The time is right to reassess portfolios

Lubor Svoboda, co-founder of the ARETE investment group, explains in an interview for Euro magazine why the time is right to reassess portfolios.

The financial market has shown an imbalance over the past year. The "old rules" no longer apply, investors are trying to find a safe haven for their capital, while eliminating the losses suffered during the covid crisis. This pressure on demand is causing prices to rise rapidly and US stock markets in particular have experienced meteoric growth over the past year. However, this high growth in share prices has also been accompanied by a significant increase in the P/E ratio, which indicates the ratio of share price to earnings and also the potential return on investment in a given share title.

With share prices at their highs while real assets (and commercial real estate among them) have become significantly cheaper, an investment opportunity is opening up. This opportunity is particularly attractive to investors who want to invest for the long term and are looking for long-term stability. When investing in real estate, it is of course important to keep an eye on macroeconomic trends, regulation and the political environment, but also on asset-specific factors. Investors should focus primarily on the long-term performance and stability of the issuer, as well as the value of the LTV, which shows the proportion of equity and external financing and the risk arising from over-indebtedness.

"A current view of equities suggests they are highly priced, while real assets appear relatively more affordable, and in some distressed situations, undervalued. One can infer that the time is gradually right to reassess portfolios and buy real assets such as commercial real estate."

The full interview is attached. For more information on the ARETE INDUSTRIAL fund, which focuses exclusively on income-generating industrial real estate in the CEE region and is still open to qualified investors, follow here.