M&G Real Estate’s in-house research team produces regular updates on our key markets, alongside more in-depth pieces on major trends affecting global property today.
This paper highlights the structural shifts that are likely to be reinforced by COVID-19 and how these can be leveraged by investors to future-proof their investment portfolios. Key areas of opportunity include:
- Growing e-commerce penetration, expansion of supply chain capacities and automation are likely to drive tailwinds for the logistics sector in markets with a relatively bigger domestic consumer base
- Increasing economic digitalisation leading to wider adoption of omni-channel retailing and telecommuting is expected to fuel ‘hotelisation’ of the retail and office sector, with high quality assets that offer flexibility likely to be more attractive to occupiers
- Rising need for convenience, availability of amenities and employment are likely to continue driving demand for inner-city residential by millennials and Generation Z, thereby bolstering the sector’s income resilience
In this paper, we discuss the structural changes that are presenting challenges and opportunities for real estate globally, where adopting technological and innovation strategies can overcome such challenges.
- Successful strategy implementation should unlock new sources of customer demand, increase space productivity, and improve asset quality
- Real estate investors could thereby benefit from extended investment longevity, added value to their portfolio and more defensive income stream
This paper assesses the potential impact of rising rates on the UK property market. It shows that:
- Gradual transition towards a comparatively lower “new normal” for interest rates
- Relationship between property yields, interest rates and bond yields is nuanced and complex
- Capital values supported by market-specific factors during periods of rising bond yields
- Stock selection and effective asset management to drive rental growth and healthy returns
This report highlights a growing trend among European lenders taking an active interest in sustainability through green lending initiatives.
- The continued shift towards certification
- Margin discounts offered for energy efficient real estate
- Green buildings tend to exhibit lower systematic risk
This report is a deep dive into APAC retail and the macro fundamentals specific to the region driving the sector.
- Key trends influencing change in the retail sector and how e-commerce is set to slow in APAC from its double digit growth trajectory
- Physical retail is underpinned by consumers' social, experiential, convenience and dining out needs
- Active asset management to boost value of assets is crucial in the new retail age
A closer look at the drivers of change in UK retail and how the sector is adapting to evolving consumer needs.
- The proliferation of e-commerce, shifting consumer preferences and retailer cost pressures are drivers of change in retail
- Retailers are innovating to compete, complement and/or diversify from online retail by offering experience or convenience to consumers
- A proactive investment and asset management strategy is required to remain resilient to the rapidly changing sector
This deep dive into European retail explores the structural and macro factors influencing change and how retailers and landlords are maintaining competitiveness.
- Eurozone growth supportive of consumer sentiment pick-up and sustainable household spend
- Europe now the second most popular destination for outbound Chinese tourists
- Retail schemes anchored by luxury, food and big-ticket items best placed to resist e-commerce competition
- Landlords can drive footfall with experience-led retailing
Latest real estate market outlooks
Economic growth in the Eurozone softened in 2018, but macro tailwinds remain strong, such as Japan and the European Union agreeing to remove tariffs on goods and services. This European real estate market outlook looks at the opportunities emerging across the continent and what we believe will be important to drive returns going forward.
- Emerging submarkets driven by new infrastructure offer bottom-up opportunities
- Defensive qualities of the residential sector creates attractive long-term potential
- Innovative and tourist-driven retail set to remain resilient to online competition
- Transport corridors between Europe and China to open up new investment
Asia Pacific real estate continues to attract strong capital inflows, with returns expected to remain resilient amid more accommodative macro policies and balanced supply and demand.
This paper highlights areas of strong potential returns and resilient income, including:
- Logistics markets with more sizeable consumer bases, providing a buffer against the decline in global trade and geopolitical rifts
- Office properties, supported by high occupancy rates, a well managed supply pipeline and healthy demand from growth sectors
- Residential in gateway cities, reflecting population growth and the rise of dual-income families
Nordic, CEE and Southern European logistics markets offer better potential for attractive returns, according to M&G Real Estate research.
Here at M&G Real Estate, we forecast rental growth for logistics markets across Europe using our analysis of the physical and digital drivers increasing demand for logistics space. This includes infrastructure development across Europe and we reweight the European Commission’s Digital Economy and Society Index (DESI) to just those factors most relevant to logistics. We analyse the most attractive markets in terms of value and long term rental growth prospects.
Looking further afield for opportunities reveals edge of Central Business Districts as offering attractive fundamentals and value.
The recovery in Europe continues to boost employment and the office market. Tight supply has driven rental growth, supporting capital values. Attractive pricing for investors can be found at edge of Central Business District markets, whilst offering affordability for occupiers.