Emerging Trends in Real Estate Europe 2021...Emerging Trends in Real Estate Europe 2021 An uncertain...

Emerging Trends in Real Estate Europe 2021An uncertain impact

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to fit the image within the box. An uncertain impact:

managing structural and cyclical change

What does uncertainty look like in real estate currently?

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COVID is a game changer to the property industry, like the global financial crisis was, but even more disruptive. As well as introducing uncertainty, it will continue to impact our prospects by accelerating a lot of things that were going on in our business anyway.

How does this translate into our themes for 2021?

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#1 Shock to the system from economy and business continuity issues

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European business environment in 2021

I’m very positive about the capital that will come into the market. Very negative on the economy and how that will play out because I think we’re only at the beginning of some of the bankruptcies that we will see happen.

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#1 Growing concerns about profitability and headcount…

If most [real estate] businesses aren’t planning for staff reductions, I’d be prettysurprised

#1 Normal ways of doing business continue to be disrupted

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• Pipeline of pre-COVID-19 deals now mostly complete

• Caution over deal and capital sourcing with travel restrictions and further lockdowns

• Fast adoption of technology to support due diligence

• Conditions favour domestic buyers, managers with multi-country footprints, larger property markets with sufficient critical mass to have team on the ground

Emerging Trends in Real Estate Europe 2021 │ An uncertain impact

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#1 Influencing capital flows from Asia and Americas

The US guys have decided they just want to be as opportunistic as they can, so it’s a blood-in-the-water, high-returning strategy. If you want US capital, you have to be able to offer them that extra incremental return.

It’s also [about] us being able to get in front of investors – whether Australian, US, or European – to make the case..

Cross-border capital in European real estate in 2021

Themes for 2021

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#2 But concerns at operational level around security of income

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#2 Conditions remain for overall appeal of asset class

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Where the market believes that credit will survive the scale of the correction to come, then they’re buying that every day of the week.

Emerging Trends in Real Estate Europe 2021 │ An uncertain impact

#2 Debt and equity less plentiful but from “a high base”

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We’re talking about the beginning of the new cycle, but we’re not at the bottom of the market yet. And that is a 2021 topic, not a 2020 topic..

Emerging Trends in Real Estate Europe 2021 │ An uncertain impact

Themes for 2021

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Logistics facilities

Life sciences

Communication towers

Data centres

Healthcare Affordable housing

New energy infrastructure

Private rented residential

Social housing

Industrial/warehousing

#3 Residential dominance of 2020 over taken by tech

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1 2 3 4 5

7 8 96 10

If I look across our assets at the sectors that aren’t having any issues in paying their rent, it’s undoubtedly the resisector

I envision there’s going to be life science clusters, medical clusters that are going to bedeveloped throughout Europe that will be very in demand from an investor’s standpoint

Emerging Trends in Real Estate Europe 2021 │ An uncertain impact

#3 Future of offices becomes the new unknown

• What’s the new balance between office time and remote work?

• Flexibility is the key word• Increased focus on health and wellbeing• Will decline in demand be balanced out by

increase in space per person?

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Agree 2021

To what extent do you agree or disagree with the following statements?

Themes for 2021

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#4 Cities rankings 2021: investment and development prospects

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2

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5 6

9

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Germany has got a strong economy, had managed the pandemic pretty well, and is open for business. It’s back in action

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We’re looking at deals for top-quality office assets in London that are 100 basis points, 150 basis points above equivalent deals in Berlin or Munich

Berlin1

London2

Paris3

Frankfurt4

Amsterdam5

Hamburg6

Munich7

Madrid8

Milan9

Vienna10

Themes for 2021

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#5 COVID-19 accelerates our focus on social issues

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Sustainability and impact investing need to be in our thinking for all that we do rather than just launching specialised products or projects.

Social-political issues in 2021

#5 What are the drivers for impact investing?

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#5 Are we ready, or are we still too green?

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Investors have been under pressure to deploy capital in strategies that are environmentally friendly for some time now, and we are starting to see that same pressure to deploy in strategies that are socially impactful.

How the real estate industry can make the greatest difference through impact investing?

#5 How do we move forward?

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Factors needed to attract more capital to impact investing

More information

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pwc.com/etre2021europe

europe.uli.org/etre2021europe

@ULIEurope #ETRE21