September 1, 2023: Vol. 17, Number 8

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From the Current Issue

Europe

Drowning in misinformation: Without better datasets, enhanced analysis methods and consistent regulatory frameworks, flood risk assessment and management will struggle to improve

Flood risk assessment is an important and growing concern for real asset investors. But measuring the threat of flooding to assets and locations is stuck at an embryonic stage and faces challenges stemming from limited historical data as well as data incompatibility. This makes translating scientific analysis into reliable inputs complex. And it leaves investors struggling to properly factor in flood risk to support investment decision making.

Europe

Step by step: The long climb from shortening leases to operational real estate

As we tentatively circle the edge of another recession, fund managers and investors who understand operational real estate are going to be ahead of the curve. With leases getting shorter and occupier demands more sophisticated, we must think more operationally about how we manage all assets and their occupiers — from residential to shopping centres, and even offices.

Europe

Back on track: Listed real estate securities are back on a convergence path with private property and on target to deliver some attractive gains

As expected, the prices of public and private real estate assets each went their own way in 2022. REITs were hit hard by plummeting global equities, while values continued to move forward in private real estate, continuing the unlisted segment’s longstanding tendency to react slower to shifting economic conditions. A high correlation between REITs and tumbling stock markets in light of the Russian invasion of Ukraine, rampant inflation and a tightening monetary policy, sent listed values in the United States 27 percent lower for the year, as reflected in the FTSE Nareit All Equity REITs Index. At the same time, underlying property prices gained 6.5 percent, according to the NCREIF Fund Index – Open-end Diversified Core Equity (NFI-ODCE), creating the gap that still largely exists today.

Europe

The only way is up?: The impact of market turbulence on non-listed real estate debt

Ongoing uncertainty across the macroeconomic and geopolitical landscape has raised many questions for the real estate investment industry. In April, the 2023 Capital Raising Survey, published by INREV, ANREV and NCREIF, painted a mixed picture for the industry. It showed that, in 2022, fund managers raised a minimum of €246 billion of new capital for non-listed real estate globally — the second-highest result since the inception of the study. Falling €8 billion short from the record high €254 billion raised in 2021, the results highlighted the year as one of two very different halves.

Europe

Dark times: Lower-grade office stock is weighing down portfolios across Europe — but offloading or improving assets is no easy task

The bifurcation of the office sector has never been as clear as it is today. And the gap between top-class and average office properties continues to grow. As Nick Waring, development director at PineBridge Benson Elliot in the United Kingdom puts it, the European office market has been “cleaved in two”. Hybrid work patterns, accelerated sustainability goals, higher inflation and interest rates have raised the hurdle for what constitutes a successful property. As a consequence, hard decisions will have to be taken on what to do with large swathes of the office market, which face an increasingly unsure future.

Europe

Southern comfort Southern Europe offers opportunities amid economic gloom

The European real estate sector is being buffeted by an economic storm triggered by the rapid rise in interest rates. Despite the economic doom and gloom, this also presents investors with opportunities, if they know where to look.

Europe

Are you skilled at assessing risk?: Most of us aren’t as skilled as we think

In 2009, Geoff Colvin, an award-winning author and business writer for Fortune magazine, published a book titled The Upside of the Downturn. His chapter on risk was particularly enlightening and probably just as applicable to what’s going on today as it was to what was going on then in the wake of the global financial crisis.

Europe

UK supermarket chain to build 10,000 rental homes by 2030

Waitrose, the UK supermarket chain, has submitted its first build-to-rent residential planning applications, as it aims to build 10,000 residential units above and around its stores by 2030.

Europe

Fog surrounding German commercial pricing begins to lift

The uncertainty surrounding German commercial real estate pricing is beginning to lift and could restore liquidity in the market. As with many European markets, low transparency surrounding pricing has prevented or thwarted many transactions, in recent months. Savills says, however, that “the fog” around valuations has lifted significantly, with benchmark transactions now appearing in every sector. In recent weeks, Savills has observed the commencement and preparation of a rising number of sale processes.

Europe

Life sciences developers step up Canary Wharf presence

When HSBC officially confirmed that it would be leaving London’s Canary Wharf by 2027, it rubber-stamped the view that the CBD is losing its appeal among its traditional tenant base. Last year, legal giant Clifford Chance also said it would be leaving the beleaguered office district, where companies have taken up too much space in what has become an isolated location in the new hybrid working world of office employment. Alternative use for the area is rapidly increasing, however, with life sciences emerging as one of the main repurposing avenues favoured by developers at present.