The real estate sector is facing massive change in 2020, Damian Harrington, Director, Head of EMEA Research, Colliers International, told The Real Estate Day.
‘We will see the end of this cycle and the transition to a new cycle, a shift to a new era,’ he said. ‘We’re looking at a lot of change next year’.
There will be more focus on environmental policies and sustainability, technology will play a bigger role and the link between real estate projects and infrastructure will become even closer.
The French capital is the current darling of the market because of the huge Grand Paris project which will shift occupiers to new areas in the fringes. ‘It’s the polycentric model as we have seen in London,’ said Harrington. ‘That’s the direction of travel for a lot of investment going forward’.
It also shows that infrastructure trumps political risk, as investors are more interested in the new transport links that open up new areas of the city than in social unrest, strikes and the Yellow Vests.
There’s another glimpse of the future in Milan’s Porta Nuova project. ‘It’s a really well thought-out mixed-use scheme which has seen huge rent increases,’ he said. ‘It shows that going forward mixed-use will be the big theme’. Some things will not change in 2020: international capital will continue to target European real estate.
‘Asian investors, in particular, can get a higher yield in Europe than they would at home plus hedging gains, so they get better returns, he said. ‘This explains why Europe is one of the most diversified real estate markets in the world: 50% of all investments are cross-border, while the percentage in Asia is 30% and 20% in the US’.
Looking across the Continent, there’s a dominance of landlord-friendly markets and an imbalance between supply and demand.
‘We are looking at another year at least of higher rents in the office and logistics sectors in Europe,’ Harrington said. ‘Retail is a different story. but some parts present an opportunity. The growth of online shopping has reached a plateau and ominchannel is drving sales. People are realising that retail is not dead, it just needs to change’.
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