Hitting Reset: Real Estate Themes for the Next Cycle

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Below is a taster of the Report, chapter by chapter:

01 – Value falls will create entry points for value-add and opportunistic investors

Property values may have fallen but with distress comes opportunity and innovation.

It is not just rebased values – from the 2008 crash came new asset classes and the rise of debt funds, and real estate debt could emerge as one of this cycle’s asset class of choice.

02 – Doing the numbers on capex and ‘retrofit first’ strategies

Landlords trying to maintain value in a stumbling market need to upgrade space to avoid obsolescence.

Capex and retrofit strategies can repurpose older stock cheaply, quickly and with less environmental damage than rebuilding, and this could be backed up by a flurry of lending in both the commercial and residential sectors to bring buildings up to scratch.

03 – A new opportunity for private equity

While fundraising is slow there are hundreds of funds looking to take advantage of the biggest shift in pricing since the financial crisis.

Managers with a track record coming in and out of cycles and who truly understand that creating value is about more than just light asset management will do very well.

04 – Professional renting – the big winner of the mortgage crunch

It is no longer just build-to-rent. Housing market instability will drive more people towards renting where they will find a variety of quality, professionally managed products – from co-living to retirement to single family housing – while turmoil in other conventional markets will push more institutional investors towards all that is rental.

05 – Finding the new core

As the “traditional” real estate sectors continue in their state of flux, more investors will look to where they can find more stable and structurally supported returns. All the work over the last 30 years making alternative real estate more transparent and palatable will come to the fore.

06 – The EV revolution

1.3 million plug-in cars on UK roads now share just 37,055 chargers. This demand for charging infrastructure is going to lead to huge changes and an opportunity for investment.

From motorway stops to convenience retail, captive audiences will mean new ways to think about physical space, while older petrol station infrastructure in central locations will need repurposing.

07 – Adapting to our environment

Billions of pounds in investment are needed to adapt the UK’s real estate to the changing climate.

New builds will see increasing occupier and policy demands to be both efficient and sustainable while retrofitting older buildings will form a larger part of the thinking by owners and government to avoid obsolescence.

08 – The role of real estate in easing the healthcare crisis

Where NHS trusts have large but underutilised estates, an opportunity exists to use land to help address the lack of housing for NHS staff. The private sector can build key worker accommodation at affordable rents and receive a long-dated income stream in return. This can be done in deals which also see other care facilities replaced or paid for.

09 – Social value – more than just a numbers game

As the S in ESG catches up with the E there has been a growing focus on how to differentiate and measure social value. And while putting a number on the social side of development is important, it must be accompanied by qualitative measurement. New measurements will need to focus on the “story” accompanying social value.

10 – Policy, policy, policy

From fire safety regulation and Section 21 changes to the likelihood of a Labour government keeping Conservative housing policies, at Montfort we have the tools and the smarts to oil the wheels of this debate and hopefully achieve cogent change and intelligent outcomes, rather than policy paralysis as we face a change of government.

 

Following the acquisition of Blackstock Consulting, award-winning reputation management consultancy Montfort Communications has added the specialist Real Estate team led by Andrew Teacher to its existing practice areas in financial services, capital markets, asset and wealth management, public affairs, investor relations, litigation & disputes and digital services. With this latest report, the team continues its track record of high-impact research across the built environment.