The global cohead of one of the world's largest real estate empires, with assets worth about 325 billion U.S. dollars, told a Toronto property conference that when no one expects you to buy, it is the right time for purchases.
Nadeem Meghji of Blackstone, made the comments to Daniel Fournier, the executive chair of the real estate investment firm Oxford Properties Group during what was described as a fireside chat at the Real Estate Forum on Wednesday.
"In the fog of war, when sentiment is still negative and it is not obvious things have turned, is when you want to be deploying capital," said Meghji, whose firm has purchased 30 billion U.S. dollars in real estate in the last 12 months. "We are not waiting for the all-clear sign."
The company has its eye on Western Europe, even with a slowing economy there, because the sentiment is so negative and liquidity so limited that capitalization rates are higher than in America. Also, borrowing rates are lower than in the United States. Logistics is a core interest, with hospitality a focus in Southern Europe.
"What we see happening now is an inflection point. We said publicly [at the beginning of 2024] that we see values bottoming, and what we have seen is three straight quarters of values increasing. It's not a V-shape recovery, and there are still challenges in office, but we see a recovery," Meghji said regarding the global real estate market.
Blackstone has less than 2% of its portfolio in the U.S. office market, but it is looking at properties. "Even before the pandemic we had underweighted office because what we saw was [capital expenditures] growing faster than rent," he said.
In addition to Europe, the company is focusing on India. The executive noted the Asian nation is the fastest-growing major economy in the world and yet, with a population of 1.4 billion people, has less Class A warehouse space than Detroit, Michigan, while Phoenix, Arizona, has more data centre capacity than the world's most populous country.
The executive said that sharp reductions in borrowing costs and the increasing availability of credit are driving real estate activity.
"We have two or three times as many bidders showing up at auctions," Meghji said.
The forum was a homecoming for Meghji, a former Vancouver resident who brought his parents to the event.
"Like a lot of Canadians, I grew up with immigrant parents. They moved here in the 1970s. They didn't have a formal education, so they hustled," recalled Meghji, noting his mom went into residential real estate after selling cosmetics. "They created opportunities for me with their sacrifice."
The Blackstone executive earned a Bachelor of Science degree from Columbia University. He would go on to earn a law degree and a Master of Business Administration at Harvard University.
"He's a humble guy, but let me tell you a bit about him," said Fournier, a long-time business contact whose own company, Toronto-based Oxford, has a portfolio worth 63.5 billion Canadian dollars in assets with 147 million square feet of commercial space.
"He graduated summa cum laude from Columbia in electrical engineering. He finishes his law degree but doesn't want to be a lawyer, so he does his MBA. He finishes all this, and two months later he goes to work for a startup real estate company in Houston. Most people go to some impressive firm in New York City."
While working in Houston in 2007, Meghji started reading about Blackstone. "I was thinking: 'What are these people doing?' It seemed so interesting," he said.
He started working for Blackstone shortly afterward and, in 2015, became head of real estate for the Americas before eventually taking on his current position in January 2024.
Fournier asked the Canadian what he thought about real estate in his former country.
"What we like about Canada is you have world-class cities, you have world-class universities and a stable political system with population growth," said Meghji, noting the country has some near-term pressure on immigration.
He said Blackstone plans to continue its focus on warehouses through subsidiary Pure Industrial, which now has a 40 million-square-foot portfolio in Canada. Blackstone's purchase of Toronto-based Tricon Residential has given it a multifamily development platform north of the border.