In a fast-changing landscape, market players have to look ahead and try to anticipate trends if they want to future-proof their investments, panellists agreed at Real Asset Media’s Emerging Hotspots Investment Briefing, which was held at MIPIM last week.
‘Investors are willing to take more aggressive pricing when they are looking at an investment based on the future,’ said Luke Dawson, Managing Director & Head of Capital Markets CEE, Colliers International. ‘They take a 5-10-year view of the area that is going to become the next hot spot, while before they would have played it safe and just bought in the city centre’.
The classic definitions of core or core-plus are shifting, he said: ‘It used to be defined as the CBD or the city centre, but investors now say it is the place that employees want to go to, rather than the place where everybody already is’.
That shift has intensified as labour markets have tightened across Europe and attracting and retaining employees has become crucial. The location can become the differentiating factor.
‘The second league is becoming interesting,’ said Jarek Morawski, Director, Research and Analysis, Grosvenor. ‘Investment is increasingly going outside of CBDs now, to areas where a few years ago there would have been none. New neighbourhoods in cities like Paris are becoming popular not just for resi but for offices as well, and not just for start-ups but for corporations as well’.
The same is happening in Spain, said Neil Livingstone, Managing Director, Spain, Colliers International: ‘Mixed-use projects and new developments including co-living and co-working are happening in various areas outside the city centre in Madrid and Barcelona’.
The secret of WeWork’s success is that ‘we are always a bit ahead of the curve’, said David Kaiser, Senior Director, Real Estate, WeWork: ‘We get constant direct feedback from people on the ground and we are quite driven by our members, that landlords call tenants. We talk to them every day and they tell us which cities they think we need to be in. We also collect data religiously. No one in real estate collects data as we do, and we have mapping tools so we can accurately predict which markets will be successful for us’.
Local authorities can also make a big difference in putting a city or a neighbourhood on the map, he said: ‘We have always been very London-centric but two years ago went to Manchester, driven by our enterprise members, and we have found it is a phenomenal city. The City Council is proactive and intelligent and it encourages growth’.
The fact that it has a great airport and transport system, pedestrianised areas and cycling lanes and private spaces are being made public makes it a great city to live in as well as to do business in and the result, he said, is that ‘it is attracting more and more people and the occupier market is pretty crazy’.
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