Everyone starts to worry about securing the barn door only after the cows have vacated the barn. The fact is, most reactions to risk involve scraping the toast after the risks have turned into adverse events. A more productive approach to risk management would be to identify in advance all the things that might burn the toast in the first place.
Recent investment data show that liquidity is starting to return to the parts of the UK market believed to offer the strongest growth prospects, such as logistics and residential. The continuation of this trend, however, rests on increased capital allocation to UK real estate from international investors. Is this something we can expect to see in the near term?
With inflation and interest rates hitting hard, many are simply refusing to guess how this will play out in the short, medium and long term for occupiers, developers and investors in industrial and logistics real estate. But, as always, there is little need for any crystal ball gazing. For the most part, the prognosis is actually fairly simple: Those who are well-capitalised, ambitious and creative still have plenty of opportunities to flourish.
The important insights of modern portfolio theory (MPT) come with strong portfolio management advisories that have been emphasised in real estate markets by the global financial crisis and the more recent COVID-19 pandemic.
In recent years, the emergence of private debt funds and alternative lenders has injected a new dimension into real estate financing. There has been a convergence of factors propelling this surge in private debt within the United Kingdom’s real estate sector, and it is having a profound impact — but it is not all bad news for traditional lenders.
Recent market sentiment points to growing criticism of valuers. Everyone from investors, lenders and auditors, seem to be of the view that real estate valuers are being too slow to incorporate environmental, social and governance (ESG) factors into their work. This is creating a perception of a disparity between valuations and buyer expectations, supporting the notion that valuers often fail to keep up with developing market conditions. Is there any truth to the accusations, or are valuers looked upon unfairly?
Housing associations in the United Kingdom anticipate a 22 percent reduction in the number of new affordable homes built over the short term due to increasing costs. A new study conducted by Octopus Real Estate has found that increased build and finance costs have led to a third of housing associations reporting a deficit of 11 percent to 25 percent on individual affordable housing development schemes.
Global cross-regional capital flows totalled $30.5 billion (€28.4 billion) in the first half of 2023, down by 52 percent from the first half of 2022. The drop is the second consecutive half-year period with an approximate 50 percent decrease in volume.
Concentrating on the negative substitution effects of artificial intelligence (AI) on real estate overlooks the positive “income effect” that AI could have on economies and property demand in the future. The admonition comes in a blog post published in late August by Jim Costello, chief economist at MSCI Real Assets, in which he writes that linear thinking over AI is blinding people to the new opportunities it could create for real estate investors.
Europe has a €93 billion real estate debt funding gap as all-in borrowing costs reach a 20-year high. AEW says the €93 billion figure represents the shortfall between the original amount of secured commercial real estate debt originated between 2018 and 2021, and the amount available for refinance between 2023 and 2026 across all four property sectors in France, Germany, Italy, Netherlands, Spain and the UK.
We have long held an optimistic view on parts of the office market. Our core argument is that extended homeworking is negative for productivity and that the concentration of wealth in cities provides evidence of the impact of in-person collaboration on wealth generation.
