To start the year off right, we asked 7 renowned industry experts to tell us their top trends, investment opportunities, and most of all their own ambitions for 2019. Their answers range from the growth of online sales as the main driver for the logistics market and ways to meaningfully connect it with traditional retail to the rise of alternative investments. Enjoy reading, sharing and discussing their statements—and feel free to add your own predictions!
The signals coming from the market point towards an above-average level of investment again in 2019. The investment pressure on real estate persists due to the ECB policy of low interest rates and a lack of investment alternatives. The small number of sought-after Core or Core Plus products in portfolios will be compensated—at least in part—by an increasing rate of resales and growing opportunities for forward deals. Portofolio adjustments by portfolio holders will meet with a greater risk propensity among buyers. Returns will continue to decline above all for good products in secondary locations.
Overall, this year we expect above-average investment activities and growth. The figures will turn out to be slightly lower than in 2018, however. We therefore expect a transaction volume of 58 billion euros, which is not significantly below last year’s level. Colliers is growing in this market environment in all asset and service areas as well as at our sites.
CEO of Colliers International
The advance of digitalization in all areas of life and in particular in the world of work will pose a challenge to high street trade in 2019 again and be a major issue. The fundamental requirement is the seamless, sometimes playful interleaving of online and offline shopping. This is the only way for traders and investors to create a successful common basis for the digital marketplaces of the future.
In contrast to purely online traders, only high street retailers will in future be able to combine a real shopping experience with immediate goods availability and variety in conjunction with suitable online applications. This will also benefit our city centers.
It is decisive here that the political framework creates fair general conditions and thus equal opportunities with existing legislation and any new regulations that are required. Anyone who wants to see real, lively marketplaces in our cities needs to pay particular attention to the evolution of retail outlets during the transition period to omnichannel. If this does not happen in harmony, we may face deserted city centres. In some areas, halls as big as football pitches are sprouting up as a result of largely unregulated online retail. These buildings make no contribution to the social life of a city whatsoever.
Chairperson of the Management Board of the German Council of Shopping Centers, Managing Director/Head of Shopping Center Asset Management, redos invest management GmbH
For most global markets, healthy investor demand and limited supply continues to underpin core pricing. With this in mind, our focus in 2019 is markets and sectors with resilient income growth potential. We believe this is key to continuing our investment success through market cycles.
Alternatives, such as hotels and residential, will continue to attract investor demand. Global macro trends, as well as the potential for durable income streams, will translate into compelling opportunities for investors along the risk and return spectrum. We see a further role for these sectors in institutional portfolios as new operating models and tenures are tested and refined.
Accessing these specific strategies demands an extensive asset origination network, with scale and representation in local markets. At M&G Real Estate, we work with our Capital Solutions clients to identify and execute bespoke strategies that aim to perform in the short, medium and long term.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested.
Head of Capital Solutions, M&G Real Estate
The occupational fundamentals are probably the strongest we have seen for the past 15-20 years. We have good demand fueled by ecommerce and relatively low supply through speculative developments. This has resulted in low vacancy, around 5 % as a European average, and high occupancy and tenant retention. Online sales continue to grow by 12 to 14 % per year. This is the main driver for the logistics market in Europe and will prevail over the next five years. The scarcity of skilled labour has become particularly evident in European regions with low unemployment rates.
This is a strong factor taken into account in occupiers’ implementation strategies. In the investment market, the depth of demand pursues at very good levels, from core to opportunistic. The origin of capital is wide and global. For example, Asian investors have and are in the process of acquiring logistics across Europe. We have had the pleasure to work with them on some of those transactions and we still have a few newcomers entering the market, who have no exposure to logistics.
2019 will be an exciting year for the sector and BNP Paribas Real Estate. Our team is delighted to work on a wide range of transactions and as we continue to unlock opportunities and pursue new avenues in the market we very much look forward to helping our clients achieve their ambitions.
Head of Logistics & Industrial, BNP Paribas Real Estate
Client demand for Real Assets is set to be strong throughout 2019 with investors favouring the relative stability and growth potential that Real Assets offer. My two predictions for 2019 are:
In 2019, we will continue to build on the success of last year in bringing together our collective expertise across real estate, infrastructure and private debt. This deepening integration will help us take advantage of the opportunities across Europe and allow us to deliver better client outcomes.
Chief Investment Officer, Real Assets, Aviva Investors
In 2019, we will again see the continuing trend of new hotel brands trying to position themselves on the market. This applies to Germany in particular. New, internationally operating investors are increasingly becoming involved and major, already established hotel chains are expanding their brand portfolios.
At the same time, the trend towards consolidation in the industry will continue. Our aim for 2019 is not just to maintain our market leadership in Europe and Germany, but also to further strengthen it thanks to our interesting brand portfolio.
Vice President Development Central Europe, Accor Hotels
Digitalization will not only modernize real-estate business in 2019, but will also primarily speed it up. We have noticed that sustainability is also shifting into focus again due to digitalization. For example, the availability of comprehensive data and the option of analyzing them allow us to optimize energy consumption.
Nevertheless, established companies are not simply having to optimize their processes with the support of digitalization. If they want to keep up with the rapid developments, they will also have to deal with new business models or develop themselves.
We are pushing for consistent data standards in the real estate industry. Most market players have recognized the advantages of common data standards. After all, they do form the basis for further professionalization, acceleration and also for new business models in the real estate industry.
Head of Digital Asset Management, Commerz Real