Unsurprisingly, uncertainty surrounding the outcome of Brexit negotiations is expected to continue to overshadow the UK property market throughout 2018. Forecasts by KPMG Economics predict that momentum will pick up after the United Kingdom leaves the European Union in 2019.
It turns out that singer and songwriter James Taylor was prescient when he wrote, “I’ve seen fire and I’ve seen rain.” We may well look back and view the summer of 2017 as a turning point — a pivotal moment when our trajectory shifted and challenges such as extreme weather, overbuilding, poorly-designed infrastructure, urban density, population growth, limited resources and increased risk all suddenly came into focus.
Last year saw two major events with global ramifications — the Brexit vote in the United Kingdom and the election of Donald Trump as president of the United States. These events ratcheted up the level of global uncertainty to unprecedented levels. Indeed, the Economic Policy Uncertainty Index, a widely-respected measure, found that global uncertainty hit an all-time high after the November 2016 US presidential election.
It’s a bit like one of those philosophy exam questions. The question at the top of the page is “What’s next?” The examinee puts “Don’t know” and quickly moves on to the next page and question.
We can all agree on one thing: from the perspective of young people in the United Kingdom, the decision whether to go to university has become a lot more complicated in recent years. Tuition fees in England and Wales for UK and EU students are more than £9,000 (€10,076) per year — three times the level of five years ago. Annual interest rates on student loans have also increased sharply to more than 6 percent and rents for student accommodation are not getting any cheaper.
I spent the better part of late September and early October in Germany both for Institutional Real Estate Europe’s annual Editorial Advisory Board meeting and Expo Real, and it’s a good time to offer some random observations about the investment climate and investor sentiment, as well.
Two mega funds held a first close and a launch, respectively, in October.
The fifth annual Institutional Real Estate Allocations Monitor from Hodes Weill & Associates LP and Cornell University’s Baker Program in Real Estate shows that institutional investors around the world are continuing to raise their target allocations to real estate and have now broken the 10 percent barrier; at the same time, investors are still significantly underinvested against their targets. The extent of the underinvestment varies by region.
A recent research report from Colliers International on the industrial and logistics real estate market in the Czech Republic has pointed to “change beyond all recognition over the past five years.”
A report from JLL and The Business of Cities shows that most of the world’s leading cities are in Asia. The report, which analyses 44 global cities, lists a Top Seven that features London, New York City and Paris as the top three, with Singapore, Tokyo, Hong Kong and Seoul taking the remaining four places.
A report from Colliers International on global capital flows into European commercial real estate confirms that Germany overtook the United Kingdom as the most active market in H1 2017 but shows that the United Kingdom fought back in the third quarter.