MORNING NEWS: ESG is top challenge for real estate, say more than 1,000 leaders

Good morning. Here’s your daily round-up of the latest news and views from EG and a collection of industry-relevant headlines from the nationals, all perfectly curated to set you up for the day ahead. ESG is one of the most significant challenges facing the real estate sector in both the short and long term, according to the latest edition of PwC and ULI’s Emerging Trends in Real Estate Europe report. The report, released this morning, found that some 70% of 1,143 respondents were concerned about environmental issues in 2025, with 72% flagging this as an issue for the next five years. Many admitted that they were struggling to keep competing environmental concerns at the top of the agenda. What was top of the agenda for most respondents, however, was European and global economic growth, with 77% and 62% respectively either “very” or “somewhat” concerned. The report found that market players largely believed a “new normal” was emerging, with valuations falling and interest rates regaining some level of predictability. This led to more than 80% of respondents expecting business confidence and profits to stay the same or rise next year. In addition to concerns about economic growth, there were fears of growing geopolitical uncertainty, with 85% citing political instability (up from 74% the year before) and 83% the conflicts in Europe and the Middle East as sources of considerable volatility. In an attempt to temper volatility, the board of Supermarket Income REIT has agreed a deal with the firm’s investment manager Atrato to switch its management fee calculation away from net asset value and to base it instead on market capitalisation. The move has been welcomed by vocal TR Property Investment fund manager Marcus Phayre-Mudge, who is calling on other REIT boards to follow suit.  “Since shareholders benefit from share price total returns rather than NAV-based returns, it’s only right that the manager’s compensation is tied to the same metric,” he said. “It is great to see SUPR’s board and its manager, Atrato, work together to create a fairer arrangement for shareholders. We urge other boards to review their own investment adviser contracts and, where needed, adopt similar improvements.” And in the world of development, fresh plans are being drawn up for the £1.5bn redevelopment of London’s Liverpool Street station that will see the 10-storey office block on top of the station scaled back. Initial plans, first submitted by Sellar and rail group MTR in May 2023, were mired in controversy, with campaign groups including Historic England and the Victorian Society hitting out at the designs. Now Network Rail Property has taken charge and launched a consultation on new proposals to make the station “a destination in its own right”. NRP said that after listening to a broad range of views, it was leading the consultation on plans which it said would deliver significant improvements to public infrastructure for a “best-in-class, destination station that protects the station’s heritage setting”. Group property director Robin Dobson said: “Network Rail Property is leading a new team with a new approach which will respect the station’s unique heritage – simple in design, embracing London’s mix of the old with the new.” He added that a new office building on top of the station would still be developed to generate cash to pay for the station improvements. Elsewhere, Landsec has submitted a hybrid application to transform the 1970s-built Lewisham Shopping Centre in south-east London. The proposals, made by the REIT’s LandsecU+I arm, map out a 17-acre masterplan that includes 1,700 homes, 445 co-living residences, 660 student beds, shops, cafes and bars, a live music venue and eight acres of public realm, including an urban meadow on top of the centre. Landsec has owned Lewisham Shopping Centre for more than 20 years. Mike Hood, chief executive at LandsecU+I, said: “This submission marks an important milestone to create a new green centre for Lewisham. A place that people will love, that brings immense social and economic benefits, thousands of much-needed homes, and a beautiful green meadow on top of a revived shopping centre.” Serial retail park buyer Realty Income posted strong Q3 figures this morning, revealing that it is now spending significantly more building its European portfolio than expanding its holdings in the US. Figures for the first three quarters of the year show that of the $1.1bn it splashed on real estate, more than 64% of that – $744.4m – was on European real estate. And, said president and chief executive Sumit Roy, there is a “robust pipeline” of opportunities for the firm to continue to go after. “Realty Income is pursuing a wide range of growth opportunities, including capital diversification initiatives to further enhance the reach and scale of our proven platform,” he said. Singapore-listed Elite UK REIT is feeling similarly positive about opportunities. The REIT said it was pushing on with disposals as it sets out a new strategy that will see it switch from government-let office space to residential. Chief executive Joshua Liaw said: “We are firing on all cylinders. On capital management, we made good progress in strengthening Elite UK REIT’s position through refinancing, hedging and the substantial completion of dilapidation settlements negotiations for vacant assets.” All of the news from EG, plus a selection of headlines from the nationals: JP Morgan plans wind-down of real assets fundSupermarket Income REIT switches fee calculation from NAV to market capSirius buys light industrial park in £9m dealESG compliance is real estate’s biggest challenge, say property chiefsElite UK REIT ‘firing on all cylinders’ with new strategyRealty Income splashes £574m on European real estateUK co-working space almost double that of USDeloitte partners with Catalyst for Belfast innovation hubTikehau Capital restructures IREIT leadership COMMENT: How to deliver impactful change through your pro bono programmeGlobal Holdings Group sticks to value-add with Soho acquisitionLloyds Living PRS on the Rise in CardiffRX and Re-Defined launch managed services offeringManchester Council kicks off quartet of resi developmentsStrettons raises £12.8m in October auctionNetwork Rail updates Liverpool Street station plansLandsec lodges plans for Lewisham Shopping Centre redevelopmentBlackstone’s Trentham Estate picks new operating partnerUrban Splash Residential Fund forms £200m partnership with CituPrologis nears prelet at next Cambridge Biomedical Campus blockNational deals round-upHanover Green grows retail and F&B team with Newmark hiresCPP acquires industrial and logistics specialist as part of expansion plansL&G launches rent-free shops at London BTR schemeKajima hires ex-Montagu Evans partner to lead development and investmentClarion nabs strategy boss from BouwinvestM&G takes major stake in BauMontHomes England, PIC and Muse form jv to deliver 3,000 affordable homesZephyr X buys Hampshire site for £20m care home schemeRLAM bags trio of Cambridge offices for £44.5mHealthcare firm settles at Hampshire business parkLandsec becomes sole owner of MediaCity in £83m dealTom Ford buys £80m Chelsea mansion in year’s biggest property deal (£)Owner told to destroy luxury Airbnb cabins built without permission (£)Shoppers’ worries over bills and tax restrict retail spending (£)