As 2018 draws to a close, deputy editor-in-chief Robin Marriott looks ahead to what real estate investors should be watching out for in 2019, as highlighted in the December issue of PropertyEU Magazine.
As the cover and contents of our December issue reflect, the conversation in Europe has very much turned towards the outlook for 2019. My email inbox (not a perfect barometer of the market admittedly, but a useful guide nevertheless) certainly confirms this as the biggest talking point.
Thanks in particular to JLL for the invite to its Property Predictions event in early January and to Principal Global Investors for providing me with a sneak preview of its look-a-head report. We shall be reporting the contents shortly. But as far as this magazine goes, you will find influential firms such as Aviva Investors, Invesco Real Estate, Union Investment Real Estate and Savills have shared their 2019 thoughts with reporter Nicol Dynes.
One message coming through quite loudly is about how it seems wise to defensively position the portfolio or only go into growth areas. And to my mind, there are two groups of firms acquiring real estate. There is a subset (hopefully a small one) dangerously pushing the envelope in their underwriting and there is the other group (hopefully much, much larger) that are not.
It is comforting to see firms put into place business plans a long time ago that make sense today. An example of the latter group is Primonial REIM that saw yield compression as a threat to its office strategy as long ago as seven years and decided to get into healthcare. ‘The intuition seven years ago that real estate yields would drop is part of today’s success,’ says Laurent Fléchet, Primonial Group's deputy CEO in charge of real estate in the Big Interview. This company now has plans to build a €4 bn European housing portfolio alongside €5.4 bn of healthcare.
As 2018 draws to a close, we also reflect upon the biggest deals that took place. Our reporter Virna Asara has been slicing and dicing the deals by country and sector that have been attracting all that capital out there. Will 2019’s end of year report look anything like 2018’s?
And, in a first for this magazine, we have turned the spotlight on an industry segment perhaps overlooked but nevertheless crucial for every transaction – law firms. We reveal which are the most active law firms in Europe for the big deals. We also dissect a report by CMS showing how seller-friendly terms in real estate purchase agreements have been happening in record numbers. It is a sign of negotiating power lying with sellers because it’s a seller’s market.
All that remains to be said is we hope this final push to year-end is successful and that this issue arms you with more knowledge on how best to approach 2019.