The new decade has just started, but so far, it’s been eventful!
This week is packed with important events, we had the 77th Golden Globe Awards on Monday, that thankfully didn’t conflict with Insight London 2020 hosted by CMS and EPRA. For someone who is working within the Real Estate Industry, we’d highly recommend the latter one. Investors and Real Estate professionals attended from all over the world to gain precious insight on the trends of the last decade and forecasting on property trends for the upcoming decade.
On arrival, we were fascinated by the venue, until Dominique Moerenhout opened the panel discussion, and started with a very important question: ‘What are the skills to stay ahead of the game?’. This is something that all successful individuals thinking about, unrelated to industry, however throughout the panel discussion we gathered some very interesting answers to this question.
After reading the agenda for the evening, we had very high expectations for the discussion, as some of the best professionals of the industry were on the board: it was moderated by Tim Leckie, Executive Director at JP Morgan, and the panel members were Toby Courtauld, CEO of Great Portland Estates, Chris Grigg, CEO of British Land, Matthew Roberts, CEO of Intu Properties, David Sleath, CEO of Segro and last but definitely not least Gillian Tiltman, Portfolio Manager at Neuberger Berman.
Tim was an excellent moderator and started off the panel by asking them to share their views on the market outlook. It was a thought-provoking conversation from start to finish, and we were very happy to hear more about Brexit, not just in political context, but on how it has affected the Real Estate industry. Unfortunately, the uncertainty around this issue caused a 20% decline as of May, however everyone was optimistic that following the election, this uncertainty should be removed.
The panel members also gave important insights on recruitment, and although we experience it first-hand already, they all confirmed that employers were more considerate and mindful on who they hired over the past year.
So how is the market now, at the dawn of this new decade?
The members of the panel all agreed that they are seeing a good continued demand for portfolio expansion, and location is still (and highly likely will always be) a key factor. The retail space is facing a tougher competition than ever, as customer needs tend to shift towards choosing online retailers. (Obviously no one can be blamed when you can have everything delivered to your door in a couple of hours). Does it mean the end of retail space in the next decade? Not at all, however we need to be aware that the use of the retail space is going to change radically, therefore it is important to use Smart Building and other Proptech solutions that provides the most amount of data and therefore make the adaption as smooth and accurate as possible.
A similarly big change can be seen in the office space, as flexible solutions are becoming more and more popular. Our generation tends to focus more on experience, services and other facilities provided by the landlord. We think we are all aware of the rise and fall of WeWork, however, the company didn’t fail because there is no need for flexible solutions, (there is a 100% growth forecast within the next 5 years) but because they were aggressively expanding, and that just set them up for failure as it wasn’t backed by the appropriate amount of sales.
The need for flexibility can be seen in the residential sector too: more and more people choose to rent, even if they can afford to buy. In addition, the younger generation are tending to move into urban areas, therefore, private renting and the build-to-rent sector will see a significant growth during the next decade, especially in the major UK cities.
The current situation of the Real Estate industry has been set back a bit by not just the uncertainty around Brexit, that delayed lots of deals, however also by the elections taking part last year. Despite all these factors, there is much capital going to Real Estate, which can be expected to grow further once all these questions have been clarified.
Despite my high expectations of the panel discussion, we weren’t disappointed, rather fascinated. Whilst, we have tried to highlight all the information, we’d afraid, it’s impossible in a blog post. It was an amazing event, looking forward for coming back next year!
Dora Pasztor and Hattie Sunderland