Four property veterans divulge what they would spend a fantasy £1bn war chest on in 2019
Ross Blair, senior managing director and country head of Hines UK
It’s incredibly tough to gauge what 2019 has in store for us – and therefore to judge where to invest. For the returns we want to generate, buying core income and hoping for further cap rate compression is not a bet we are willing to take right now. In many places, though, we are witnessing low levels of development completions and below-average development pipelines, coupled with steady levels of occupier take-up, and from occupiers increasingly focused on the quality of product. Therefore, we are turning our attentions again to development and value-add – particularly in prime city centre office locations and small and medium-scale logistics product.
Therefore, with my £1bn war chest I would search for land in quality locations with improving infrastructure and high barriers to entry, plus assets with short-term income, which might be difficult to finance for some of the competition, but buildings that can be creatively refurbished to meet current occupier requirements. I would consider both develop-to-hold and develop-to-sell strategies, creating a portfolio with an attractive level of running return in a world where cash flow is being sought by so many investors.
Matthew Weiner, chief executive of U+I
The first thing I would do is partner with a local authority in one of Britain’s struggling towns to take over a dying high street and work with that authority, and the community, to develop a masterplan that would completely transform it for generations to come. That means moving away from single-use and building a buzzing blend of flats, family townhouses, independent shops, busy offices and spaces for small businesses to grow and for scientists to try things. A place that’s alive day and night, not just nine to five.
£1bn goes a long way, so I’d look for other public sector projects to unlock derelict or unused publicly owned land. The private sector, with its skills and experience, can be a great ally. I’d like to use my £1bn to prove just that.
Katharina von Schacky, global head of shopping at German fund manager Commerz Real
If I had £1bn to spend on my dream asset, I would buy a large-ish mixed-use, well-connected asset in a top city centre location. The asset itself would include a mix of retail, services, offices, food and beverage, apartments and some leisure space. It would be exciting to visit but also have a great sense of community… for all ages. Changing events and offers, exciting omni-channel retailers, great facades and shop-fits are a given, along with areas to relax or eat, or that are incredibly convenient to work or live in, with offers for takeaways/deliveries to your doorstep.
The building itself would be functional and well equipped with electronic and technological devices that assist with management and occupation – everyone would be linked through one location app. It would also be built and maintained in line with green building standards.
That type of asset would be my dream. Does that exist anywhere? I haven’t found it yet, but 2019 is coming so I will keep looking for it. And while looking, we continue to work hard on getting our own assets to become more like that.
Dan Nicholson, managing director of Tishman Speyer UK
You could do worse than make central London development the focus of a £1bn investment in 2019. The logic is both compelling and clear. First, there’s a very low development pipeline, with Grade A vacancy in new-build projects currently running at just 0.4%. Second, the paucity of speculative development finance, which shows no sign of increasing, means there’s no immediate prospect of this pipeline growing dramatically.
At Tishman Speyer, the recent successful closing of our value-add fund has provided us with more than €750m (£678m) of equity to put into the right opportunities across Europe, including London. 2019 should be another interesting year.
To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette
