Gyoza, 'Brinvasion' And Alibaba: What To Watch And Hope For In Real Estate In 2019
If 2018 was the year of mergers that didn't happen, the continued retail apocalypse and absolutely zero clarity about Brexit, what has 2019 got in store for the U.K. real estate sector?
Bisnow asked eight experts from across the spectrum of U.K. real estate what they hope next year will bring — and what they think will actually happen — on a range of topics from the companies to watch, to WeWork's valuation, to retail values and most importantly, where they are excited to eat next year.
Here is what they had to say.
Sherin Aminossehe, Head of Offices, Lendlease
What will be the biggest story of 2019?
Brexit.
Which company will you be keeping an eye on, and why?
WiredScore: a great business with great people, very much making it clear that connectivity is essential and not a “nice to have”.
Will WeWork’s value go up or down?
It is less about WeWork for me and more about how the plethora of companies in the sector will weather changes in the economy. Acquisitions have been big news in this sector in 2018, so I wonder whether we will see any mergers in 2019?
Have retail values hit bottom yet?
Writing this on the day when Laura Ashley has announced 40 further store closures, Asos shares plunged by 40% due to a profit warning as well as a veritable gaggle of other retailers reporting a slide in their share price, you do wonder about where the future of retail is heading. If the [International Monetary Fund]’s forecast plays out, I suspect there will be more to come in the next 12 months.
What restaurant are you looking forward to eating at?
I actually draw nearly all the restaurants that I eat at on my Instagram account @archidoodles. So for me it’s not just culinary expertise and Michelin stars but “drawability”! The one that always fits that bill is the Ritz dining room, but always welcome to suggestions.
What buzzword will sum up 2019?
If I had the choice, I’d banish buzzwords alongside management speak to room 101. Maybe just maybe, instead of using jargon in 2019, we could learn to speak normally, because at the end of the day who really wants to square a circle? Or actually stand on a burning platform (ouch)? And I would only want a helicopter view if I could actually fly in one …
Give us one area of London to watch.
Stratford, where else?
What is your hope for the world in 2019?
A better one for the world than 2018.
Madeleine McDougall, Head of Real Estate and Housing, Lloyds Bank
What will be the biggest story of 2019?
The continued impact of climate change both environmentally, socially and economically. It will drive focus on further positive change in real estate investment strategies. Sustainability will become a fundamental element in the risk analysis of assets.
Which company will you be keeping an eye on, and why?
More an organisation — the [National Health Service]. I’m excited to see the role it could play in changing our city centres and high streets by providing medical services in vacant spaces that are in core areas close to existing transport hubs.
Will WeWork’s value go up or down?
There will be downward pressure on most corporate valuations globally next year given where we are in the economic cycle and the prevailing headwinds in the geopolitical environment.
Have retail values hit bottom yet?
Retail is too diverse a sector to answer this in such a binary way. It depends on what asset and where. For a shopping centre with a clear purpose that understands its demographic, the answer is: There is still probably some way to go but not much. There are some great asset managers out there who understand the shifting dynamics buffeting the sector as a whole.
What restaurant are you looking forward to eating at?
I’d love to think of somewhere hip and foodie, but I’m northern so I’ll never not be excited about having a Greggs.
What buzzword will sum up 2019?
“Lively”. Things will be lively in politics, business and the economy.
Give us one area of London to watch.
Residential in Zones 3 to 5.
What is your hope for the world in 2019?
More co-operation and a renewed focus on the things that matter. We need to face into many of the challenges our society faces. On a lighter note, England to win both the Rugby World Cup and FIFA Women’s World Cup.
Matthew Weiner, Chief Executive, U+I
What will be the biggest story of 2019?
I’m sure I won’t be the first to say this, but Brexit will have a huge impact — at least on headlines. But I’m confident that beyond those headlines, there will be plenty of great stories of regeneration, communities and developers getting on with things and creating great places for the future.
Which company will you be keeping an eye on, and why?
Alibaba. The group is pushing the definition of retail by the melding together of real-world and digital shopping experiences.
Have retail values hit bottom yet?
At a sector level, probably not. The U.K. remains over-supplied with retail space, but that covers a whole sector and for those assets that offer convenience or experience — those that create innovative spaces where people can share experiences, enjoy leisure time and work flexibly — I think the bottom has been reached.
What restaurant are you looking forward to eating at?
London has such a vibrant new food scene that there are far too many to choose from. That said, my kids are huge fans of both Japanese and Italian cuisines so if I were to pick one, it would probably be Angelina, in Dalston, which offers a “surreal exploration” of Japanese and Italian cuisine!
What buzzword will sum up 2019?
Partnership — at least for U+I! The public and private sectors must work together to improve the productivity of land. We’ve made some business commitments this year around how we’ll approach and monitor our PPP projects and will be putting those plans into action in 2019.
Give us one area of London to watch.
Hayes — it’s just 20 minutes from Paddington, and Crossrail will eventually bring it even closer to the city centre. It’s long been viewed as an outlier in the west London office market, but we’re seeing more and more occupiers looking to move there thanks to its great connections to the capital and Heathrow, and quality mixed-use schemes are emerging as a result.
What is your hope for the world in 2019?
That we stop arguing and regain some respect for our fellow human beings. The current state of our politics, and other things like the reappearance of racism in football, highlight the danger of living in a world in which people feel emboldened to say anything. At the heart of this is the fact that inequality has become too great, so we need to start to find ways to heal the injustice that is felt by those outside the one per cent. Developers like U+I can play our small part in this by helping deliver affordable mixed-use places in which diverse communities can thrive, in underused parts of big cities like London, Manchester and Dublin.
Sophie Ross, Director of Strategy and Business Transformation, Hammerson
What will be the biggest story of 2019?
Brexit, of course.
Which company will you be keeping an eye on, and why?
Everlane — the power of the conscious consumer will only grow. It has been groundbreaking from the start with its radical transparency on women’s wear basics.
Will WeWork’s value go up or down?
WeWork did a fantastic job in turning the office market on its head. There are now additional players in market and traditional office developers have caught up and are providing a more customer-friendly approach. Their success will be down to continued innovation and not standing still.
Have retail values hit bottom yet?
There are a number of external factors impacting on values which continue to play out both within retail and the wider macroeconomic climate — quality of asset and curation will be key next year and the strongest destinations will remain the most resilient with secondary locations likely to see more marked reduction in value.
What restaurant are you looking forward to eating at?
Lino in Smithfield Market.
What buzzword will sum up 2019?
“Direct to consumer” — D2C.
Give us one area of London to watch.
Elephant & Castle.
What is your hope for the world in 2019?
Peace, love and (Brexit) resolution.
Savannah de Savary, Founder and Chief Executive, Built-ID
What will be the biggest story of 2019?
I think the property pages will continue to be dominated by residential-related stories. The current volatility in the world of politics and economics could have an even greater impact on house prices and we could see investment and construction levels falling even further. How this will play out against the backdrop of our growing housing crisis will continue to draw attention and I foresee more column inches dedicated to possible solutions such as build-to-rent, co-living and modular construction in 2019.
Which company will you be keeping an eye on, and why?
I’ve been following the emergence of inter-generational living with interest, as a means of combating the social isolation traditionally associated with senior living solutions. 2018 has seen the emergence of new retirement living options where community, place-making and amenity are given as much attention as other developments aimed at the wider market.
The race is on for emerging players such as The Kohab to become the first pioneers of the concept of inter-generational living in the U.K., where younger people will be offered reduced rents in exchange for spending quality time with older residents.
Will WeWork’s value go up or down?
The fundamentals fuelling the growth of WeWork look set to continue, with the coworking space industry expected to grow exponentially over the next five years and the number of global coworking members expected to double from around 2.3 million in 2018 to more than 5 million in 2022.
However, I believe that WeWork needs to grow at a much faster pace than current projections to justify its high valuation, so while the company will remain a force to be reckoned with, I don’t believe we will see another massive rise in its value.
Have retail values hit bottom yet?
There is not a one-size-fits-all response to this question. The negative headlines typically refer to physical retailers which haven’t modernised their businesses, and which have real estate exposure far higher than they should and for them, of course, the future is sadly not looking bright.
However, there are brands, particularly those that have mastered a digitally led experiential approach, such as farfetch.com and made.com, who are doing very well. The retail shake-up is providing a fantastic opportunity to reinvent our high streets, towns and city centres to reflect preferences in today’s shopping experience.
What restaurant are you looking forward to eating at?
As a busy entrepreneur, I don’t have as much time for eating out as I would like. I do, however, spend too much money on UberEats which gives me plenty of opportunities to try new offerings from the London’s latest hottest restaurants. I’m currently addicted to Ms. Cupcake.
What buzzword will sum up 2019?
With 2019 being the last year of the 2010s, there will be a lot of reflection on what has transpired during this decade. We’ve heard the word “transformation” a lot in recent times and I think this will be used a lot in this summing up. We have seen technology transform nearly every area of our business and personal lives, with companies extracting value from their data at a rate that has never been seen before.
Give us one area of London to watch.
The reinvention of Battersea Power Station is absolutely fascinating. It is symbolic of 2020s multi-generational and diverse London, embracing modern work styles and today’s retail wants and needs. Basically all the elements of living in the ultimate neighbourhood of the future.
What is your hope for the world in 2019?
While it is true that the impact of technology on our lives has the potential to be very isolating, we must not forget that that it is equally powerful in enhancing social cohesion. Strong social and digital networks are key to bringing communities together, often rallying behind a common purpose and positive force for change.
My hope for 2019 is to continue to work alongside many others who are developing tech solutions that empower the community to better shape the world around them. In the case of Built-ID, this is in the building projects of tomorrow.
Harry Badham, Head of U.K. Development, AXA Investment Managers — Real Assets
What will be the biggest story of 2019?
Brinvasion — changing Brexit into the successful social, cultural and legal invasion of Europe by Great Britain.
Which company will you be keeping an eye on, and why?
Microsoft — designing their new offices in Seattle.
Will WeWork’s value go up or down?
How will anyone know?
Have retail values hit bottom yet?
At some point alternative uses will provide a floor.
What restaurant are you looking forward to eating at?
In good company, anywhere the food is fresh and the music has soul.
What buzzword will sum up 2019?
Pragmatic (I hope).
Give us one area of London to watch.
The City, of course, will continue to surprise.
What is your hope for the world in 2019?
Quit the squabbling, it makes nobody happy.
William Newton, President and EMEA Managing Director, WiredScore
What will be the biggest story of 2019?
Obviously Brexit. But beyond that, other global events that will also impact the U.K. political climate include the no doubt ridiculously early start to the Democratic primaries in the run up to the 2020 U.S. election. We’ll see the campaigns run a fine line between softly attacking each other, and attacking Trump. Interestingly, they'll start to use technology and social media in revolutionary new ways, perhaps generating considerable distrust from the general public growing weary of infringements on privacy. Clearly what happens in the U.S. usually has a knock-on effect globally and therefore we will likely see this tendency replicated in the U.K. when the next election is called. I’m sure it will generate some impact for headlines in the year ahead.
Which company will you be keeping an eye on, and why?
Uber. The company has just announced that it’s going to IPO in 2020. I’ll certainly be watching with interest over the next year, as the advances that they will likely make will be a bellwether for the tech economy. It will be interesting to see what knock-on effect their vision will have on other companies and sectors facing disruption or going through a period of tech transformation.
Will WeWork’s value go up or down?
Up. SoftBank want to keep deploying capital and WeWork want to spend it.
Have retail values hit bottom yet?
Not even close. I think we’re only seeing the beginning of falling values, which are ultimately reflecting a fundamental shift in the retail model. We've barely seen a true disruption in last mile delivery and when that comes retail will finally change forever.
What restaurant are you looking forward to eating at?
The gyoza stall at Maltby St Market.
What buzzword will sum up 2019?
Political latency — the lag between what the public wants and what politicians are doing.
Give us one area of London to watch.
I would have to highlight Bermondsey. Not only does it have great food but also greatly improving digital connectivity.
What is your hope for the world in 2019?
Increased connectivity leads to increased tolerance and stability.
Trish Barrigan, Managing Partner, Benson Elliot
What will be the biggest story of 2019?
A major hospitality chain acquiring a managed/serviced office provider.
Which company will you be keeping an eye on, and why?
Unibail-Rodamco Westfield, the largest owner, developer and manager of retail assets in a world that is becoming increasingly negative on retail.
Will WeWork’s value go up or down?
Up.
Have retail values hit bottom yet?
No.
What restaurant are you looking forward to eating at?
Core by Clare Smyth.
What buzzword will sum up 2019?
“Co” as in co-living, coworking; everyone is trying to get into it.
Give us one area of London to watch?
Barking.
What is your hope for the world in 2019?
Greater effort to reduce the amount of plastic and single use refuse.
Charlie Wade, U.K. Managing Director, VTS
What will be the biggest story of 2019?
The start of the movement to online leasing. CRE is one of the only remaining offline industries and it’s time that changed.
Which company will you be keeping an eye on, and why?
It's less about one specific company and more about the dynamics of our entire industry. As we head into a less predictable and uncertain market, not just in the U.K. but on a global scale, I will be watching to see how quickly the established global real estate investment managers can react to the different pressures and expectations from their investors. The landscape has changed and there will be some big winners and losers as a result of that shift. Who can adapt the quickest and who will see their market share dramatically eroded as a result of inertia or complacency? A few new names, some very unexpected, will make their way into the top 10 rankings over the next few years I'm sure.
Will WeWork’s value go up or down?
There are much smarter people out there to answer that question for you, however, I am confident they will continue to grow market share and SoftBank clearly anticipate that this will, in turn, increase their value.
Have retail values hit bottom yet?
The retail landscape will continue to present its challenges but there are some very exciting and dynamic approaches out there to try and combat spiralling values. I'm excited to see the new and innovative approaches some in the industry will look to leverage in 2019, from using technology to stay ahead of the risk and exposure to the changing high street, to an evolving occupier strategy.
What restaurant are you looking forward to eating at?
I've taken the hit, followed the trend and recently bought a Big Green Egg. I will be spending most of next year perfecting my BBQ skills in all weathers for all occasions. It has already become a bit of an obsession!
What buzzword will sum up 2019?
Real-time data.
Give us one area of London to watch?
Twickenham — the 6 Nations is going to be very good this year!
What is your hope for the world in 2019?
That our global leaders and politicians learn how to lead, park their differences and come together to impact real change. We continue to abuse the planet, from the level of plastic in our oceans, the dramatic loss of habitat and continued decline of critically endangered species, to the level of pollution in our cities. What will the world look like when my children are old enough to start exploring it for themselves? My hope is we take real steps next year to make sure it is appropriately protected.
For our industry, my hope is that the people who have been unsure about PropTech and the shift that is taking place dive in headfirst and invest in catching up with their peers. The risk of inaction is significant. Those early adopters are now equipped to make more informed, faster, data-led decisions and those still on the fence will miss out on the lucrative opportunities technology presents, or worse, be left behind entirely.
