| The good news and the bad…
These are nothing if not uncertain times and this week's newsletter is something of a mixed bag when it comes to the state of the real estate investment market.
New research from global funds network Calastone reveals that property funds suffered outflows of GBP1.1 billion in 2020 and things could have been worse had UK commercial property funds not suspended dealing for at least two months back in April. On a slightly more positive note though, Calastone points out that outflows are slowing, totalling GBP224 million in December, down from GBP315 million in October and GBP263 million in November.
Institutional investors meanwhile, are far more bullish, according to the results of a survey by ANEV, INREV and PREA, with a minimum of EUR55.4 billion having already been earmarked for investment in 2021. Funds of funds expect to invest a further EUR9.2 billion into global real estate this year, bringing the total expected minimum new capital to EUR64.6 billion.
"This year’s Investment Intentions suggests continuing robust investor appetite for real estate, with Europe and the diversity it offers firmly in sight and somewhat of a sweet spot for both local, regional and cross-regional capital," says Iryna Pylypchuk, INREV’s Director of Research and Market Information.
The London office market could see further investment in the coming year having enjoyed a strong end to 2020 with several significant deals closing in December, including Allianz's purchase of a GBP400 million, 75 per cent, stake in a three-building portfolio owned by British Land. And the Prime Central London residential market is in reasonable shape too, according to Beauchamp Estates, with the firm predicting the value of luxury homes to increase by up to 2 per cent in 2021 with sales volumes growing by 15 per cent.
New research from mortgage broker Trussle though, suggests that things may not be quite so rosy at the other end of the residential market in London and other major urban areas, with first-time buyers having apparently fallen out of love with city living. Seventy one per cent say they are still planning to buy, but are eschewing the bright lights of city centres in favour of towns, suburbs and rural locations.
"Financial pressures and rising house prices, alongside a desire for more outdoor space, means demand in more affordable rural locations is currently outpacing that for urban destinations," says Miles Robinson, Head of Mortgages at Trussle.
Getting on to the UK property ladder at all remains beyond the reach of many, a fact recognised by several leading real estate players who have all joined forces to drive collaboration across the country's growing build-to-tent (BTR) sector, which is forecast to be worth over GBP550 billion by 2030. Moda Living, Quintain, Greystar, L&G, Grainger, Get Living, and other developers and operators, have launched a national communications steering committee through the UKAA (The UK Apartment Association), supported by the British Property Federation, to promote BTR to the UK public.
“This initiative is a clear demonstration of how the BTR sector is maturing and working together for the benefit of our customers and our members," says Dave Butler, Managing Director, UKAA. It is undoubtedly one of the most important initiatives for the UKAA and the Sector in 2021, with the potential to be a game-changer in public and media understanding about what we offer."
Property Funds World
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