Market Update Western Europe

Pan European Summit

Date
February 24th, 2020
Venue
Queen Elizabeth Olympic Park, E20 3BS, United Kingdom

About

The Class Pan-European Summit put investment in the spotlight as we joined forces with Yolande Barnes, from UCL’s Bartlett Real Estate Institute. Yolande argues that alternatives with resilient business models should be assessed in a different light as the value can increase and risk can be mitigated with a long-term perspective. With proper assessment capturing a new territory of environmental, demographic, and technological risks and a long-term perspective, alternatives may deserve a lower risk profile, which will incentivize investors to deploy more money in the market. Will this be an innovative solution that can potentially solve the housing crisis?

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Speakers

Adina David

Director Flexible Housing

Greystar

Carlo Matta

Head of Europe

CA Ventures

Christian Birrell

Investment Manager

COLIV Fund DTZ Invest

Frank Uffen

Co-Founder

The Class Foundation

Joe Persechino

Head of Residential & Student Accommodation

AXA IM Alts - Real Assets

Marcus Roberts

Director

Savills

Reggie Noel

Senior Investment Manager

Nuveen

Russell Pedley

Chair of Residential Council

ULI UK

Sophie Chick

Director World Research

Savills

Ulrike Hagendorf

Senior Research Manager

Catella Residential Investment Management GmbH

Yolande Barnes

Chair of The Bartlett Real Estate Institute

UCL

Takeaways

  1. What makes alternatives, alternative?: The jury is still out on how our industry perceives risk in alternatives. Much depends on how we define and classify alternatives.
  2. A turn towards long-term: That said, it is evident that securing long-term rental income in real estate is becoming increasingly important due to a low stable interest rate environment which doesn’t allow for serial real estate trading and financial institutions’ obligation to pay the pensions of baby boomers.
  3. Operations in the spotlight: Future-proof real estate will require the flexibility to manage not just bricks and mortar but the whole range of human activities that take place inside of it. This puts emphasis on the operational element of shared living models.
  4. A call for industry guidelines: Strong alignment between investors and operators is seen as crucial to ensure value creation and mitigate reputational risk. Frameworks, guidelines and best practices can help accelerate investor comfort with operational assets. We can find inspiration in recent operations guidelines produced for the BTR and Later Living sectors.
  5. Opportunities for product diversification: Blended living concepts are perceived by investors as an opportunity for product diversification. The ease of conversion to office, residential or hotel lowers perceived risk of shared living models.
  6. Undervalued areas unlocked by bold movers: Bold investors and developers are initiating mixed use, highly amenitised communities outside of the center of university cities, where investors have typically not been comfortable. It is speculated that once customer appetite for new ways of living is evidenced through successful case studies, investment in communities in such locations will quickly increase.
  7. Young and old: While age isn’t everything, demographics trends can tell us about future demand for living models in European cities. In 2029, Europe’s top ‘youthful’ cities will be Edinburgh, Amsterdam, Toulouse, Oslo and Dublin. The top ‘aged’ cities will be Genoa, Dresden, Bilbao, Leipzig and Valletta.
  8. City is king: While Ireland, the UK and the Netherlands remain attractive due to the liquidity of these markets, PBSA investors are interested in Italy Spain and Portugal as they offer a yield opportunity due to the imbalance of supply and demand. However, when taking a long-term perspective, it is increasingly important to adopt a city-based, rather than country-based, outlook. Significant risks to real estate such as flooding, property obsolescence and migration patterns will be experienced on a city level.
  9. There is no core: Given the predicted landscape of risks to real estate, the question should perhaps not be whether alternatives are the new core, but whether there is a core at all.

Sponsors

Savills
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