Can divergent views of markets all be right?
Fieldfisher LLP, Riverbank House, 2 Swan Lane, London, EC4R 3TT

Pushing the boundaries of global investment

Global capital flows into real estate may be showing little sign of tailing off, but investors now need a wide variety of imaginative strategies to find value in markets around the world.
Simon Mallinson, Executive Managing Director at Real Capital Analytics, opened the event by asserting that even if global capital flows are accelerating less dramatically than in recent years, deals now on the stocks mean that total flows in 2018 could exceed those for 2017 and 2016.

But Liz Troni, Head of EMEA Research at Cushman & Wakefield, stressed that fair value – the price that can justify investors’ return expectations – is becoming increasingly hard to find.

This search for value is pushing international investors towards new sector-city combinations: for global cities, this might mean warehouses and retail warehouses rather than CBD offices, while development could also widen the range of core acquisition opportunities.   First tier cities in some of the smaller emerging markets may also look promising, e.g., in Asia, while second tier cities in core national markets – such as Bristol, UK or Austin, Texas – could appeal to more experienced investors, who might also consider completely new sectors including data centres and hospitality.

The challenge of finding value in core gateway city locations has also led investment managers DWS to develop a range of alternative strategies for their international investors, explained Jessica Hardman, Head of UK the Real Estate Group.  These include focusing on emerging locations in core cities, as in the case of Stratford, East London; managing for core; logistics; affordable residential; ‘new living’ (student accommodation, aparthotels, senior living); and defensive retail, often including a significant leisure element.

Tim Horsey