A few months ago, Faisal Butt poured a seven-figure sum of capital into one of Britain’s leading online real estate firms. The MBA graduate had been surfing London’s property market for years. He invested in a bevy of property funds and realtors including Ivy Gate, Prime London Advisory and eMoov.co.uk, an online platform.
He had already led the establishment of a £100 million international joint venture property fund and a Mayfair-based real estate investment advisory firm. Another, an entrepreneurial venture which invests in high growth property, was set-up two years ago.
He wasn’t alone in his generous investment spree. Faisal, an alumnus of Oxford’s Said Business School, is partnered with James Caan, a serial entrepreneur who minted an estimated £95 million fortune with a private equity portfolio of businesses – including real estate.
Investors had been pulling back at the time. The financial crisis had ravaged the UK’s property sector and wiped billions off balance sheets. The markets imploded and a property bubble had almost dragged economies into the abyss.
But Faisal was undeterred. “That’s a time when innovation happens and I started to see it, and I thought that I’d like to be at the centre of that movement,” he said. “I backed more property start-ups than most other investors in London.”
His latest backing is of eMoov.co.uk, which has investors chomping at the bit, such is its growth potential. Zoopla, a rival, floated last month with a market capitalisation of nearly £1 billion.
Faisal is just one of a crop of MBA students who are buying into real estate. As the sector has experienced a splendid comeback since the crisis, graduates are eager to join the property party once more.
David L. Funk, director of the Baker Program in Real Estate at Cornell’s Johnson School says that student interest waned during the global financial crisis, but a core population of students passionate about the sector remains.
Yet demand is now on the rise. Andrea J. Heuson, director of Real Estate Programs at the University of Miami, says that MBA students are only just beginning to realize the sector’s opportunities. “They have jumped on the bandwagon as the sector [has] recovered,” she adds.
Interest is buoyed by a spurt in hiring among real estate companies. There is an increase demand for MBA students with specialist knowledge.
“There is relatively strong demand at the moment for real estate talent at Wharton from companies from across the spectrum of real estate investors and advisors,” says Todd Carson, Wharton School's MBA career management advisor.
The top business schools are beginning to take a bite out of this demand. UK-based Henley Business School has been at the forefront for years. But their real estate programs have grown hugely because of the boom in the property market, says Ginny Gibson, professor of corporate real estate at Henley.
The school has 150 Master’s students specializing in real estate, and about 200 undergraduates. “They’ve got that market edge to them,” says Ginny. All of the Master’s students have an industry mentor, and graduate recruiters from the big real estate firms come to Henley’s campus on a regular basis, she adds.
A bevy of real estate MBA and Master’s programs have been rolled out across the United States.
Last year, Rutgers Business School announced the creation of a $3 million endowed chair in real estate – in anticipation of getting an MBA concentration off the ground in 2014. Today, there are dozens of highly-ranked schools catering for everything from commercial analysis, project management, finance and investment, and real estate law.
At the Wisconsin School of Business, students can earn a specialized real estate MBA. The MBAs have an average of four years' work experience. Last year’s career fair drew a record number of employers. Sharon McCabe, a senior lecturer in real estate at the school, says students work at private equity firms, insurance companies, pension firms and property consultancies.
She says: “Many companies involved in real estate look for students who specialized in real estate… As the global economy begins to recover from the recession, real estate continues to attract more and more investors. Employers want students who understand all facets of the asset – not just the projected income and expenses.”
Students tend to opt for the commercial side of the market, says Andrea. At Miami, MBAs seek jobs in financial and marketing analyst roles for developers, and capital provision intermediaries, among others.
The school only offers a specialization in real estate, she adds. “We are seeing more intern and full-time positions available at the full-service development firms. As more new construction projects come online, there are more opportunities for financial and market analysts.”
Cornell's two-year specialist Master's degree in real estate has seen job opportunities on the commercial side hit pre-crisis levels. “We have experienced a particularly strong employment market this [year],” says David.
Students at Cornell can also opt for a dual MBA and Master of Professional Studies in real estate. But the specialist Master’s is increasingly appealing as real estate companies seek multi-sector and multi-skilled talent, says David.
He adds that career opportunities in home building have been on fire of late, but students rarely move into residential functions such as brokerage or sales. “Then [there are] a number of niche areas including affordable housing, architecture and design, historic preservation, and entrepreneurial real estate.”
But the recovery in the US residential housing market has lowered the perceived risk in the industry, says Sharon.
Ginny reckons that the rental market in London, where affordability is a big issue, is about to see a flood of investment. “You’ll see more institutional investors starting to build rental residency properly,” she says.
Although most students take the commercial route, Wharton MBAs are also entering the residential market. “Students choose to become investors in both commercial and residential real estate, and are conscious of the state of both markets in choosing their career paths,” says Todd.
“Development has recovered nicely in some markets, and opportunities in private equity and acquisitions are perennially popular options for our students.”
He adds: “For those with the proper motivation and background, opportunities are available on both the sell-side and the buy-side.”