{"id":1504,"date":"2020-11-09T10:19:31","date_gmt":"2020-11-09T10:19:31","guid":{"rendered":"http:\/\/ceo.com.pl\/en\/?p=1504"},"modified":"2020-11-09T10:19:31","modified_gmt":"2020-11-09T10:19:31","slug":"real-estate-faces-hugely-challenging-time-but-maintains-long-term-appeal-due-to-low-interest-rates-48686","status":"publish","type":"post","link":"https:\/\/ceo.com.pl\/en\/real-estate-faces-hugely-challenging-time-but-maintains-long-term-appeal-due-to-low-interest-rates-48686\/","title":{"rendered":"Real Estate faces \u2018hugely challenging time\u2019 but maintains long-term appeal due to low interest rates"},"content":{"rendered":"<ul>\n<li>Berlin tops rankings for overall real estate prospects according to joint PwC\/ULI report, leading a strong showing from German cities that are demonstrating resilience amid COVID-19.<\/li>\n<li>London jumps two places to second as investors see it as good long-term value and Paris remains in top three.<\/li>\n<li>55% of investors expect to be net buyers of real estate in 2021, but security of income in non-core assets is causing concern.<\/li>\n<li>Data centres, logistics and life sciences top the table for sector prospects, with traditional mainstay sectors struggling.<\/li>\n<\/ul>\n<p>Europe\u2019s property sector is in the midst of a cyclical downturn which is coinciding with long-term structural changes to real estate, according to the latest 18<sup>th<\/sup> edition of the <em>Emerging Trends in Real Estate<sup>\u00ae<\/sup> Europe<\/em> report. However, real estate generally is seen as one of the few asset classes to generate acceptable returns at a time of low or negative interest rates.<\/p>\n<p>The PwC and Urban Land Institute (ULI) survey of almost 1,000 industry leaders across Europe says that retail and offices will be most affected, due to widespread uncertainty related to rent collections amid the pandemic. This has led to investors increasingly assessing the underlying operational risk of the occupiers, and focusing on their own strengths as operators of real estate to keep the income secured.<\/p>\n<p>Capital flows into the sector are also altering how funds can be deployed and there is a strong likelihood that domestic and European investors will play a much greater role in Europe. While a majority still expects Asian capital flowing into Europe to increase, this percentage is significantly lower than previous years, with interviewees citing the inability of overseas investors to visit a property in Europe before buying it.<\/p>\n<p>The challenges around business travel and potential future lockdowns is raising concerns about deal sourcing. The industry had been working through a pipeline of deals originated pre-pandemic, subject to conventional due diligence, and mostly with existing partners.<\/p>\n<p>However, the assessment of new opportunities within restrictions and the difficulty of building up new relationships in a \u2018zoom-era\u2019 might significantly slow down the transaction volume further going forward. At the same time, this could give an advantage to those players with a greater footprint with resources in place on the ground in more countries and profit the real estate markets in the bigger countries, such as Germany, with sufficient critical mass and the possibility to travel domestically and overcome some of the restrictions.<\/p>\n<p>The `Digital Switch\u2019, the increased pace of digitalisation around the globe boosted by COVID-19, is also having impact on investors\u2019 sector preferences, with logistics, data centres and communications towers and fibre identified as having strong potential. In addition, life sciences and healthcare are coming out favourably, a trend accelerated by COVID-19, as well as residential that is still high on the list of investors.<\/p>\n<p>Lisette van Doorn, CEO of ULI Europe, said:<\/p>\n<p>\u201cEuropean real estate is at a turning point, trying to work out its future role in society while facing the cyclical challenges following the outbreak of the pandemic earlier this year and the ongoing uncertainty this creates.<\/p>\n<p>\u201cCOVID-19 has fast-forwarded a number of trends already started, for example related to digitalisation, remote work and online shopping, but given the artificial environment amidst ongoing lockdowns and government support to employees and businesses, it remains hard to work out the long-term impact.<\/p>\n<p>\u201cThe search for yield, which is now even more dominant than pre-COVID, continues to attract investors to real estate, especially core and income-generating, such as residential that continues to appeal to investors, in the \u2018safest havens\u2019 across Europe.\u201d<\/p>\n<p>Dorota Wysoki\u0144ska-Kuzdra, chair of ULI Poland and member of ULI Europe Executive Committee, commented:<\/p>\n<p>&#8220;Similarly to other sectors of the economy, the COVID-19 pandemic and its effects have a significant impact on the real estate market. Due to sanitary constraints, assets such as retail, hotels and student housing recorded significant drops, while remote work forced by the lockdown initially introduced concerns about the future of offices. However, the logistics sector is doing very well, thanks to the popularity of e-commerce, as well as data centres driven by digitization. The life sciences industry continues to increase more attention both in Poland and worldwide. Despite short-term uncertainty, investors agree that this situation will accelerate previous trends such as innovation, environmental focus and the influence of built environment on people. It is all the more pleased that Warsaw remains resilient and has maintained its position as the most attractive city from outside Western Europe for capital investments.&#8221;<\/p>\n<p>Gareth Lewis, Real Estate Director at PwC UK, said:<\/p>\n<p>\u201cThe pandemic has amplified a number of previously identified structural trends. These include the uptick in e-commerce and remote working, causing investors and the industry at large to re-examine the historical risk and return profile for many types of real estate.<\/p>\n<p>\u201cIt&#8217;s clear that, at this time of significant uncertainty investors continue to see Europe&#8217;s core cities as safer bets and there remains cautious optimism. With London jumping up two places to second in the rankings &#8211; despite the challenges faced by all major cities &#8211; many investors see the long-term value.<\/p>\n<p>\u201cFurther, central banks&#8217; decisions to depress interest rates for the foreseeable may see an uptick in investment activity as pent up capital is deployed.\u201d<\/p>\n<p>The report, published annually by ULI and PwC, is based on the opinions of 995 real estate professionals across Europe, including investors, developers, lenders, and advisors.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/ceo.com.pl\/en\/real-estate-faces-hugely-challenging-time-but-maintains-long-term-appeal-due-to-low-interest-rates-48686\/#Investing_in_society\" >Investing in society<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/ceo.com.pl\/en\/real-estate-faces-hugely-challenging-time-but-maintains-long-term-appeal-due-to-low-interest-rates-48686\/#European_cities_ranked_for_investment_and_development_prospects\" >European cities ranked for investment and development prospects<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/ceo.com.pl\/en\/real-estate-faces-hugely-challenging-time-but-maintains-long-term-appeal-due-to-low-interest-rates-48686\/#European_cities_overall_prospects_2021_%E2%80%93_top_10\" >European cities overall prospects 2021 &#8211; top 10<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/ceo.com.pl\/en\/real-estate-faces-hugely-challenging-time-but-maintains-long-term-appeal-due-to-low-interest-rates-48686\/#Capital_markets_%E2%80%93_a_world_divided\" >Capital markets \u2013 a world divided<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/ceo.com.pl\/en\/real-estate-faces-hugely-challenging-time-but-maintains-long-term-appeal-due-to-low-interest-rates-48686\/#Sector_prospects_in_2021-_top_ten\" >Sector prospects in 2021- top ten<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Investing_in_society\"><\/span>Investing in society<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Following COVID-19, Environmental, Social and Governance strategies have gained far more interest. With many already committed to reducing the environmental impact of the built environment, executives surveyed now see a growing importance for the social aspects of their strategies.<\/p>\n<p>Lewis, continued:<\/p>\n<p>\u201c2020 has also seen the real estate world begin to evaluate its wider role in society more seriously \u2013 from addressing diversity and inclusion in the workplace to a far greater emphasis on the environmental, social and governance agenda.<\/p>\n<p>\u201cThe social upheaval brought about by COVID-19 has the potential to accelerate the growth and prominence of impact investing in the built environment, with social impact increasingly being considered as part of an overall strategy rather than a specific investment strategy via specialist funds or products, although there is still a long way to go.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"European_cities_ranked_for_investment_and_development_prospects\"><\/span>European cities ranked for investment and development prospects<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There is some comfort taken from the fact that there has not been a late cycle development boom, meaning that ahead of potential business failures, European real estate supply and demand is broadly in balance; stalwarts like Berlin, London and Paris are still being backed for their long-term prospects.<\/p>\n<p>The city rankings in this year\u2019s report reflect both the caution and opportunities driving the market, with a focus on cities believed to offer liquidity and stability. Berlin tops the list as the overall favourite for prospects in 2021, with investors encouraged by the relatively strong performance in tackling COVID-19 by Germany as a whole.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"European_cities_overall_prospects_2021_%E2%80%93_top_10\"><\/span>European cities overall prospects 2021 &#8211; top 10<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table width=\"0\">\n<tbody>\n<tr>\n<td width=\"302\"><strong>Overall ranking<\/strong><\/td>\n<td width=\"302\"><strong>City<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"302\">1<\/td>\n<td width=\"302\">Berlin<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">2<\/td>\n<td width=\"302\">London<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">3<\/td>\n<td width=\"302\">Paris<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">4<\/td>\n<td width=\"302\">Frankfurt<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">5<\/td>\n<td width=\"302\">Amsterdam<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">6<\/td>\n<td width=\"302\">Hamburg<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">7<\/td>\n<td width=\"302\">Munich<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">8<\/td>\n<td width=\"302\">Madrid<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">9<\/td>\n<td width=\"302\">Milan<\/td>\n<\/tr>\n<tr>\n<td width=\"302\">10<\/td>\n<td width=\"302\">Vienna<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Real estate executives were cautious about the overall outlook, with interviews undertaken between July and September resulting in a marked decline in business confidence with 28% seeing a decrease in business confidence compared with 13% in 2019.<\/p>\n<p>In addition, 44% anticipated a fall in profitability compared with 15% in 2019.\u00a0 Epidemics or pandemics caused 88% of those polled to be `concerned\u2019 or `very concerned\u2019, while 79% were concerned or `very concerned\u2019 about international political stability.<\/p>\n<p>Those surveyed saw better news in the prospect of central banks\u2019 `lower for longer\u2019 interest rates, seeing reassuring levels of real estate investment activity even during the depths of Europe\u2019s first lockdown, with many citing \u201cpent-up capital\u201d waiting to be deployed.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Capital_markets_%E2%80%93_a_world_divided\"><\/span>Capital markets \u2013 a world divided<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Domestic investors are expected to come to the fore in 2021, with inter-continental travel severely limited for North American and Middle Eastern investors.<\/p>\n<p>A majority (53%) of respondents expect Asian investors, who are seen as recovering first from the COVID-19 pandemic, to increase their investments in Europe in 2021, although this percentage is significantly lower than previous years. About a third expect European investors to increase their commitments next year and a small majority expect this to stay stable. However, 51% of respondents expect North American investors to decrease their investments into Europe.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Sector_prospects_in_2021-_top_ten\"><\/span>Sector prospects in 2021- top ten<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Three of the top four property types in the <em>Emerging Trends Europe<\/em>\u2019s sector rankings are likely to benefit from the increased pace of digitalisation around the globe, a change boosted by COVID-19, including data centres, communication towers and fibre, and logistics facilities.<\/p>\n<p>Life sciences has also been cast in a new light by COVID-19, with many developers and investors scrambling to learn about a sector which has traditionally been highly specialised but where strong potential is seen, given long term demographic trends, and the anticyclical nature of the sector.<\/p>\n<p>While slightly less prominent than last year, residential remains highly favoured by investors, with three sectors in the top ten representing some form of residential. Respondents did raise concerns around increased regulation.<\/p>\n<p>Given the strong growth of remote work and uncertainty around how this trend may play out over the longer term and what the future role of the workplace will be, no office sectors feature in the top ten this year; even flexible\/serviced and co-working has slipped down the rankings as the industry is taking a wait-and-see approach as to how these developments will turn out in a post-pandemic world.<\/p>\n<table width=\"0\">\n<tbody>\n<tr>\n<td width=\"151\"><strong>Overall rank<\/strong><\/td>\n<td width=\"151\"><strong>Sector<\/strong><\/td>\n<td width=\"151\"><strong>Investment ranking<\/strong><\/td>\n<td width=\"151\"><strong>Development ranking<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"151\">1<\/td>\n<td width=\"151\">Data centres<\/td>\n<td width=\"151\">1<\/td>\n<td width=\"151\">1<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">2<\/td>\n<td width=\"151\">Logistics facilities<\/td>\n<td width=\"151\">2<\/td>\n<td width=\"151\">2<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">3<\/td>\n<td width=\"151\">Life sciences<\/td>\n<td width=\"151\">3<\/td>\n<td width=\"151\">3<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">4<\/td>\n<td width=\"151\">New energy\/infrastructure<\/td>\n<td width=\"151\">5<\/td>\n<td width=\"151\">4<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">5<\/td>\n<td width=\"151\">Industrial\/warehouse<\/td>\n<td width=\"151\">6<\/td>\n<td width=\"151\">5<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">6<\/td>\n<td width=\"151\">Healthcare<\/td>\n<td width=\"151\">7<\/td>\n<td width=\"151\">7<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">7<\/td>\n<td width=\"151\">Private rented residential<\/td>\n<td width=\"151\">9<\/td>\n<td width=\"151\">8<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">8<\/td>\n<td width=\"151\">Affordable housing<\/td>\n<td width=\"151\">8<\/td>\n<td width=\"151\">6<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">9<\/td>\n<td width=\"151\">Communication towers\/fibre<\/td>\n<td width=\"151\">4<\/td>\n<td width=\"151\">13<\/td>\n<\/tr>\n<tr>\n<td width=\"151\">10<\/td>\n<td width=\"151\">Social housing<\/td>\n<td width=\"151\">11<\/td>\n<td width=\"151\">9<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Berlin tops rankings for overall real estate prospects according to joint PwC\/ULI report, leading a strong showing from German cities that are demonstrating resilience amid COVID-19. London jumps two places to second as investors see it as good long-term value and Paris remains in top three. 55% of investors expect to be net buyers of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1001,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[8,7],"tags":[2801,178,2788,496,192,2772,2841,1905,1906,314,177,176,175,2754,64,243,2732,3193,3194,3195,82,130],"class_list":["post-1504","post","type-post","status-publish","format-standard","has-post-thumbnail","category-real-estate","category-reports-analysis","tag-amsterdam","tag-berlin","tag-continental","tag-covid-19","tag-dorota-wysokinska-kuzdra","tag-e-commerce","tag-frankfurt","tag-gareth-lewis","tag-lisette-van-doorn","tag-london","tag-madrid","tag-milan","tag-paris","tag-play","tag-poland","tag-pwc","tag-ranking","tag-uli-europe-executive-committee","tag-uli-poland","tag-urban-land-institute","tag-warsaw","tag-western-europe"],"jetpack_publicize_connections":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/posts\/1504","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/comments?post=1504"}],"version-history":[{"count":0,"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/posts\/1504\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/media\/1001"}],"wp:attachment":[{"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/media?parent=1504"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/categories?post=1504"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ceo.com.pl\/en\/wp-json\/wp\/v2\/tags?post=1504"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}