Mixed signals are rife.
M&G warns central London offices are likely to be most negatively impacted by Brexit. For Barings Real Estate’s Ian Mayhew, London is a “hard sell”.
Yet reporting City office investment at a record high in Q2, CBRE’s head of London investment properties James Beckham said the low investment levels seen in Q1 were “an aberration. International investors remain hungry for real estate in London and we have seen a diversification in the origin of this capital, albeit the majority is still coming from Asia.”
Those who are cool on the capital aren’t sitting on their hands, mind. After striking several significant northern deals in the past 18 months, Barings’ Mayhew says Manchester offers opportunities for returns that are no longer available in London.
And Cushman & Wakefield’s UK and Ireland head George Roberts is looking further afield, specifically at the “strong growth story in Ireland”: nearly 2m sq ft of office leasing deals were signed in Dublin in the first half of 2018, while investment into Ireland’s commercial property market has more than doubled in the past year.
It all points to diverging strategies and performance over the year ahead. Which side are you on?
■ Troubling news from the auction room: overall lots offered in June are down by 20%, lots sold are down by 23% and revenues are down by 24%. According to EIG managing director David Sandeman, who compiled the figures, the results are “alarming”.
They certainly highlight the transparency of the auction room. They point, perhaps, to private investor anxiety around interest rates, Brexit and retail woes. And they reveal concerns that will be by no means confined to the auction room.
■ What is it with retail reviews? The original Grimsey review followed a government review led by Mary Portas. Now, after Grimsey 2 – out earlier this month – the government has announced another, to be led by shoe repair king Sir John Timpson.
Ministers were said to be warming to Bill Grimsey’s latest round of recommendations; the Timpson enquiry suggests they believe more needs to be done. So could the Timpson review be more radical than Grimsey? A complete overhaul of business rates? The levelling of the fiscal playing field between online and offline retail? It seems unlikely.
I’d expect those issues to be buried in a file marked “Too difficult”. More likely – and not for the first time – is that this is a ministerial attempt to be seen to be doing something, without actually doing anything.
■ As the beaches and bars of southern Europe beckon, keep half an eye on opportunity. It’s not just holidaymakers heading there; the non-performing loan market is moving south too.
Spain is now selling some of the largest-ever NPL portfolios to the likes of Blackstone and Lone Star. Italy is working through its more dispersed exposure more slowly. Cyprus, with €15bn of NPLs, is for some a “strategic opportunity”, while Greece is just starting to work through €60bn of distress.
It might be enough to persuade some to extend their holiday. Mark Caplan, managing director at commercial servicing firm Pepper Group, says: “For those with non-performing loan skills, I regret to say it and I take no pleasure in saying it, but I think there’s a job for life for pretty much all of us, if you’re prepared to travel.”
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