‘The balance between retail and logistics is changing’

The rate of growth of online shopping is slowing down, retail assets drive online sales and sentiment is changing, as it’s all about omnichannel and click and collect

Damian Harrington, Director, Head of EMEA Research Colliers International, tells The Real Estate Day that the rate of growth of online shopping is slowing down, retail assets drive online sales and sentiment is changing, as it’s all about omnichannel and click and collect

Damian Harrington, Director, Head of EMEA Research Colliers International

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‘A very benign outlook for real estate’

Sabina Kalyan, Global Head of Strategy & Research, Global Chief Economist, CBRE GI

Sabina Kalyan, Global Head of Strategy & Research, Global Chief Economist, CBRE GI

The outlook is positive for the property sector, which is still good value compared to bonds, Sabina Kalyan, Global Head of Strategy & Research, Global Chief Economist, CBRE Global Investors, told The Real Estate Day.

The monetary policy loosening of last year is beginning to percolate through to the real economy and the context is ‘incredibly benign’ for real estate, she said, with ‘incredibly low interest rates and bond yields staying low forever. I wouldn’t be surprised if prime real estate yields fell further, which is amazing given where they are now by historical standards’.

There are reasons to be ‘cautiously optimistic,’ she said. The key threats from last year, like a trade war between the US and China and a cliff-edge no-deal Brexit, seem to have receded, although geo-politics, especially trouble in the Middle East and its impact on the oil price, remains a risk.

‘We look at a cities on a global level and at the moment the top US markets have stronger fundamentals – economic growth, job creation, wealth – than European cities, which are still stuck in a lower growth phase, so there is a bias to tilt from Europe to the US,’ Kalyan said. 

As far as sectors are concerned, logistics continues to be in huge demand but pricing has become more aggressive which ‘makes us nervous’, she said, while retail will suffer from more disruption so ‘it is not yet time to go back in’.

In order to avoid retail investors are therefore ‘forced into logistics, into offices in the best cities and in the alternative sectors’, Kalyan said. Alternatives have the best growth prospects because they still need to be established in Europe. ‘There is so much that still needs to be done, like creating a proper institutional build to rent market in the UK and other European countries’. 


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‘We are very positive on the Paris market’

The Grand Paris project sets the French capital apart from other European cities because of its huge scale, ambition and reach

Andy Watson, Partner, Europa Capital, tells The Real Estate Day that good infrastructure underpins good real estate and the proof is the Grand Paris project, which sets the French capital apart from other European cities because of its huge scale, ambition and reach

Andy Watson, Partner, Europa Capital

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‘Logistics in CEE will continue to grow’

International investors really believe in the sector but they have to work harder to find assets because land shortages are a constraint and availability of labour is a major issue

Luke Dawson, MD & Head of Capital Markets CEE, Colliers International, tells The Real Estate Day that international investors really believe in the sector but they have to work harder to find assets because land shortages are a constraint and availability of labour is a major issue

Luke Dawson, MD & Head of Capital Markets CEE, Colliers International

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‘Central London offices will outperform this year’

David Inskip, Head of UK Strategy & Research, CBRE Global Investors

David Inskip, Head of UK Strategy & Research, CBRE Global Investors

London offices will benefit from the end of political uncertainty over Brexit and will see good demand and rental growth in 2020, David Inskip, Head of UK Strategy & Research, CBRE Global Investors, told The Real Estate Day. 

‘We look for pockets of outperformance and I would say that central London offices is the number one candidate in that regard,’ he said. ‘We have seen big improvement in the occupier market through 2019 and we expect that strength to continue into 2020. What was missing was investor sentiment, activity and pricing because of all the political uncertainty holding the market back’.

Now that the Brexit issue has been resolved things will change quickly, Inskip said: ‘It will mean that you get a bit of a re-pricing and a bit of yield compression coming through in the sector and a bit of outperformance as a consequence’.

The UK market will benefit from a stable Government and more political certainty, but there are still question marks over the country’s exit from the EU, he said: ‘Uncertainty will diminish but will not be completely eliminated. We want to move on quickly, but Brexit is a long process rather than just an event, so we will have to continue dealing with it and wondering whether the UK and the EU will reach a comprehensive trade agreement’.

The risk of a no-deal and the UK reverting to WTO rules would be damaging to the economy, but fortunately it is not the most likely scenario. ‘We think there will be a limited agreement at least and other things will be rolled over so that risk will be averted,’ Inskip said.

The UK has a number of things in its favour, like a strong labour market, good earnings growth and consumer confidence and the likelihood of higher government spending and fiscal policy providing a boost rather than being a drag.

In the real estate market 2020 is likely to be a year of ‘evolution of the trends we have seen recently rather than a year of sharp change,’ he said. ‘Putting retail to one side, generally in the occupier markets we strength, robust if not spectacular demand meeting fairly limited supply and that’s leading to modest rental growth, so it is a good story’. 


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‘Developments in technology are transforming buildings’

proptech is improving efficiency and delivering cost savings as well as leading to smarter offices which are sustainable, have cleaner air and promote well-being

Kevin Turpin, Regional Director of Research, CEE, Colliers International, tells The Real Estate Day that proptech is improving efficiency and delivering cost savings as well as leading to smarter offices which are sustainable, have cleaner air and promote well-being

Kevin Turpin, Regional Director of Research, CEE, Colliers International

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‘Global brands believe in the future of bricks and mortar retail’

Matthew Roberts, CEO Intu Properties

Matthew Roberts, CEO Intu Properties

Despite widespread negative sentiment, all global brands still believe in bricks & mortar retail, Matthew Roberts, CEO, Intu Properties, told The Real Estate Day.

It has been a challenging time for the sector but, in the end, what matters is quality so the good assets in the best locations continue to do well. 

‘I have had a lovely time since I took over as chief executive back in the spring of 2019, out meeting the leaders of our top 30 customers and most of them are global brands,’ he said. ‘The really good news is that they all believe in the future of bricks and mortar retailing’.

They might be shrinking their estate, but they want to go into the top locations in the markets that they are interested in. ‘We are lucky enough to have nine out of the top 20 shopping centre locations in the UK and three of the top ten in Spain, so our customers want to continue to invest with us,’ Roberts said. 

‘We did see a bit of a time out on some of those global brands taking space in the last 12-24 months with the political and economic uncertainty in the UK but that has changed now’, he said. 

Leases that had been negotiated for months were suddenly signed as soon as the Brexit uncertainty came to an end and there was a stable government, he said, so ‘hopefully those global brands like Inditex will be back investing in the UK and we’ll see the benefit of that’.

It is necessary to adapt to a changing retail environment and landlords will have to take more operational risk as shorter leases are clearly the future, but ‘landlords can still thrive if they have the right assets,’ Roberts said.

‘When I started my life in retailing a quarter of a century ago everyone took 25-year leases, but now the direction of travel on leases is shorter and shorter,’ he said. 

‘The average lease length in Spain is three years now, but we have a very good business there, our centres are full and rents are growing. We may have to end up with more turnover elements but because of the great assets that we have, I think it is a situation that we will thrive on’.


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‘Paris is getting critical mass’

Paris: usually investors start with core but in the last 18 months there has been more interest in core plus funds and value-add and more willingness to understand the market

Beverley Shadbolt, Country Manager, France, LaSalle Investment Management, tells The Real Estate Day that usually investors start with core but in the last 18 months there has been more interest in core plus funds and value-add and more willingness to understand the market

Beverley Shadbolt, Country Manager, France, LaSalle Investment Management

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‘The UK market is in a better place in 2020’

Chris Grigg, CEO British Land

Chris Grigg, CEO British Land

The outlook for the UK real estate sector is extremely positive, even if there will still be Brexit issues and share price volatility to deal with, Chris Grigg, CEO, British Land, told The Real Estate Day. 

‘We are in a better place overall,’ he said. ‘Not all the political uncertainty that we saw last year has disappeared, but now we are in a better and a stronger position.’ 

Confidence is returning to the market and that points to a ‘pretty decent year ahead’, he said, with signs of strong demand from occupiers and more international investors deciding to return to the UK and to London in particular. 

‘We continue to see good demand from our occupiers, particularly in the London part of our business,’ Grigg said. ‘I think there is a decent chance that we will see more international investments in London this year than we saw in the last 12 months’. 

Brexit as a process is not ‘done’ and the seesaw that characterised the listed sector last year will continue, but will be much more muted. 

‘I think it will be an interesting year for the listed sector,’ he said. ‘No doubt there will be some volatility because we still have to go through the Brexit process and, if the history of the recent past is anything to go by, that will create some volatility in the share price, but it will be nothing compared to last year’.


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”The yield factor will attract investors to Warsaw and Budapest’

both institutional investors looking for safe havens and opportunistic ones looking for oversized returns are showing an interest in the Polish and Hungarian capital cities despite the relative lack of liquidity

Thomas Frater, Founder & CEO, Hussar & Co, tells The Real Estate Day that both institutional investors looking for safe havens and opportunistic ones looking for oversized returns are showing an interest in the Polish and Hungarian capital cities despite the relative lack of liquidity

Thomas Frater, Founder & CEO, Hussar & Co

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