ULI/PwC report: Amidst a late-cycle property market and evolving business models, the global real estate industry remains strong
- The increased competition for assets in Asia is changing the industry in fundamental and often unexpected ways. Many core investors are moving up the risk curve to meet target returns, while others are moving down the risk curve to seek the type of steady but safe yield no longer available from sovereign bonds. Core and opportunistic investors are converging in the value-add space. One result of this phenomenon is the migration of investors into markets and asset classes that in the past did not attract much interest. In particular, fund managers are now considering data centres healthcare assets, affordable housing projects, build-to-rent facilities, student accommodation and senior housing.
- Europe’s property industry is drawing comfort from the fact that the European Union economy is growing at its fastest pace in a decade, which is supporting occupier demand as well as investment. Much of the growth has been driven by the core economies of Germany, France, Italy, and Spain. For European property professionals, it is hard to dissociate London from the continuing uncertainty around Brexit. But the report also notes that Asian investors – less bothered by Brexit than their European peers – are looking to the long-term by deploying capital in London.
- In the U.S., the possible impact of the new federal tax law on real estate is being watched closely. According to the Emerging Trends 2018 mid-year survey of industry professionals in the U.S., 61 percent of respondents believe the new tax law will be good for real estate. Around a quarter of respondents say the tax reform will boost investor demand, and a similar number say it will improve occupier demand. The report notes that the full impact on commercial real estate remains to be seen, but points to three main fiscal levers: foreign investors will be able to invest and repatriate profits more easily than before; U.S. companies that until now parked some of their profits overseas at lower corporate tax rates can repatriate those earnings into the U.S.; and the U.S. corporate tax rate will be reduced.
The Urban Land Institute is a non-profit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the institute has over 40,000 members worldwide representing all aspects of land use and development disciplines. For more information, please visit europe.uli.org, follow us on Twitter, or join our LinkedIn group.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
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Joost BlankenspoorGlobal CommunicationsNetherlandsjoost.email@example.com+31 (0)88 792 65 96
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