1 / 63

Welcome……..

Welcome……. Market Trends Seminar Propects for Commercial Property November 12 th 2015. Your Panel……. Steve Mallen Principal, Steve Mallen Consulting Catz , 1984, Geography Michael Brodtman Head of Valuation & Advisory, CBRE Magdalene, 1978, Economics/Land Economy Phil Clark

kdaniel
Download Presentation

Welcome……..

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Welcome…….. Market Trends Seminar Propects for Commercial Property November 12th 2015

  2. Your Panel…….. • Steve Mallen • Principal, Steve Mallen Consulting • Catz, 1984, Geography • Michael Brodtman • Head of Valuation & Advisory, CBRE • Magdalene, 1978, Economics/Land Economy • Phil Clark • Head of Property Investment, Kames Capital • MA (Real Estate), City University • Robert Peto • Chairman, DTZ Investment Management • Corpus, 1968, Economics/Land Economy

  3. Agenda……...

  4. Chairman…….. Introduction Steve Mallen Principal, SM Consulting November 12th 2015 Steve Mallen

  5. Has the market peaked ? Steve Mallen

  6. Has the market peaked ? Bears • European referendum • Chinese growth retardation • Rising interest rates • Escalating construction costs • Minimum wage legislation • Workstyle evolution • Return of speculative development • Capital compression • Reliance on rental growth • Business rates Bulls • Strong economic growth • Low inflation/low interest rates • Low oil & commodity pricing • Government majority • Planning reforms stalling • Supply levels dwindling • Positive yield spreads • Rising capital & debt allocations • Record overseas investment flows • Capital market liquidity Steve Mallen

  7. Looking to the Future…….. Steve Mallen

  8. CULS Market trends seminar Michael Brodtman Head of Valuation & Advisory Thursday 12th November 2015

  9. PREDICTIONS FROM NOVEMBER 2014; WERE THEY CORRECT? • London as a global magnet • Rerating of all property, especially prime • Rental growth spreading out from London • Transformed landscape for debt • Sustained economic recovery and investment demand will override political uncertainty

  10. LONDON IS THE KEY GATEWAY CITY FOR GLOBAL INVESTORS IN COMMERCIAL REAL ESTATE • Top 15 destinations across the globe in H1 2015

  11. WILL LONDON REMAIN COMPETIVE? Innovation Favourablecorporation tax Language/time zone Accessto talent How will London stay ahead? Global leaderin finance Gatewayinto Europe More flexiblelabour market World classretail/leisure

  12. POSITIVE IMPACT OF CROSSRAIL 30% increase in visitors to the West End Launches late 2018 • 200m passengers • expected annually Extra1.5 million people within 45 minutes of Central London 14% increase in passenger numbers at Tottenham Court Road Turnover for West End retailers to increase turnover by 28%

  13. PREDICTED RECORD INVESTMENT IN 2015

  14. OVERSEAS AS 50% OF TOTAL INVESTMENT IN THE UK

  15. ROBUST NET FLOWS TO PROPERTY UNIT TRUST/OEIC

  16. VALUES MOVING AHEAD OF RENTS

  17. UK AVERAGE PRIME YIELDS NEAR ALL TIME LOWS

  18. PRIME PROPERTY POSITIVE YIELD GAP AT 3.5%

  19. RENTAL VALUE GROWTH PATCHY BUT IMPROVING

  20. PRIME RENTAL VALUE INDEX FOR RETAIL SECTORS

  21. KEY THEMES FOR 2016 • Employment growth spreading beyond London • Consumer confidence remain high with earning growth forecast to stay strong • Strong office take-up and limited supply of new space drives rental growth • Continued pressure on retailers restricting rental growth • Strong demand for industrials alongside scarcity of land pushing rents • Investment volumes have been strong, but levelling off as cap rate compression ends • Market will be tested by interest rate rise

  22. Market Trends 2015 Cambridge University Land Society The most important part of walking through the property market entrance door is knowing where the exit is! Phil Clark Head of Property Investment

  23. What are the major opportunities and threats to UK commercial property? O OPPORTUNITIES T THREATS

  24. UK Pension Fund Trends Source: Towers Watson Phil Clark Head of Property Investment

  25. Kames Property Income Fund Broadway, Bexleyheath Summer Row, Birmingham Renfield Street, Glasgow Mosley Street, Newcastle Building income from property investment *Target yield based on a fully invested portfolio and historic performance. Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up. **Fund size as at 30 September 2015.

  26. What is Active Value property investment? c.50% fund allocation An active approach to property

  27. Kames Property Income Fund As at 30 September 2015

  28. Managing exit risk Key Actions In Current Market • We’re becoming price resistant. • Making sure we have plenty of quality tenants on long leases (easily financeable for geared purchasers). • Investing in REIT securities. • Holding higher cash levels than previous cycles. • Keeping an eye on bank lending. Phil Clark Head of Property Investment

  29. Phil Clark Head of Property Investment Thank You

  30. CULS Market Trends SeminarRobert H HPeto 12th November 2015

  31. UK GDP GDP The first estimate of Q3 2015 GDP showed the UK economy growing at a quarterly rate of 0.5%.

  32. Contributions to GDP Growth Contribution to Q3 2015 GDP Growth by sector That said, the expansion has become increasingly reliant on the dominant services sector with construction contracting and industrial production nearly stagnant.

  33. Business PMI Sentiment Surveys PMI Surveys With sentiment surveys above 50 (signaling expansion in output across the sectors) suggests moderate GDP growth over the next 12 months.

  34. Labour Market UK Employment & vacancies Employment continues to rise and the number of unfilled vacancies is at its highest since records began in 2001.

  35. Wages & Inflation Wage growth v. headline CPI inflation Theimproving labour market and low inflation backdrop has driven an acceleration in real wage growth…

  36. Retail Sales & Consumer Confidence Consumer Confidence & Retail Sales …and an improvement in consumer confidence which has continued to drive robust growth in retail sales.

  37. Business Confidence & Investment Business Confidence & Investment Strong business confidence points to a sustained pick up in business investment through the first half of 2016

  38. External Sector External Environment UK Trading Partners While domestic conditions remain firm, exporters continue to struggle from weak euro area demand.

  39. Inflationary pressures remain subdued CPI & Core Inflation The UK returned to deflation during September and price pressures look likely to remain weak for some time yet.

  40. Inflation & Interest Rate Outlook Interest rates, headline CPI inflation & 5yr forward rate curve This should support the UK consumer outlook through lower inflationary and interest pressures in the short term.

  41. However, the cycle may not be over just yet... Property vs. 10yr Gilt Yield Other Indicators Economic & real estate fundamentals, relative pricing and improvements in the availability of debt remain should support growth prospects. Availability of debt Real estate fundamentals Relative economic fundamentals Retail inflows into real estate relative to other asset classes

  42. Property Market Review All Property rental growth 3m vs 12m YTD rental growth across segments The rental cycle continues to gain momentum, although to date this has been driven by central London property markets.

  43. All Property Capital Growth Components of 12m Capital Growth However, the rental recovery has not been enough to offset the lower contributions from inward yield compression.

  44. RICS Rent Expectations & IPD Rents The strength of the RICS rent expectations data points to rental growth continuing to accelerate through the first half 2016.

  45. RICS Rent Expectations by Sector The retail area of the market continues to exhibit more modest rental projections relative to the office and industrial sectors.

  46. RICS Rent Expectations by Region Although near term rental expectations are comfortably positive across all parts of the UK, London continues to display the strongest projections

More Related