently joined JLL from the banking world, there’s a unique bottom-up and top-down offering.?

Things are different – and the coming months will determine how great a role we will play in the beginning of this next real estate cycle.