Before moving on to what is in store today (Friday 29th) and what promises to be an action packed day on the slopes I would just like to reflect on last night’s enlivening Business Forum and the key takeaways from industry leaders in attendance.
The principal question on the lips of those who study and work in the commercial property markets in recent months has been “how long can it all last?” Boom times for investment transactions in 2014 have continued into 2015 as CoStar’s just released figures have revealed.
The figure invested in UK commercial real estate in 2015 was a 5% decrease on the record of £70.7bn invested in 2014, making it the second strongest year on record and 46% above the 10-year average.
But within this, momentum slowed in the second half of the year with investment down 19 % from the previous year. However office investment into the ‘Big Six’ regional cities rose significantly.
As 2016 gets underway CoStar News have been reporting on a number of significant sales being remarketed at less aggressive pricing. Capital values are undoubtedly moving in too. LSH is predicting average total returns on UK commercial property investments to slow to approximately 9% in 2016, down from an admittedly strong 13% in 2015 and down from the five year average of around 10%.
Most think transaction levels will down this year and there is less optimism at the beginning of 2015 than 2016 driven in particular by more uncertainty around the political and macro climate.
The LSH business forum provided clear insight from industry heavyweights in to these and many other issues.
LSH chief executive Ezra Nahome said the agent had had a “record year on pretty much every metric”. Unveiling a fresh initiative LSH & Co acting as a marketing and PR company within LSH but also for external clients Nahome said 2016 was set to be equally exciting for the business as it targeted strong growth and a series of opportunities.
Francis Salway, the former chief executive of Land Securities, suggested it was right to be cautious now. “You may say I have had fantastic performance at present but I feel that any period such as now where you have had more than two to three years of 20 to 30% real growth in values means it is time to be careful.”
Citing Raymond Mould and Patrick Vaughan, Salway said: “Those in cycles who are prepared to take money off the table early and wait while others are still making strong performance can really succeed. It is important to learn to pause for breath and be prepared to stop.”
Salway was particularly optimistic about two positive changes for the sector – shorter leases and the introduction of REITs. “What a great product they have proved to be.”
Andrew Jones, chief executive of LondonMetric, focused on how shifting retail shopper patterns was creating both problems and opportunities for traditional retailers and landlords. “The direction in travel towards internet shopping is not in doubt. But there are great opportunities particularly we see in retail parks and logistics where in some ways sheds are the new shops.”
Owen Michaelson, chief executive of Harworth Estates, and Duncan Walker investment director at Helical Bar added to a lively panel debate.
So what’s in store today?
Well the ski clinic with Olympic skier Chemmy Alcott gets underway at 10am offering advice on navigating a Grand Slalom Course.
And then at 12 the racing gets underway with the Grand Slalom followed by the Dual Parallel Slalom. Prize giving will take place at 4pm and then it’s back for networking.
I will be reporting back tomorrow on what happened. Look out for me today as well as CoStar’s UK managing director Giles Newman if you want to comment at all. And most importantly look out for our film crew who will be on hand to capture the moment!