There are only three countries where the market sentiment has remained less positive: the United Kingdom (outside London), Hungary and Spain. The countries with the most positive market sentiment amongst investors, are Germany, Finland, Sweden, Russia, Ireland, France and the Czech Republic.
These were the results presented by David Hutchings, Head of Investment Strategy in EMEA at Cushman and Wakefield during the webinar “What’s Next for European real estate investments?”, organised by the same consultant last Thursday, who also noted that in terms of transactions and demand the market sentiment has been evolving positively. However, «pricing and debt availability remain in negative territory and have been much slower to improve».
Despite the economy’s good start after the confinement period, «the second leg of recovery looks set to be slow and uneven», alerted David Hutchings, who further added that we will see «acceleration in terms of the repricing of the property with a focus on rents more than yields and it will be secondary assets that will feel the pain».
The investors’ strategy should now be focused on different factors which can be divided into three groups. «Legacy from Covid-19», such as healthcare investment, fiscal stimulus and valuing lower risk. Another factor combines the issues the pandemic highlighted and on which we need to reflect: e-commerce, equality, affordability and centralising or dispersing. And, the final issues that came back to the investors’ agendas with the pandemic concern climate and demographic change within each country.
Residential and Logistics are the winners
In terms of all the different real estate segments, the same survey showed that retail and hotels are still on the red, whereas the market’s sentiment towards offices improved slightly and residential and logistics are still on top.
On the future of retail, David Hutchings believes that there will be «a decentralisation in terms of investment during the recovery period. We are going through a moment during which retailers are fighting to keep their businesses, but some of them will not resist and, as such, there will be opportunities on the market», he added further predicting that «in the future, we will have less retail spaces than we currently have».
In terms of what the future holds for the office segment, it seems to be something very different, where flexibility will be key. According to James Young, Head of Investor Services in EMEA at Cushman & Wakefield, «the role offices play will change» and he explained that «although offices will remain important for companies, its uses should change and most likely there will be a combination between the office and remote work». What is certain is that, within this segment, «flexible leasing will be part of the future», he guaranteed.
While we see an «increase in logistic units’ transactions across Europe», Stephen Screene, Head of Global Capital for EMEA Capital Markets, assumed that the housing segment, and in particular, private rented was the «surprise which will now become a very active segment». The investors’ appetite should also turn towards assets which feature life sciences and data centres, he advanced.
«Investment supply may be more encouraging than pre-Covid-19, with an increase in motivated vendors likely to take place. Assuming there will be no widespread return of Covid-19 lockdowns, we anticipate a rally in the activity that will strengthen in 2021», concluded David Hutchings.