Publications

Taking the long view Even in challenging times, real estate investors continue to have a strong degree of confidence in the future of the sector.

The majority of UK real estate professionals continue to believe that London is overvalued. As our chart shows, this is very much business as usual. Over the past eight years, only 2021 - when investors began to wonder what a post-covid market might look like - has challenged the status quo. Even then, what we saw was only a significant narrowing of the gap, not a reversal. In this year’s polling, 62% of our respondents feel London is overvalued, as opposed to 6% who believe it is undervalued. These are the most bearish numbers we have seen since pre‑Brexit days.

Investors may be moving towards the view that making offices sustainable does not necessarily equate to higher costs for occupiers.

Every year we ask a cross-section of leading UK real estate professionals for their views on the market. This year we polled 270 experts, including 62 investors and 54 developers. In many ways they share the outlook of the global investors we surveyed, with long-term confidence tempered by short-term concerns. Overall, 38% reported feeling optimistic about the market, while 34% describe themselves as neutral and 28% are pessimistic. Although positive, this take on the market is unsurprisingly more cautious than the one we found 12 months ago, with sentiment falling back to levels last seen at the beginning of the pandemic as the more bullish outlook of the past two years recedes.

As our chart shows, the genuinely ‘global’ cities remain the most appealing (albeit by slim margins), with the top four slots going to London, Paris, Tokyo and New York.

Despite a difficult year and an uncertain outlook, we found strong underlying positives among investors globally.

A radical rethink for global property – and where we live, work and play As the real estate world emerges from the pandemic it is clear that all around us the urban landscape is changing. Many properties are obsolete but also have exciting futures with new uses. Our town centres and cities are undergoing fundamental change – which all adds up to a world focused on Repurposing Real Estate. Now in its tenth year, our Real Estate Thought Leadership series has covered topics such as the rise of international investment in the UK, the growth of tech, the future of the office, the rapid rise of industrial & logistics and the arrival of build-to-rent as a major asset class. This year, with the Government having published its Levelling Up & Regeneration Bill, we focus on the future of towns and cities not only in the UK but in a series of key global investment hubs: Germany, France, the Netherlands, Spain, Singapore and the United Arab Emirates. After two years of lockdowns, working, shopping and socialising at home, a debate is raging about the future of town and city centres. Will they recover? How will they look in ten years? Will urbanisation go into reverse? And what does this mean for the real estate world?In `Repurposing Real Estate’ we provide the first answers having polled more than 300 leading industry professionals and almost 15,000 global consumers. The results are fascinating: almost a third of real estate is earmarked for conversion – with retail and offices to housing the most popular choices. Consumers want more green and open space, having spent too long confined to their own homes. But the good news is that investors, having come through the pandemic, are still confident in real estate as an asset class. The big changes will be in what property they invest in, meaning the places we live, work and play in may be very different in the years to come.

For landlords smart buildings will deliver higher rents, for tenants technology will be an increasingly important enabler for the work from home revolution, and for both innovation will help support a more sustainable future.

Technology and an innovative approach to sustainability and wellbeing are set to secure the future of the office. In a world where the office now has to compete with the comfort of working from home, it needs to find a new purpose to persuade people to return to the commute, at least some of the time.

People miss the office, the human interaction it promotes and the clear boundaries that office life creates between personal and professional life. In many organisations, it has been younger people who have lobbied hardest for a return to the office, unable to work satisfactorily at home and missing the opportunities and social interaction that office life presents. As city centres begin to work out a new future, technology will be at the heart of the debate, with the more favourable buildings allowing people to work seamlessly and connect with colleagues around the world at the same time as giving a feeling of safety and security. With ‘the digital workplace’ now considered the new working environment, employers need to both embed the physical implementation of smart technology in their buildings and to ensure the virtual working experience transforms the employee experience by fostering efficiency, innovation and the social elements that many people crave in their workplace.