Looking Ahead – 2019 Real Estate Investment Market Review
2018 was a mixed year for the real estate investment market. The first half of the year saw hiring activity across almost all sub sectors. However, in the second half of 2018 hiring became much more selective and focused on specific or niche requirements.
In November 2018 Theresa May’s Brexit deal was met with, at the very least, apprehension. This filtered down into general hiring activity across the real estate investment market, but it is still fair to say that many of the smaller high yield funds continued with their capital deployment.
In summary, high yield debt funds are continuing their expansion and new entrants are coming to market, albeit at a slower pace than we have seen previously. psd provided a number of executive and senior candidates for some of the many UK focused funds that are looking to recruit top talent and push into Europe.
Value-add / Opportunistic funds
Value-add / Opportunistic funds had a solid year in 2018 with Logistics, Hotels & Leisure leading the way, although it should be noted that any asset class in need of an active, hands on asset management strategy has yielded good returns with the correct implementation.
UK development finance
UK development finance in London has continued to slow down due to difficulty in selling stock. Affordable Housing development finance has grown with many lenders looking to focus in this area. Lenders have also continued to increase the proportion of its book to the regions. Loan pricing remains relatively unchanged.
Retail has continued its decline with many high profile CVA’s. It will be interesting to see what changes will be made in 2019 in order to slow its decline. Many ideas are being floated, such as free parking in town centres and taxing online sales, but it seems not many are being pushed.
There is clearly a lot of liquidity in the market and it continues to be the case that with the right strategy and the best in class team, raising capital should be achievable.
2018 was an interesting and challenging year in recruitment, psd’s retained work has continued to increase due to a slower response in advertising. Even with the growth of technology, traditional recruitment methods of using our long standing candidate network is delivering the best results for our clients.
Looking into 2019, many in the market believe they will have to engage more in the operational aspects of real estate and will require more collaboration with other businesses and service providers. The ‘Brexit Effect’ on the European market is estimated to be minimal and many predict there will be an increase of investment. The downside of this is some 56% of investors asked by PwC believe there will be a decrease of real estate investment in the UK in 2019.
Overall, 2019 will continue to be a challenging period for the economy and for real estate. Given our experience, track record and specialisation of our executive search consultants, we remain confident in supporting our clients in identifying and sourcing the strongest senior talent in the multiple real estate sectors we specialise in.
Senior Consultant – Property & Construction
Adam is a Senior Consultant in psd’s Property & Construction practice, specialising in Private Equity, Debt Capital Markets and Investment Banking.