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Real Estate - The
World's largest Asset Class
Associates advises a select number of institutional investors and
high-net worth individuals on the acquisition or disposal of Real
Is a wave of overseas cash ready to hit London Office Market?
Is the trend to home-working going to end and all staff will be
again pidgeon-holed in their work cubicles anytime soon? If so one
can be quite optimistic for London office values, and also in most
other cities. More space per person to prevent spread of infections
could even increase the demand for space and mitigate the modest
demand reduction that a certain amount of home-working will produce.
However, due to Brexit many major corporations, including the
finance sector, will operate on a diminished scale in London. Even
if it is only a headcount reduction of 10-20% it could put a dent
into overall demand for space.
Outlook for Office Properties
The 2.5 percent markdown taken by Britain's Great Portland may
reflect the fact that the market is pulled in different directions -
short-term negative, long-term positive. The recent news about
possible vaccinations that may become available soon does little to
clear the outlook. Too much damage has been done to economies and
the longer term outlook for working in offices vs. working from home.
Banks may have to brace for heavy losses as
commercial property prices plunge
In previous downturns, commercial property loan losses were
“heavy” and there are worrying signs that such a trend could be
repeated this time during the pandemic-induced slowdown, Oxford
Economics’ Adam Slater said in a report.(26-October-2020)
Real Estate Investment in a changed environment must become more
like stock picking.
Just going into the asset class, or individual subsectors such as
Offices, Retail etc will not be successful any more. With increased
working from home and online shopping it will be essential to pick
properties with occupiers that are not so influenced by this trend.
City centres 'face desaster' unless office staff return
(Sunday Times, 28-June-2020)
Even a small (10-20% drop in occupancy would put a serious dent
into profitability - and rental value - of many premises as many
costs are fixed and the marginal income from these 10-20% would make
or break many a business.
Institutional appetite for real estate investment reaches seven-year
Hodes Weill & Associates and Cornell University, 22-Oct-2019)
Buyers are back in London’s prime property market
Given the low level of interest rates - with no change in sight
- it is no surprise that a lot of pent-up demand has built up during
the past few years. The number of wealthy people buying in London is
going up, not down
London retains global finance throne amid Brexit chaos
London’s financial services sector has grown since 2016 because
there is no realistic competitor in its time zone..The
chief executive of the British division of one of Europe’s largest
banks said although some business will move to the EU, most senior
bankers will be reluctant to leave London. He would consider taking
a 20% pay cut to remain in the city. (Reuters
Mio Price Tag for London's Ritz Hotel
Given that many quality hotels in city centres of major towns
are trading in the $2-300mio range and even higher end hotels are
usually well below the $1 mio mark it is remarkable that such a high
price is bandied about. Turnover of £47 mio and pre-tax profit of £7
mio in 2018 leave trophy hunters as the only possible buyers.
Heinz was a Co-founder of Temple Associates in 1996 and continues as its
He graduated in Economics and Banking at the Universities of Vienna and
through - and survived - not one but multiple market cycles, recessions and
worked in various positions in Vienna, Zurich, New York and London with
Goldman Sachs, Smith Barney, Bank Austria and the Royal Bank of Scotland.
He is fluent
in German, English and (rusty) French. He can follow Swiss German and
is working hard on his Italian.
years with Goldman Sachs he was the sole author of a widely-read market
letter on fixed-interest markets.