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Winning in growth cities 2018 2019 preview

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Winning in Growth Cities is an annual report which examines global commercial real estate investment activity, assessing cities by their success at attracting capital.
Get the full report at http://cushwk.co/wigc

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Winning in growth cities 2018 2019 preview

  1. 1. WINNING IN GROWTH CITIES GLOBAL CAPITAL MARKETS WEBINAR STEPHEN SCREENE International Partner, Head of International Transactions, EMEA Capital Markets 01
  2. 2. WHAT NOW, WHERE NEXT? GLOBAL CAPITAL MARKETS WEBINAR 02 DAVID HUTCHINGS Head of Investment Strategy, EMEA Capital Markets
  3. 3. WHAT NOW? TRENDS IN THE GLOBAL MARKET Asia lifts the global total to record levels GLOBAL VOLUMES (Pa US$bn, inc Dev Land) Prime Yield Movements: All Sector 6.0% 6.5% 7.0% 7.5% 8.0% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Americas APAC EMEA Global Yields Source: Cushman & Wakefield, RCA • Geopolitical uncertainty and a slowing in the economic cycle have done nothing to dent enthusiasm for real estate. • Global investment rose 18% in the 12 months to June and investment volumes hit a fresh record of $1.8tn. • Whilst transaction growth in North America was lacklustre, increasing by just 0.6% y/y, elsewhere volumes improved at their fastest in 3 years, with Asia Pacific up 32.0% and Europe 16.4%. • The macro environment may not be as supportive as expected at the beginning of the year, but many investors are still increasing their allocations to what is seen as a defensive sector. • As a result the market is set to remain in demand, with supply and risk tolerance the key factors determining whether volumes rise further still in 2019.
  4. 4. TOP TARGETS FOR INVESTMENT New York top but London extends its lead for cross border TOP MARKETS OVERALL TOP FOR CROSS BORDER INVESTORS 0 20 40 Toronto Boston Denver Madrid Dusseldorf Miami Berlin Sydney Phoenix Seattle Houston Shanghai Atlanta Seoul Amsterdam Chicago Dallas Tokyo Washington, DC San Francisco Hong Kong Paris London Los Angeles New York AnnualvolumetoJune(USDbn) Excl.developmentsites 2018 2017 0 5 10 15 20 25 Hamburg Brussels Houston Chicago Copenhagen Melbourne Dublin Vienna Frankfurt Munich Dusseldorf San Francisco Sydney Washington, DC Los Angeles Tokyo Helsinki Shanghai Berlin New York Madrid Amsterdam Paris Hong Kong London AnnualvolumetoJune(USDbn) Excl.developmentsites 2018 2017 Source: Cushman & Wakefield, RCA
  5. 5. INTERNATIONAL CAPITAL Increasingly dynamic flows from all regions Sources of Cross Border Capital (ex Dev land) Changes over Time (ex Dev land) Source: Cushman & Wakefield, RCA 0 10 20 30 40 50 60 70 80 90 100 MEA APAC Americas Europe US$bn YeartoJune Regonal Global 0 10 20 30 40 50 60 70 80 90 100 MEA APAC Americas Europe US$bn YeartoJune 2013 2017 2018 Regional
  6. 6. TOP 10 TARGETS BY SECTOR 10 cities dominate– with US cities leading above all Rank Yr to June Retail Office Industrial/ Logistics Apartments Hospitality Other alternatives 1 HONG KONG PARIS LOS ANGELES NEW YORK NEW YORK WASHINGTON DC 2 NEW YORK LONDON SAN FRANCISCO SINGAPORE LONDON LONDON 3 LOS ANGELES NEW YORK CHICAGO LOS ANGELES SAN FRANCISCO CHICAGO 4 LONDON HONG KONG NEW YORK DALLAS TOKYO ATLANTA 5 SEOUL TOKYO HONG KONG WASHINGTON, DC AMSTERDAM DALLAS 6 TOKYO LOS ANGELES WASHINGTON, DC ATLANTA WASHINGTON, DC SAN FRANCISCO 7 AMSTERDAM SAN FRANCISCO DALLAS DENVER HAWAII NEW YORK 8 CHICAGO SEOUL TORONTO HOUSTON PHOENIX TORONTO 9 SYDNEY SHANGHAI SINGAPORE PHOENIX LOS ANGELES LOS ANGELES 10 SAN FRANCISCO WASHINGTON, DC ATLANTA CHICAGO DALLAS AUSTIN Top 10 rank in 5-6 sectors Top 10 rank in 3-4 sectors Top 10 rank in 1-2 sectors
  7. 7. While there are clear risks in the macro environment, there is little to suggest the cycle is set to end or that recession is looming. However, with central banks in a tightening mood and a slow but sure easing in QE driven liquidity, investment strategies need to evolve. WHAT NEXT?
  8. 8. WHAT IS DRIVING STRATEGY? Pointers for the year ahead Economy – down but not out, with growth continuing in most areas, frequently still above historic averages. To say there is ample liquidity is an understatement but not for all assets and this will change as QE reverses. The hunt for productivity will lead to a focus among businesses on new technology but also on changing real estate needs. Quality of life and affordability are coming increasingly to the fore, with sustainable growth relying on attracting talent and customers. Market diversity is increasing as the apparently synchronised nature of the global economic cycle in late 2017 proved short- lived. The need to remake space and cities flows directly from social and business changes with a need to embrace sustainability and better curate the offer a city makes. Alternative sectors offer gains in portfolio performance and a wider range of uses for mixed use schemes but investors need to be armed with specialist local market knowledge.
  9. 9. A STRATEGY TO INVEST Themes for 2019 DEFENSIVE Seeking liquidity and sustainable long-term income. • Super gateways • New markets in lower risk countries 01 02 03 DARING Taking risks ahead of the market. • Emerging Markets • Challenger cities • Reexamining retail DISRUPTIVE “New" and unproven ideas that will disrupt the locations we choose and the way property is built, managed and used. • New submarkets in gateway cities • New platforms that add value for users and owners and create new revenue streams RISK HIGHLOW
  10. 10. THE HOSPITALITY SECTOR IN EUROPE GLOBAL CAPITAL MARKETS WEBINAR 03 BORIVOJ VOKRINEK Partner, Head of Hospitality Research, EMEA
  11. 11. THE EUROPEAN LANDSCAPE INVESTMENT VOLUMES 12 months ending June 2018 Top Investors (YE Jun 2018) LRC Europe Fonciere des Murs Vivion Capital Partners Brookfield AM Aroundtown Secure Income REIT Invesco Colony Capital Art Invest 37% 5% 5% 27% 13% 13% 33% 11% 3% 33% 19% Fund Institution Other Private Public SWF 12% 49% 15% 20% 3% 5% 70% 2% 19% 3% Asia Pacific Europe Middle East Americas Other SOURCE OF CAPITAL YE Jun 2018 vs 2015 Source: [Cushman & Wakefield; RCA] • Growing liquidity in core as well as non-core markets • Increasing interest from institutional investors • Rising popularity of leases with variable component • Hotels in mixed-use developments / mixed-use components within hotels Increasing investment activity across the Continent 2018 2015
  12. 12. TYPICAL DEALS C&W Transactions RADISSON BLU COMPLEX BUCHAREST CLIENT GHG London Holdings Ltd PROJECT Luxury lifestyle hotel & private members club (existing asset sale) SIZE / DEAL VALUE 120 rooms / £ Confidential CLIENT Emerige PROJECT Luxury lifestyle hotel & room hostel (Development sale) SIZE / DEAL VALUE 161+90 rooms / Confidential CLIENT Cerberus & Revetas PROJECT Upscale and midscale hotel, Casino and retail (Investment Acquisition) SIZE / DEAL VALUE 487+276 rooms/€169 million THE CURTAIN LONDON SO SOFITEL & HOSTEL MORLAND, PARIS
  13. 13. HOTEL MARKET OUTLOOK – WHERE IS THE OPPORTUNITY? Key Markets: Travel Spending Outlook vs Hotel Supply Growth Source: [Supply: STR / Cushman & Wakefield 2018; Travel Spending Forecast: Oxford Economics 09/2017] Note: Size of the bubbles represents RevPAR in 2017 (EUR) / Green bubbles are markets with notable international leisure component
  14. 14. EUROPE Trends and Risks TRENDS Tourism demand outpacing global economy & supply under control Ongoing consolidation to drive economies of scale and market coverage Concept fragmentation to address diverse customer needs RISKS Increasing labour & distribution costs Functional obsolescence Market shocks Disruptors
  15. 15. DATA CENTRES GLOBAL CAPITAL MARKETS WEBINAR STEPHEN KIRBY Partner, EMEA Data Centre Advisory 04
  16. 16. THE EUROPEAN LANDSCAPE Overview • European Data Centre Market Geography: – London (500 MW) – Frankfurt (300 MW) – Amsterdam (300 MW) – Paris (200 MW) • Rise of the Hyperscale Provider • Decline of the Enterprise Operated Facility • Investment Activity
  17. 17. CLOUD UTILISATION GROWTH V IN-HOUSE DECLINE The decline of owner occupied facilities = growth of data centre providers According to Gartner, by 2025, 80% of enterprises will have shut their dedicated owner occupied data centres. Technology is moving fast, in-house corporate teams are unable to adapt as operational formats impact CapEx & OpEx strategies. Cloud & Colocation is increasingly seen as the obvious corporate solution.
  18. 18. $2.3 billion $3.6 billion $2.6 billion Single facility $1.9 billion $127 million$409 million $442 million $7.8 billion $2.3 billion$34.0 billion Confidential$490 million Confidential $3.2 billion Elegant Jubilee INVESTMENT: M&A Corporate activity over the past 2 years: $1.8 billion Value versus Flexibility versus Purchaser matrix Occupational Flexibility CapitalReceipt INVESTMENT: TRADITIONAL Real Estate Investors v Data Centre Specialists
  19. 19. EUROPE New market entrants & access to product TRENDS Growth of Operators & Hyperscale Providers M&A Consolidation Structured Occupation Specialist Investors RISKS / OPPORTUNITIES Availability of Investment Product Power Constraints Legacy Facilities New ‘EDGE’ Locations
  20. 20. STEPHEN SCREENE Moderator JACK SIMMONS Residential ANDREW SMITH Student Housing STEPHEN KIRBY Data Centres DAVID HUTCHINGS Global Strategy BORIVOJ VOKRINEK Hospitality
  21. 21. CUSHMAN & WAKEFIELD COPYRIGHT 2018 No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by the property owner(s). As applicable, we make no representation as to the condition of the property (or properties) in question. DAVID HUTCHINGS Head of EMEA Investment Strategy T +44 (0) 20 7152 5029 M +44 (0) 7793 808029 david.hutchings@cushwake.com Download the full report: cushwk.co/wigc

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