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Real Estate Research

Research Blast

Research Blast

Increased scrutiny of real estate lending from the Bank of England has forced lenders to hold more equity against their loans, reducing the risk of a repeat of 2007.

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Our publications

 
Research Blast – Top Real Estate Questions for 2018– December 2017

Research Blast – Top Real Estate Questions for 2018 – December 2017

In this Research Blast we look at some key questions for investors as we enter 2018, such as will 2018 be a turning point for yields? And will enthusiasm for logistics globally continue and be corroborated by rental growth? Our Research & Strategy team answers these and other questions to help investors with their strategy as they enter the new year.

UBS Asset Management – White paper infrastructure series – Part 1

The case for infrastructure debt is part 1 of our infrastructure series exploring how investors can access the asset class. In this paper, we look at the characteristics of infrastructure debt, explore the key portfolio considerations of investing in the asset class and highlight potential risks for investors.

Real Estate Summary – Edition 3, 2017

Steady demand growth, with Europe and Japan historically strong Lack of investment and real income growth are notable challenges Real estate still in demand; prices tightening but slower than in the past Income is the main driver of returns, but what income is safe?

Real Estate – Navigating your investment journey

This extract from the Pension Fund Indicators publication gives great insight into real estate as an asset class - a superb foundation for both internal and external audiences.

Infrastructure – Navigating your investment journey

This extract from the Pension Fund Indicators publication gives great insight into infrastructure as an asset class - a superb foundation for both internal and external audiences.

Real Estate Summary – Edition 2, 2017

Healthy support for occupier demand in main markets.Central bank policy shifting towards lower liquidity world.Transaction volumes stabilize in Q2; no adjustment in pricing.Strategic focus shifts to risk management.

Real Estate Summary – Edition 1, 2017

Demand growth healthy, particularly in Europe and Japan. Reflation trade in question as wage growth lags. Lead markets show first signs of softness in pricing. Wage gains important for real estate and will influence strategy.

Liquidity of real estate investments – Challenges for investors during the real estate cycle

How dependent is the development of real estate and its liquidity on the general development of the wider economy? Gunnar Herm and Dominic v. Felten shed some light on the influences of varying economic cycles on real estate, their resulting effects on the letting and investment markets, and liquidity requirements for real estate investments. The authors then explain which types of liquidity for real estate exist and analyze different structures within the primary and secondary markets. What becomes apparent is the increase in significance – and the potential – of a functioning secondary market.

Real Estate Summary – Edition 4, 2016

Demand and supply drivers remain broadly healthy.
Upswing in inflation and market interest rates a challenge.
Both transaction volumes and fundraising slowing down.
Variation in performance across markets and sectors is narrowing

Global Real Estate Summary – Edition 3, 2016

Growth steady, but interest rate dynamic is shifting. Fundamentals healthy, but supply and borrowing both ticking up. Spreads narrowing in some markets as investors move up the risk curve. Bouts of uncertainty and volatility will remain frequent.

Global Real Estate Summary – Edition 2, 2016

Demand drivers healthy, but signs of slowdown widening. Transaction volumes remain low, but prices broadly stable. Income growth is the major driver of returns in lead markets. Negative interest rates a sizeable risk to the asset class.

Real estate yearly update 2016 - all you need to know

Adding flavor to your portfolio – This extract from the Pension Fund Indicators publication gives great insight into real estate as an asset class - a superb foundation for both internal and external audiences.

Global real estate summary, edition 1
May 2016

This summary captures the macroeconomic fundamentals as well as comments on global real estate trends and strategies. All regional summaries are structured in the same fashion, shedding light on demand and supply aspects in the region in question as well as the respective capital markets. The Viewpoint finally rounds off each section.

Real estate yearly update 2015 - all you need to know
August 2015

This extract from the Pension Fund Indicators publication gives great insight into real estate as an asset class - a superb foundation for both internal and external audiences.

Real estate and sustainability - investing for returns and the future
August 2014

Investors and businesses increasingly incorporate information on environmental issues into their occupational and investment strategies.

 

US Real Estate Summary – Edition 3, 2017

Occupancy rates flattening, leaving rent growth to power income gains.Transaction volume still easing off recent highs. Cap rates should face slight upward pressure by the end of the year. The result: more of the same. Positive returns should continue with lower rates of appreciation.

US Real Estate Summary – Edition 2, 2017

Trends in US commercial real estate flatten out after six unsustainably high years. Occupancy is strong but not likely to move much higher. Properties generate good, positive income growth, just not the stellar growth of the recent past.

US Real Estate Summary – Edition 1, 2017

Diverging occupancy trends likely indicate momentum in US commercial real estate is turning sideways. Interest rates went up. Interest rates came down. Commercial real estate spreads remain near long-term averages.

Research Blast – Balanced Perspective

Investable real estate fundamentals appear poised for relative balance in 2017, lining up with long-term positioning expectations. To read the full article please click below.

US Real Estate Outlook 2017

Commercial real estate and farmland investment is on everyone's radar these days. Our US Real Estate Outlook 2017 offers a look at how trends in the economy and capital markets impact these sectors in the United States with quick-takes on each of the key property types. Four investment themes provide strategic guides for long-term allocations and smart tactical decisions.

US Real Estate Summary – Edition 4
December 2016

Rising US interest rates move real estate spreads toward long-term averages. Rent growth rising faster than inflation across all sectors. Occupancy trends begin to diverge. Income return continues to dominate capital appreciation.

US Real estate summary – edition 3
September 2016

Conditions remain supportive for commercial real estate demand. Property sector fundamentals are beginning to differentiate. Cap rates are likely flattening in 2016. Income return accounts for the majority of total performance.

US Real estate summary – edition 2
June 2016

US commercial real estate rents are rising faster than inflation. Transactions volume appears to be leveling off near record highs. Appreciation remains higher than history but slowed during 1Q16, as expected. Positive outlook for 2016 even with reduced expectations for total return.

US Real estate summary – edition 1
March 2016

US commercial real estate performance reflects the strength of fundamentals. 2015 produced a sixth year of above-average appreciation and strong income growth.Tax reform passed in December 2015 potentially benefits qualified foreign pension plans. Positive outlook for 2016 even with reduced expectations for total return.

Real Estate Research Blast – What's in a statistical area?
March 2016

Awash in acronyms, the hierarchical nature of CBSAs (Core Based Statistical Area) and MSAs (Metropolitan Statistical Area) is not immediately apparent to the ordinary observer. This is markedly true in witnessing the term's common usage. A particular geographic region may commonly be referred to as an MSA and a CBSA; both usages would be completely correct.

 

Real Estate Research Blast – Japan hotel sector

The Japanese hotel sector is on the cusp of an unprecedented structural transformation. We believe that the window of opportunity is now open for investment into Japan's hotel sector in this sector, where underlying structural changes are tilting the demand and supply dynamics in a favorable manner. Various compelling top-down drivers are culminating leading towards in a strong outlook for the sector, which is providing an opportune entry point across the risk spectrum for real estate investors.

APAC Real Estate Outlook – 2H17

Although property yields across the APAC region are at, or close to, historical lows, demand for real estate exposure in a multi-asset context is set to remain healthy in the near-to-medium term. We maintain a focus on sector and market combinations where leasing activity has been subdued and valuations under pressure, and where the cycle appears to be bottoming. Over the medium term, counter-cyclical and niche strategies are fast coming to the fore as astute investors look beyond the immediate horizon.

Chinas rebalancing – White Paper

Much has been touted about China's rebalancing, tilting away from investments and low-end manufacturing towards a model that is focused on innovation, services and a larger consumption component. No doubt it is always easy to extrapolate and assume that economic history may provide textbook answers as to how China should and would manage its problems, but more often than not, we neglect to see China's current conundrum in its entirety.

Real Estate Research Blast – On China: Observations on the effervescent residential market, November 2016

A recent headline in the Chinese local media raised eyebrows with regards to the frothy nature of China's housing market, when a prominent local developer priced its latest residential product launch in an upscale district of Shanghai at an astronomical RMB 300,000 per square meter (approximately USD 4,200 per square feet).

Real Estate White Paper: Australia – Still lucky?

Macro and sectoral rebalancing taking place supporting real estate fundamentals in Australia

APAC Real Estate Outlook – 2H16

APAC domestic demand drivers remained resilient in 2Q16, supported by further monetary easing, relatively healthy jobs markets and the ongoing structural shift towards services sector production. The latter is being driven by changes in consumer preferences, improvements in technology, wage growth (in emerging markets) but also lower global growth. Weaker trade volumes as a result of slower global growth, increasing trade restrictions and lack of significant liberalization agreements in recent years means that Asia's historical drivers of capital spending and exports have taken a back seat to services based consumption and jobs.

Real Estate Research Blast – Brexit: The Asia Pacific perspective
July 2016

As investors come to terms with the outcome of the UK's referendum on its EU membership, the vote to exit will have implications for the global economy and financial markets. Investors should brace themselves for a period of heightened volatility by taking advantage of selective opportunities and positioning their investment strategies accordingly.

Real Estate Research Blast – Japan's negative interest rate policy
May 2016

The Bank of Japan (BoJ) joined the negative interest rate club earlier this year, following in the footsteps of central banks in Europe – including the ECB, Swiss National Bank, Riksbank and Danish National Bank – and which have pushed deposit rates on bank reserves below the zero threshold, albeit to varying degrees.

Asia Pacific Real estate summary – edition 1
May 2016

APAC leasing demand in line with historical averages. Rental growth limited to supply constrained CBD and submarkets. Liquidity focused on key APAC markets and cities. Generally positive outlook for 2016 but macro and geopolitical risks persist.

 

Research Blast – Budget surprise – December 2017

The chancellor has surprised the real estate industry by introducing potentially wide sweeping tax changes without any initial consultation. Whilst there are undoubtedly political benefits to such a move, it could add an additional strain to the market which has defied expectations in the post-referendum period, but remains heavily dependent upon the foreign capital which is ultimately going to be penalized by the new legislation.

Research Blast – European Corporate Debt – December 2017

While post-GFC regulatory reforms boosted liquidity and stability in the financial sector, the same process did not occur for non-financial corporations (NFCs). NFC debt as a share of GDP rose sharply before the crisis and remains elevated in most Eurozone economies posing an additional downside risk for investors despite a wider recovery in the eurozone.

Research Blast – France: labor market reforms – November 2017

Initial signs suggest the tables have started to turn in recent months, since Macron was elected in May. Investor sentiment in the European real estate investment market remains strong as investors seek higher yielding property assets relative to other asset classes. Do the announced social reforms create an opportunity for real estate investors looking for value?

Research Blast – 10 years on from Northern Rock – October 2017

A decade on from a debt-fueled property crash we reflect on whether there have been sufficient structural changes in the UK market to prevent a cyclical downturn on a similar scale.

Eurozone Real Estate Outlook 2H17

Economic growth intensified during 1H17 and perhaps peaked during 2Q. Robust growth was recorded throughout the region with the strongest GDP recorded in seven years. Occupational markets generally strengthened across the region and demand for core investments remained strong. Over the next three years we anticipate All Property total returns will be around 6.3% p.a. The returns are primarily being driven by income with rental growth amidst a strengthening and broadening occupational environment. The industrial sector is expected to remain the strongest performer by some margin, followed by the retail sector and then office.

UK Real Estate Outlook 2H17

The UK real estate market is giving off a number of contradictory messages. On the one hand, the result of the EU referendum is having a softening effect on the economy which is clearly having an impact on retail and office occupier demand. But we are now observing a clear disconnect between the underlying market fundamentals and investment appetite, which has recovered sharply in 1H17, driven by Central London offices despite this segment having the most challenging outlook for the next few years. And at the same time, the industrial sector continues to outperform even the high expectations which were set for it at the start of the year.

Research Blast – Italian Tax Incentives – April 2017

Italian Government candidates Milan for a post-Brexit role as European financial center

Research Blast – Monetary Policy – March 2017

Changing monetary policy environment – challenges and opportunities in eurozone real estate

Eurozone Real Estate Outlook – 1H17

To read the full article please click below.

UK Real Estate Outlook – 1H17

The UK economy and real estate markets have been resilient following the Brexit vote, but with headwinds building and the formal leaving process yet to start the outlook remains uncertain.

Research Blast – Retail investment – December 2016

Looking to the future and ways to futureproof retail assets in an increasingly multi-channel retail environment.

Research Blast – Multi-channel retailing – December 2016

The retail sector has undergone a large amount of change in recent years, mostly as a consequence of the phenomenal growth in online retail over the last two decades, but especially the last five years. Online retail has been the main driver for growth in Europe, although arguably it has just accelerated the rate of the inevitable evolution in the sector.

Research Blast – The Scope for PRS – October 2016

Can institutional scale rental accommodation help solve the housing crisis?

Research Blast – Brexit Three Month Update
September 2016

The dust appears to have settled, for now.

Eurozone Real Estate Outlook – 2H16

The slowdown in China and other emerging markets viewed in conjunction with the uncertainties surrounding Brexit, has led to a downward revision of economic growth prospects in the eurozone. However, the threat of contagion appears limited for now. Domestic demand in the eurozone has expanded at a healthy rate so far in 2016, and the recovery has broadened away from household spending. While Brexit could be a shock that brings the current self-sustained recovery to halt, it seems to be far too soon to assume that this is inevitable.

UK Real Estate Outlook – 2H16

Expectations for UK economic growth underwent some fairly significant downward revisions prior to the EU Referendum, and these have now been revised downwards again, although we do not envision the UK entering a recession as the main scenario.

Real assets, real expertise (Global ex-UK real estate exposure)

Across most real estate markets, the conventional practice for investors has been: (a) invest in their domestic market; and then (b) consider cross border opportunities. Real estate investment has not been exclusively domestic, but there has been a strong home bias for the majority of investors. Real estate markets differ across the globe and are subject to different risks and local practices. With investor expertise typically focused on domestic markets, this forms a deterrent to those wishing to invest beyond their domestic markets, above and beyond the very real concerns around currency risk, transparency, and tax issues.

Research Blast - Thoughts and views in the wake of Brexit

Real estate and the rise of populism, a changed political landscape brings new challenges for real estate.

Research Blast – NPLs in the Italian banking system and potential impacts on commercial real estate

The Italian banking sector is currently seen one of the weakest in the eurozone, with the European Banking Authority reporting a Tier 1 ratio of 12% and a Return of Equity (RoE) of 3.3% in their 1Q16 Risk Dashboard.

Research Blast – European Real Estate Summary – Edition 3, 2016

Despite uncertainties, occupational demand continues to strengthen. Shortage of good quality CRE for occupation is driving prime rental growth. Sharp slowdown in UK investment activity while rest of Europe sees a bounce-back on 1Q. Market fundamentals remain strong but geopolitical risks are accentuated.

Real Estate Research Blast – The market needs to correct, not be forced to collapse
July 2016

On the face of it, the past week has been a tumultuous one for UK commercial real estate. In the more liquid equity markets we have continued to see share prices for UK house builders and REITs slide, whilst the impacts of the Brexit vote are now filtering into direct, retail real estate funds.

Real Estate Research Blast – European financial office markets post-Brexit
July 2016

Let us say it upfront: London is the number one global financial center and is not easily replaced. Were London's position to be challenged, it would not only be a major risk for the UK economy but also a broader threat to the EU, if not the rest of the world.

Real Estate Research Blast – Brexit: The outcome
June 2016

The full impact of the vote to exit will take longer to emerge in the real estate market than other more liquid asset classes. Real estate transactions which would provide indications of the impact on pricing will take months to complete, whilst the valuation based property index in the UK will also have a lag in reflecting the impact of the decision.

 

Swiss Real Estate Outlook – 2H17

To read the full article in German please click below.

From pre-trade analysis to property tour

Investing in Swiss listed real estate investments offers regular returns and attractive distributions, supported by ongoing rental income. For professional investors, it is important to pay attention to the specific attributes of this asset class and to make active use of trade options.

Swiss Real Estate Outlook – 1H17

To read the full article in German or French please click below.

Research Blast – Swiss Real Estate Market

To read the full article in German or French please click below.

German: Swiss real estate market - half-yearly outlook 2H16

Die Schweizer Konjunktur setzte ihre Erholung im 1. Halbjahr 2016 fort. Die Stimmung der Unternehmen ist jedoch noch zurückhaltend, weshalb der Stellenaufbau auf sich warten lässt. Der Aufwertungs-druck auf den Franken bleibt erhalten. Somit dürften die Niedrigzinsen im laufenden Jahr Bestand haben.

German: Swiss real estate market - half-yearly outlook 2H16

Die Schweizer Konjunktur setzte ihre Erholung im 1. Halbjahr 2016 fort. Die Stimmung der Unternehmen ist jedoch noch zurückhaltend, weshalb der Stellenaufbau auf sich warten lässt. Der Aufwertungs-druck auf den Franken bleibt erhalten. Somit dürften die Niedrigzinsen im laufenden Jahr Bestand haben.

French: Swiss real estate market - half-yearly outlook 2H16

Le rétablissement de la conjoncture suisse s’est poursuivi au premier semestre 2016. Néanmoins, les entreprises font encore preuve de prudence, les créations d’emplois se faisant par là même attendre. La pression à la hausse qui pèse sur le franc reste mesurée. Les taux faibles devraient de ce fait perdurer pour l’année en cours.

German: Swiss real estate market - half-yearly outlook 1H16

Die Talsohle scheint durchschritten und eine leichte Wachstumsbeschleunigung wird für 2016 erwartet. Die Belebung der Auslandsnachfrage nach Schweizer Waren und Dienstleistungen sollte diese Entwicklung unterstützen.

French: Swiss real estate market - half-yearly outlook 1H16

Le creux de la vague semble dépassé et une légère accélération de la croissance est attendue pour 2016. Cette tendance devrait se trouver soutenue par la reprise de la demande extérieure en faveur des biens et des services suisses.

German: Swiss real estate market - half-yearly outlook 2H15

Die Schweizer Wirtschaft verliert aufgrund der starken Frankenbewertung an Fahrt. Sofern sich die Weltkonjunktur und der Euroraum jedoch weiter erholen, dürfte eine Rezession vorerst abgewendet sein.

 

French: Swiss real estate market - half-yearly outlook - 2H15

Du fait d’une forte valorisation du franc, l’économie suisse a enregistré un ralentissement de sa dynamique. La poursuite du rétablissement de la conjoncture au niveau mondial et au sein de la zone euro devrait toutefois permettre d’éviter pour l’heure une récession.

German: Swiss real estate market - half-yearly outlook 1H15

Die Schweizer Konjunktur wird 2015 von der Aufhebung des FrankenMindestkurses zum Euro geprägt. Der Arbeitsmarkt zeigt sich bisher robust. Dennoch steigt der Druck auf den kommerziellen Flächenmarkt aufgrund des unsicheren Konjunkturverlaufs.

French: Swiss real estate market - half-yearly outlook 1H15

Jusqu'à présenten 2015, l'économie suisse a été marquée par la suppression du taux plancher. Le marché du travail a fait preuve de robustesse. Néanmoins, la pression sur le marché des surfaces commerciales augmente en raison de l'évolution conjoncturelle incertaine.