Bluehouse Capital

Yannis Delikanakis - Time to seek alpha in CEE

Yannis Delikanakis, founding partner of Bluehouse Capital, shares his insights on CEE real estate.
2 MIN READMarch 29, 2019
Yannis Delikanakis, founding partner of private equity firm, Bluehouse Capital, says that the Czech Republic is his favourite market in CEE/SEE, but gives Greece a mention too. He sees challenges and interesting opportunities in retail - and, on the flipside of that, in logistics -  besides lots of potential in what he calls the “active-adult product,” catering to an ageing population who are not yet ready for a retirement home.  The investment cycle is at or around its peak, reckons Delikanakis, making alpha-driven investing more important than ever.

Bluehouse Capital is focused on Central and Southeastern Europe, with offices across the region (from Poland through to Greece and Cyprus). The firm’s recent acquisitions and investments include: Novodvorska Plaza, a 25,000 sqm shopping centre in Prague, Czech Republic; Marynarska Point 2, a 14,000 sqm office building in the Mokotow business district of Warsaw, Poland; Korso Karviná, a 14,000 sqm shopping centre in Karviná, Czech Republic; and Panattoni Park, a project to build, in cooperation with industrial developer Panattoni Europe, a logistics centre with 53,000 sqm of warehouse space and 3,000 sqm of office space in Radzymin, near Warsaw, Poland.

If you could give one piece of advice to investors wishing to break into CEE/SEE markets, what would it be?

Be as local as you can and always consider who will be the next buyer of your asset.

What is your favourite investment/development destination in the region and why?

In terms of market liquidity and professional maturity, Czech Republic.  The fact that there is a lot of local capital (institutional and non-institutional) willing to get invested in the country, coupled with the high professionalism of all the market participants, provide the ingredients for a healthy, long-term, well-performing market. In terms of obvious real estate opportunities, especially compared to replacement cost and to prices in other markets, Greece.

Which real estate debates/trends are on your agenda these days? 

The retail sector is in transition and therefore presents interesting opportunities and challenges. From a real estate point of view, the opposite side of retail is the logistics sector, which is very interesting as well.  The hospitality sector benefits from a positive, long-term secular trend, but hotels are not purely real estate investments.  Therefore, someone should be very careful in terms of choosing the right sub-sector and operator.
Offices, still represent the largest and most liquid asset class and, although our view is that the Wework type of product is here to stay, we still believe that there will be plenty of opportunities for the conventional product, adjusted of course to current technological and other trends.

Where does the region sit in the investment cycle and how does that impact your capital structures and investment decisions?

We are definitely at or around the peak.  But we can sit around here for a longer-than-anticipated period.  Therefore, “alpha” -  i.e. the value that one can create through active asset management in a property - is more important than ever.  We, at Bluehouse, have never tried to underwrite the movement of the market.  We have always been alpha-driven. Also, we are not driven by the size of the potential AUM.  We are driven purely by the opportunities that we see and our funds are sized for that.

Do you see a tendency for any alternative subclasses to turn into core assets in the nearest future?

I see a lot of potential in the “active-adult product”.  People live more and more years than before, the world population is aging and today’s older people have specific needs and requirements, very much different than the old retirement homes. There is clearly a demand-supply mismatch, especially in Europe.
This interview is one of a series being published on the GRI Hub following a qualitative survey by GRI Club of real estate market leaders across the CEE/SEE region.

Yannis Delikanakis will be participating in CEE GRI 2019 on 14-15 May in Warsaw, where CEE real estate markets will be discussed in further detail.
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