Watch Series

Americas Watch - May 2017 

A busy month, April wasn’t just a time for spring showers, renewal, baseball opening day and Easter, it was also chock-a-block of political news. April marked one hundred days of the new administration, contentious Congressional legislative battles, the first round of French elections and calls for snap elections in the UK. Geopolitical tensions rose to a roiling boil due to Syria and North Korea. Notwithstanding all the political noise, economic data in the U.S. has been mixed and points to modest economic growth. Although sentiment indices have soared recently, Q1 GDP figures were not quite in the same league. The anticipated and hoped for economic boost appears to be in serious doubt of being actualized. The disconnect between sentiment indices and economic growth was obvious in the most recent quarterly updates of property market fundamentals. All sectors, with the exception of retail, showed signs of a maturing cycle wherein supply is beginning to make its presence felt. For the commercial real estate sector to stay on track and continue to improve, the economic boost from comprehensive tax reform and enhanced infrastructure spending needs to materialize soon.

 

Europe Watch - May 2017

As political distractions continue in Europe - we await the second round of voting in the French presidential election and now have a snap general election to look forward to in the UK - these should not be allowed to overshadow what has been a positive start to the year for the region’s economies. For the Eurozone, survey evidence and high frequency data points to GDP growth in Q1 comfortably outpacing that recorded in Q4. Oxford Economics has recently revised up their annual growth forecasts for both 2017 and 2018. Within these aggregate figures Italy is not leading the pack, but the economy continues to show some positive signs. The labour market recovery is ongoing and the economy will benefit from an improving external outlook. Consequently Italy is firmly on the radar of property investors, with investment volumes in 2016 the highest since 2007. Risks remain, however. The banking sector will continue to be a drag on growth, although it has shown improvement since the state intervention in MPS and the successful recapitalization of Unicredit. Political uncertainty also has the potential to hold back growth until at least early 2018, but at present any impact appears limited. These risks are reflected in the notable yield premium Italian property offers over core markets.

 

Asia Pacific Watch - May 2017

Demographics are one of the slower moving variables that we consider when forecasting our market returns and our underwriting of assets. But various demographic variables underpin everything about real estate – whether as drivers of demand and rental growth or as sources of savings that flow into the institutional pools of capital that target and hold real assets for their investment returns. As home to well over 4.1 billion people, around a 60% share of the global population, the Asia Pacific region exhibits a diverse range of demographic attributes that on balance appear to be very supportive of modern real estate. In this Watch report we give demographics their due, reviewing some of the most important trends and recent policies that impact real estate demand. Currently less than half of all people in APAC live in cities, but between 2000 and 2010 the World Bank notes that almost 200 million people moved to urban areas in East Asia alone. Thus in spite of some strong supply pipelines in select markets in the near-term, there will likely continue to be a structural shortage of the quantity and quality of residential and commercial space in many APAC cities needed to house these strong absolute levels of growth.

 

Combined Watch Link​