In the recent Global Capital Markets webinar ‘What’s Next’, hosted by Colliers International, a worldwide view was taken of the real estate market, focussing on opportunities, the impact of COVID-19, and the outlook for the rest of the year and beyond. Tony Horrell, Colliers UK & Ireland CEO and head of Global Capital Markets moderated the panel with representatives from EMEA, Australia, Asia and the Americas.
Globally, activity in the fourth quarter is set to be driven by the industrial and logistics sector, noted the panel, with distribution and last mile assets at the top of investors’ wish lists. The increased reliance upon e-commerce, logistics solutions and technology has boosted the sector as the world responds to COVID-19. In Europe the sector has led the return of the €500m+ direct real estate transaction.
Other key takeaways from the panel included:
- Investors are cautious and highly selective in the office sector but the best buildings in global cities that offer a range of amenities alongside modern mechanical and engineering systems are still seeing good demand and pricing is stable. The panel noted the vital role office premises play in the battle for talent, the reflection of an organisation’s character and the creation of a space for collaboration.
- Other asset classes continue to attract investment; however this is increasingly through a more granular approach. A creation of what is almost ‘asset classes within asset classes’ is happening as some sub sectors perform better than others, for example the appetite for grocery assets above others in retail investment.
- In order to overcome the issues caused by travel bans, there has been a rise in partnerships between local platforms and overseas investors that are being used to execute transactions and ensure that deal flow continues.
- Major cities such as Sydney, London, German ‘tier 1’ cities, Paris and Tokyo remain attractive to investors bolstered by strong infrastructure and attractive assets.
- The UK offers good value on a global and regional scale as Colliers expects finance costs to reduce for the right product leading to further yield compression.
Looking ahead to the end of the year, the Colliers panel noted there is increasing appetite for assets that are well priced, in an attractive sector and with growth opportunities. Large portfolios that provide robust platforms and trophy assets will continue to be attractive. This is particularly true as there’s not been a global pattern of distress, instead being confined to sector specific pockets.
Richard Divall, head of Cross Border Capital Markets, EMEA, commented: “Liquidity and sentiment in Europe has been improving throughout Q3 and we are starting to see a significant number of deals transact of over €500m. This is particularly true in the industrial and logistics sector where the depth of demand is unprecedented, and we are seeing core pricing get 20% more expensive and even 10% for core plus in the Tier 1 markets of Europe. As we look ahead to Q4, I expect the launch of delayed sales to the market will significantly ease the pent-up demand by investors and we end 2020 on a far better footing than we would have imagined earlier in the year.”
