Outlook 2020 Identifying opportunities in a late cycle - Savills Investment Management
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Outlook 2020 Identifying opportunities in a late cycle
OUTLOOK 2020
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savillsim.com
OUTLOOK 2020
GLOBAL CONTACTS
Kiran Patel
Global CIO and Deputy Global CEO
kiran.patel@savillsim.com
Andreas Trumpp
Preface
Head of Research, Europe
andreas.trumpp@savillsim.com
Matthias Düsing
matthias.duesing@savillsim.com
Some things have not changed over the last In fact, we believe that the lower-for-longer
Matteo Vaglio Gralin 12 months: The US-China trade conflict is interest rate environment is probably with us
matteo.valigogralin@savillsim.com still dominating global politics, geopolitical for the next few years. Due to the scarcity of
trouble spots have not calmed down and alternative investment options, we anticipate
uncertainty has not decreased significantly. that the share of capital that investors
Judith Fischer But in other respects, things have become allocate to real estate will remain strong.
judith.fischer@savillsim.com
even more challenging for investors.
Investors can benefit from our local expertise
With global growth disappointing in 2019 and and on-the-ground-knowledge, supported
Benedict Lai forecast to slow further in 2020, occupier by in-house research and experienced teams
benedict.lai@savillsim.com
markets will probably be less dynamic than in 16 offices across Europe and Asia-Pacific.
the last few years. The European Central Bank The Savills Investment Management Outlook
(ECB) and the US Federal Reserve (Fed) have 2020 report features our views on the
Hamish Smith changed tack, diverging from their expected European and Asian commercial real estate
hamish.smith@savillsim.com
tightening paths to loosening monetary markets, serving to help investors identify
policy due to slowing economic growth rates opportunities in a late-cycle environment.
and persistently low inflation. As a result,
Nicole Tiblom government bond yields have fallen further, Andreas Trumpp,
nicole.tiblom@savillsim.com
which we think will prolong the real estate Head of Research, Europe
investment cycle for a while longer.
Hilary Waterman
hilary.waterman@savillsim.com
OUTLOOK 2020
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Contents 38.
Positioning for income and
06. 12. growth in Asia-Pacific
Our top Physical retail will continue to evolve –
commercial real but is here to stay
estate investment
picks
18.
Dynamic Cities: future
08. proofing cities for long-term
Risks in 2020 commercial real estate success
40.
20. Asia-Pacific real estate
market overview
European real estate
10. 14. market overview
Extended European logistics still to benefit
European office from strong fundamentals in 2020
cycle a silver lining
for market players 24.
House views: Europe
BELGIUM IRELAND PORTUGAL
16. 42.
PAGE 24 PAGE 29 PAGE 34
DENMARK ITALY SPAIN
Shift in monetary
PAGE 25 PAGE 30 PAGE 35
FINLAND LUXEMBOURG SWEDEN House views: Asia-Pacific
policy to low for long PAGE 26 PAGE 31 PAGE 36
FRANCE NETHERLANDS UNITED AUSTRALIA JAPAN
EUROPEAN OFFICES: CAPITAL VALUE PAGE 27 PAGE 32 KINGDOM PAGE 42 PAGE 44
GROWTH CYCLES PAGE 37
GERMANY POLAND CHINA SINGAPORE
PAGE 17 PAGE 28 PAGE 33 PAGE 43 PAGE 45
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Our top commercial real
estate investment picks
Europe Asia-Pacific
OFFICE OFFICE
• modern office buildings in well-connected areas in Brussels, • Grade B office space in Tokyo
Luxembourg, the fringe of central business district (CBD) • offices in regional Japanese cities and Melbourne
in the German top seven, Paris, Lyon, Milan, Copenhagen,
Helsinki, Oslo, Stockholm, Lisbon, Madrid, Barcelona, • supply-constrained submarkets or districts benefitting from
London, Kraków, Wrocław, and TriCity infrastructure improvements in China, such as Beijing’s
Zhongguancun market; business park offices or offices in
• core/core-plus opportunities in Stockholm, German top emerging growth corridors in Shanghai
seven and major provincials, Warsaw
• refurbishment opportunities in the Netherlands
LOGISTICS
• investment opportunities in London if there
• logistics assets tied to e-commerce in China,
is more clarity on Brexit
Melbourne, Sydney
LOGISTICS
RETAIL
• modern distribution centres along the main transport
• well-located neighbourhood retail centres
corridors around Vienna, Paris, Lyon, Marseille, Ireland
in Sydney, Melbourne and Brisbane
(M50), Northern Italy and the Rome area, main German
logistics clusters, Sjaelland in Denmark, Helsinki, the
Swedish logistics triangle, hubs in Poland (such as Warsaw
RESIDENTIAL
and Wrocław), along the main transport corridors and
near main ports in Portugal, Madrid and Barcelona • multifamily accommodation for rent in subcore
districts of Greater Tokyo, Osaka, Nagoya and Fukuoka
• urban logistics and smaller- to medium-sized warehouses
in the Netherlands (Bleiswijk), UK, major German
conurbations, Copenhagen, Stockholm, Helsinki,
Norway and selectively in Austria
RETAIL
• prime retail parks in areas with positive long-term demand
prospects in the Netherlands, France, UK, Ireland, Germany,
Italy, and Sweden – preferably food-anchored assets that
include a service and experience offering
• the outlet segment due to its resilience to e-commerce
• prime high street assets with the right size and sustainable
rents in France, German top seven and major provincials,
London, large Italian cities, Copenhagen, Aarhus,
Stockholm, Lisbon, Madrid and Barcelona
• the premium/luxury segment or areas with
high local and tourist footfall
ALTERNATIVES
• student housing, retirement housing and hotels in Italy
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GEOPOLITICAL AND POLITICAL RISKS
The global macroeconomic landscape has been US and China are also starting to broaden to include
Risks in 2020
characterised by heightened US-China trade tensions economic, military and ideological dimensions,
and a looming slowdown over the past year. While which have the potential to be long lasting by
reports suggest that the two countries are close to reshaping the global economic and geopolitical
signing the first phase of a deal, there have been landscape in the coming decades.
plenty of false starts before. And depending on the
scope of any initial agreement, downside risks will The US-China dispute is not the only issue that is
continue to create uncertainty. shaping geopolitical and economic uncertainty. A
dispute between Japan and South Korea has the
US-China bilateral trade has already fallen by potential to disrupt the high-end tech industries on a
about 20%, with a further decline likely absent global scale as both countries play an important role
a deal. Sharp fluctuations in financial markets in in the supply chain.
response to tariff announcements over the past
18 months and deteriorating business confidence Other potential hotspots include the economic
indicate that investors and businesses have become malaise in Latin America, the world’s worst
increasingly worried about the impact of trade policy performing region in terms of economic growth in
developments. 2019. Meanwhile, tensions in the Middle East remain
an ongoing concern.
Should global trade become progressively
protectionist, businesses and consumers are more Growing economic uncertainties in the context of the
Hamish Smith likely to hold back on investment and spending current late-cycle environment warrant caution, with
decisions, which are likely to exacerbate the asset selection becoming even more important to
slowdown in economic growth. Tensions between the commercial real estate investors.
Nicole Tiblom
CURRENCIES BREXIT
As the US-China trade conflict of China’s foreign exchange After more than three and a half
continues and China allows the reserves against the US. Any abrupt years since the UK’s decision to
LOW GROWTH, LOW INFLATIONARY WORLD
renminbi to depreciate further decision to sell off China’s Treasury leave the EU, during which there
Consensus Forecasts indicates At the same time, the external to remain at very low levels, the against the US dollar, there is a holdings would likely lead to extreme have been multiple extensions to
that economic growth across the backdrop is not showing signs of region may remain trapped in risk that the US administration volatility across global markets. the departure date, Brexit continues
Eurozone will remain sluggish improvement, with key surveys a low growth, low inflationary could intervene to weaken the to cast a cloud of uncertainty over
over the next 12-18 months, but pointing to a continued slowdown environment in the absence of a dollar. This would turn the trade What’s more, if the US did try to the UK. Although the chances of
that the single currency area is in US growth. Concerns about US sizeable fiscal boost, otherwise war into a currency war. The Trump weaken the dollar, this would not the UK crashing out without a deal
unlikely to fall into recession. growth and inflation prospects are known as secular stagnation. administration has already labelled only raise political tensions, but it have receded, such an outcome is
However, the risks to this outlook highlighted by the US Treasury China a currency manipulator and would also likely upend financial not completely off the table.
appear to be to the downside. curve inverting on various Against such a backdrop, we would has threatened to devalue the markets as other countries rush to
occasions in 2019, which has been a expect weaker occupier demand dollar if trading partners engage in depreciate their own currencies, with While the 12 December 2019
While problems in the good leading indicator of previous and leasing activity. For landlords, what China regards as competitive an all-out currency war potentially UK general election offers an
manufacturing sector have not US recessions. The changing this means less competition for currency devaluations. While it sparking a global recession. Since opportunity to resolve the political
caused a major headache for economic tides also forced the space at a time when development is unlikely that the Fed would it is impossible for all countries to impasse, a hung Parliament could
the services sector, the longer Fed to cut interest rates on several pipelines in many cities are starting intervene to devalue the dollar, if it weaken their currencies relative result in Brexit being further
the downturn in manufacturing occasions in 2019 in a pre-emptive to rise. The combination of softer did, potential targets to weaken the to everyone else, there would delayed, prolonging uncertainty
lasts, the more likely the service effort to avoid the economy falling demand and higher supply would dollar would most likely be the yen, ultimately be winners and losers. for businesses and investors alike.
sector will start to feel the into a recession. hurt rental growth prospects and the renminbi, the euro and sterling. Even if a withdrawal agreement
reverberations. Similarly, if could lead prospective occupiers For real estate investment, capital is eventually passed and the UK
consumer confidence were to The implications of an recession to seek increased incentives. In But the greatest scope for global flows would likely be skewed leaves the EU, much would remain
deteriorate further, households for commercial property are clear. addition, where rents are inflation financial instability relates to the depending on the relative strength up in the air as both sides would
are more likely to be inclined But even if growth across Europe linked, rental uplifts would be US and China. China holds more of the currency of respective then enter into a further period of
to increase their savings to the remains positive, with monetary lower. Taken together, returns than USD 1 trillion of US Treasury foreign investors, while returns in negotiation to agree on the future
detriment of consumer spending policy looking increasingly for investors are likely to be lower securities. Therefore, a worst-case local currency terms would also be UK-EU trading relationship.
growth. anaemic and interest rates likely than currently assumed. scenario could be the weaponisation affected.
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FIGURE 2: Vacancy rates and future supply in selected European markets
22.5 0% 0% 0% 0% 1% 1% 0% 1% 2% 2% 1% 2% 4% 2% 0% 11% 0% 1% 1% 8% 2% 2% 0% 7% 4% 2% 100
Pipeline u/c CBD (%; Q3 2019)
20.0 90
Vacancy rate CBD (%)
80
17.5
Extended
70
15.0
60
12.5
50
10.0
40
European office
7.5 30
5.0 20
2.5 10
0 0
cycle a silver lining
Madrid
Munich
Luxembourg
Berlin
Hamburg
Paris City
Barcelona
Stockholm
Brussels
Milan
Rome
Dublin
Frankfurt
Helsinki
Paris La
Defense
Vienna*
Oslo*
Warsaw
London
Westend
Copenhagen*
London City
Paris WBD
London
Docklands
Lisbon
Amsterdam
Lyon*
for market players
Peak Vacancy rate CBD (%) Trough Vacancy rate CBD (%) Current Vacancy rate CBD (%; Q3 2019)
Pre-let pipeline u/c CBD (%; Q3 2019) Speculative pipeline u/c CBD (%; Q3 2019) Speculative pipeline u/c CBD as % of total market stock (%; Q3 2019)
Source: Savills Investment Management based on PMA and various agents
Note: *overall market
Vacancy levels in several European according to the survey: 40% of The scarcity of modern, Grade
markets are the lowest since just Europe’s workers expect to leave A space means we can still
before the global financial crisis. their current job within the next expect some rental growth in the
Matthias Nicole
At the same time, development five years. Companies will need to mid-term, albeit more limited than
Düsing Tiblom
pipelines in most office markets look for talent hotspots in strategic in recent years. Central banks’
are fairly low as a share of existing locations, as outlined in our Dynamic dovish shift has significantly
Slower economic growth in Europe is starting to feed stock, PMA reports (figure 2). Cities report.1 Moreover, space downgraded expectations for
into softer occupier demand for offices. Although will be used more efficiently and interest rate rises, meaning it
the annual take-up trend is weakening, levels remain The economic slowdown alongside effectively, increasing productivity may take longer than expected
healthy, according to PMA. The tech sector has been structural changes including agile/ and employee engagement as well for property yields to bottom
a key driver of tenant demand in many markets, flexible working, technological as creating a stronger brand. out, extending this cycle.
and this looks set to continue. Savills Research and improvements and the war for This is a potential silver lining
Oxford Economics expect tech employment growth talent are driving office trends. The The ongoing demographic shift for office market players. We can
to outperform overall office-based employment in economic uncertainty means that will also impact office space. expect investment volumes to hold
most markets through 2024 (figure 1). firms must carefully manage their Intergenerational working has up rather well as the attractive
cost base, including better office become more widespread, and gap between office yields and
space efficiency, while maintaining workplaces must strive to meet government bond yields persists.
or improving productivity levels. the demands of a more varied
FIGURE 1: Projected employment growth in major European markets workforce. In addition, tenants, In this environment, investors would
A survey by Savills Research landlords and investors are benefit from focusing on income
highlights the changing nature of increasingly interested in protection and enhancement to
14
Total employment growth (%, 2019-24) office markets and tenant demand. environmental, social and ensure portfolios are structurally
12
Office-based employment growth (%, 2019-24) While the basics of comfort, air governance (ESG) issues. According resilient to weather a downturn
10
Tech employment growth (%, 2019-24) quality and lighting continue to to a survey by Savills IM,2 worker and other structural challenges.
8
be important draw factors for well-being as well as health and High-quality real estate assets
6
occupiers, so too are the length of safety remain the most important with a stable source of income
4
commute to work, quality of wi-fi social issues. The survey also can provide a safe haven in the
2 and availability of quiet space for revealed that 31% of respondents current environment. Regional
0
focused work. believe that it will take only three office markets where availability
-2
to five years until green-lease is tight and pipelines small may
Berlin
Copenhagen
Madrid
Stockholm
Munich
Helsinki
Oslo
Frankfurt
Paris
Luxembourg
Dublin
Manchester
Hamburg
Amsterdam
Rome
Birmingham
Edinburgh
Warsaw
Lisbon
Milan
Brussels
Barcelona
London
Vienna
Employers across Europe report clauses are universally implemented look attractive from a pricing
talent retention as their single between tenants and real estate perspective.
biggest challenge across Europe, investment managers.
Source: Oxford Economics (Autumn 2019)
Notes: Total employment growth refers to the % change between 2019 and 2024 in all sectors. Office employment growth refers to the % change between 2019 1. For more information, visit dynamiccities.savillsim.com.
and 2024 in information & communication; financial & insurance activities; professional, scientific & technical activities; administrative & support activities; public 2. The survey polled 112 institutional investors involved in commercial real estate, based in Europe, the Middle East and Africa; North America; and Asia-Pacific. For
administration & defence. Tech employment growth refers to the % change between 2019 and 2024 in information & communication. more on this survey, stay tuned for the 2019 ESG Report, coming in Q1 2020.
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Physical retail will
continue to evolve –
but is here to stay
Hamish Andreas
Smith Trumpp FIGURE 1: UK buyers still prefer to shop in store FIGURE 2: Online penetration of food sales remains very
(reasons for not purchasing online) low (% of 2018 UK retail sales made in store or online)
Technological developments, together with
% of respondents
TAKE THREE EXAMPLES
Store Internet
demographic shifts and changing consumer Prefer to shop in person
behaviour, are driving significant changes Grocery stores are relatively immune to economic Food
across the European retail sector. Smart downswings as people still need to meet basic food
devices have added a new dimension to and beverage needs. And with the complication Textile clothing and footwear
consumer shopping behaviour. Although Payment security or privacy concerns of delivering perishable goods, many people still
consumer purchasing patterns are prefer to shop in store, making the segment less
transforming traditional retailer supply chains vulnerable to online shopping (figure 2). In this late Other nonfood
and cost models at the same time, demand stage of the property cycle, for investors seeking
for physical retail is not dead. Indeed, even Uncertainty around how to shop online asset-backed, secure income streams, food retail Nonfood
in the UK, which leads Europe in terms of on long, inflation-linked leases looks attractive.
the share of retail sales made online, more
Department stores
than 80% of adults who had not shopped Outlet centres are increasingly popular and tend
online within the past 12 months stated a Uncertainty around how to shop online to be defensive against the rapid growth in online
preference to shop in store (figure 1). retail. For customers looking for a ‘great day Household goods
out’ shopping experience, web browsing will not
Furthermore, the net number of retail stores suffice. Outlet centres can drive performance
Delivery of goods ordered over the Internet is a problem Nonstore retailing
across Europe did continue to rise in the first through a strong leisure offering, leading to higher
half of 2019, according to PMA data. turnover and higher footfall.
0 10 20 30 40 50 60 70 80 90 100
Nonetheless, with constant headlines –
Source: Office for National Statistics
particularly in the UK – about retailers Retail parks in reach of a large catchment and
shuttering stores or undergoing voluntary Concerns about delivery of items anchored by major supermarkets, pharmacy
insolvency proceedings, it is not hard to and household goods retailers can also provide Retail will continue to evolve as technology and
see why retail is a hard sell for investment some interesting possibilities from a convenience consumer preferences drive changes to existing
committees. retailing perspective. By increasing food, beverage formats as well as new retail concepts. While we
Don’t have a suitable payment card
and leisure offerings, active management by do not underestimate the scale of the challenges
But not all retail is equal. We see pockets landlords can provide consumers with more reason for retailers and investors, those retail formats
of opportunity in the sector, particularly in to visit while boosting dwell times and consumer that fail to adapt quickly run the risk of becoming
formats where shoppers make a conscious spending. Retail parks also have the advantage of outdated, meaning more active asset management
Someone does it on their behalf
decision to travel to a location. In this respect, space, which allows click and collect options to be is required. With a focus on destination and
we prefer focusing on assets or segments that included. However, investors need to be mindful of convenience segments of the market, we think
offer consumers experience or convenience nearby competition and connectivity with respect attractive risk-adjusted returns are still available
options – areas of retail that we believe are 0 10 20 30 40 50 60 70 80 90 100 to public and private transport. for investors who select assets that can withstand
more resilient to the disruption of changing and benefit from technological change and
Source: Office for National Statistics
shopping habits. demographics.
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European logistics still to benefit from FIGURE 1:
Industrial and logistics corridors in Europe
strong fundamentals in 2020
Judith Fischer Matteo Vaglio Gralin
2019 was another strong year the most important traditional Looking ahead, occupier demand
for European logistics demand, European economic centres drivers will be affected by the weak
primarily driven by logistics and logistics hubs. According to European economic outlook and
operators and e-commerce. bulwiengesa, the Golden Banana rising operating costs. However,
Strong investor appetite and lack refers to a Southern European the sector is set to benefit COPENHAGEN
of modern space led to further conurbation lying between from structural changes such
yield compression in the larger Valencia, Spain, and Genoa, Italy, as the implementation of new
markets. Compared with most along the Mediterranean coast technologies, automation and HAMBURG
office and retail sectors, logistics (figure 1). changes in consumer habits. Our HANNOVER
LONDON
assets still offer an attractive risk- view for 2020 is that rental growth BERLIN
RUHR WARSAW
return profile. The emerging Purple Banana will be moderately positive in most LEIPZIG
corridor stretches from Germany’s European markets, but weaker BRUSSELS FRANKFURT
Not only proximity and accessibility Ruhr area to Warsaw and beyond. compared with the last few years.
PRAGUE
to producers and consumers Poland is a key country for the
PARIS STUTTGART
but also affordable operating logistics business in Eastern A key challenge for rental growth
costs are key for further growth Europe due to its relatively prospects is that completions and MUNICH
in the logistics sector. There are low labour costs, availability the share of speculative VIENNA
three established and emerging of development sites, good developments are on the BUCHAREST
ZURICH
industrial and logistics corridors connections to Western Europe rise. In addition, occupiers LYON
in Europe that represent about (albeit longer transport times) are consolidating, divesting
40% of Europe’s population and a and its strategic location along themselves of old space in order
MILAN
similar share of overall European the New Silk Road stretching from to take modern and efficient space.
GDP.1 China to Europe. Development We expect the investment market
initiatives such as the New Silk to remain healthy in 2020 due to
The so-called Blue Banana is Road offer new business a large volume of available capital
a corridor that stretches from opportunities, while ongoing and attractive yields compared with MADRID BARCELONA ROME
the Midlands in the UK through urbanisation leads to higher city other sectors. However, transaction
Belgium, the Netherlands, Western population densities and changing volumes are likely to slow due to
Germany and Switzerland, ending consumer behaviour. Last-mile scarcity of Grade A stock. Given
in Northern Italy (figure 1). This assets and multistorey warehouses the strong competition for prime
corridor is home to around 168 will play a key role. assets, there is still room for further
million people2 and includes yield compression next year.
1. Oxford Economics, Savills Investment Management
2. Savills Investment Management calculations based on Oxford Economics, total population at a NUTS 1 or 2 level. Sources: bulwiengesa, Savills Investment Management
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Shift in monetary policy European offices: capital
to low for long value growth cycles
Given the current backdrop, investors would benefit from focusing
on income protection and enhancement to ensure portfolios are well
Nicole Tiblom placed in case of a downturn. We advocate focusing on opportunities
that are defensive in this respect. Asset, lease and location selection
More than 30 central banks around the world, the economic slowdown, the risk premium for remain key components of underwriting.
including the Fed and ECB, cut interest rates in commercial real estate looks relatively attractive
2019 amid rising concerns over global growth, lower in this low-interest-rate, low-return environment
FIGURE 2: European office capital value growth cycles
inflation and weaker inflation expectations. Such (figure 1). Consequently, we can expect real estate
concerns in financial markets also resulted in global investment volumes to hold up rather well in 2020 220
government bond yields falling further – in many as investors seek safe-haven assets in their hunt
200
developed market cases, into negative territory. As a for income.
180
result, we can expect investors’ share of capital being
allocated to real estate to increase going forwards, Assuming the economic slowdown does not lead to a 140
partly reflecting the lack of alternative ‘safe,’ income- major recession, the switch to more accommodative 120
generating investment options. monetary policy implies that the current property 100
1990-1996
cycle will be prolonged further, which is positive 1996-2003
80
Heightened global uncertainty could also have for commercial real estate investment. However, 2003-2009
2009-2020
60
implications for commercial real estate demand, property cycles are undeniably enmeshed with the 0 1 2 3 4 5 6 7 8 9 10 11
resulting in lower investment appetite and consumer economic cycle, and we assess that the European real
confidence, rising financial market volatility and estate market is generally in the final phase of the Sources: PMA (Autumn 2019), Savills Investment Management
Note: Index starts the first year of positive capital value growth, so the duration and the start of
disruption in global supply chains. However, despite demand cycle. the cycle is dynamic.
FIGURE 1: Commercial real estate risk premium over government bonds The capital value growth cycle is expected to be prolonged through
2020 due to further rental growth and yields moving in further.
7.0 Average 10y government bond yield (%, unweighted)
Prime office yield (%)
Prime retail yield (%)
FIGURE 3: Office capital value growth index – last cycle trough through 2020
6.0
Prime logistics yield (%)
5.0 340 Paris: Central Madrid
320 Frankfurt London: Central
4.0 300 Milan Warsaw
280 Amsterdam Stockholm
3.0 260
240
2.0 220
200
1.0 180
160
0.0 140
APAC '06 APAC '19 Euro '06 Euro '19 US '06 US '19 120
100
80
0 1 2 3 4 5 6 7 8 9 10 11
Sources: PMA, JLL, Savills Investment Management
Notes: APAC: Brisbane, Melbourne, Perth, Sydney, Beijing, Guangzhou, Shanghai, Shenzhen, Hong Kong, Nagoya, Osaka, Tokyo, Kuala Lumpur, Singapore
& Seoul; Euro: Vienna, Brussels, Prague, Copenhagen, Helsinki, Lille, Lyon, Marseille, Paris: Central, Berlin, Cologne, Dusseldorf, Frankfurt, Hamburg, Munich, Sources: PMA (Autumn 2019), Savills Investment Management
Stuttgart, Budapest, Dublin, Milan, Rome, Luxembourg, Amsterdam, Rotterdam, Oslo, Warsaw, Lisbon, Barcelona, Madrid, Stockholm, Birmingham, Edinburgh,
Note: Index starts (=100) the last year of negative capital value growth (range 2009-13), so the
Glasgow, London: Central, M25 West & Manchester; US: Atlanta, Austin, Baltimore, Boston, Charlotte, Chicago, Cincinnati, Cleveland, Columbus, Dallas, Denver,
duration and the start of the cycle are dynamic.
Detroit, East Bay, Fairfield, Fort Lauderdale, Fort Worth, Grand Rapids, Hampton Roads, Houston, Indianapolis, Jacksonville, Kansas City, Long Island, Los
Angeles, Louisville, Miami-Dade, Marin Country, Milwaukee, Minneapolis-St. Paul, Nashville, New Jersey, New York, Northern Virginia, Oakland, Orange County,
Orlando, Philadelphia, Phoenix, Pittsburgh, Portland, Raleigh-Durham, Richmond, Sacramento, Salt Lake, San Antonio, San Diego, San Francisco, San Francisco
Mid-Peninsula, Seattle-Puget Sound, Silicon Valley, St. Louis, Sonoma County, Suburban Maryland, Tampa Bay, Washington D.C, West Palm Beach, Westchester;
US 2019 data based on Q1; Euro and APAC data is based on Q3.
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WHY DOES THIS MATTER FOR CRE?
Future CRE market performance is dependent on economic growth, wealth,
technology and population trends. Rising employment, be it through the expansion of
existing businesses or the engendering of new firms, helps support the office sector
as demand for office space grows. The retail sector gains from growing consumer
expenditure. This, in turn, is also positive for e-commerce growth, which is dependent
on functioning logistics infrastructure. In a longer-term context, the three CRE
markets of the top 10 dynamic cities demonstrate the strongest upwards trend in
prime total returns, followed by the next-best-30 cities . Such office market trends are
shown in figure 1.
FIGURE 1: Prime annual office total return trend lines
Future proofing cities for long-term 30
25
commercial real estate success 20
15
10
5
0
Judith Fischer
-5 Top 10 DC
Next-best-30 DC
Europe stands among the most growth and talent retention. It -10 Other
Trend (Top 10 DC)
urbanised regions worldwide, highlights which European cities -15 Trend (Next-best-30 DC)
with nearly 75% of the region’s are best equipped to handle -20
Trend (Other)
population now living in cities. future growth in a sustainable 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
The United Nations projects that way, and the extent to which a
this percentage will reach 84% city is future proofed hinges on INFRASTRUCTURE Sources: PMA, Savills Investment Management
by 2050. its ability to attract investment.
Cities are engines of economic Future proofing requires the The leading 2019 Dynamic Cities (top 20 featured in figure 2) are enjoying
growth. Less than 100 major right combination of soft and infrastructure investment and well-developed or developing knowledge networks.
European cities produce more hard infrastructure, which is They are also supported by a backdrop of universities, strong cultural amenities and
INCLUSION
good governance structures, which foster enterprise. Together, these factors help
than 30% of Europe’s GDP, critical to support the expansion cities attract and retain highly skilled labour, allowing them to take advantage of
according to Oxford Economics. of a city’s population and urbanisation and making them resilient to disruptive technology.
This places European cities firmly physical size. Successful cities
in the limelight for commercial of the future need seamless FIGURE 2: Top 20 Dynamic Cities 2019
real estate (CRE) investment. transport of people and INTERCONNECTION
information, which facilitates RANK
CITY
CHANGE RANK
CITY
CHANGE
2019 2018-19 2019 2018-19
However, not all cities ease of doing business and
1 London 11 Zurich
experience the positive effects encourages growth.
2 Paris 12 Oxford
of urbanisation equally. Given
13 Edinburgh
ongoing structural changes such Digital connectivity in the INNOVATION
3 Cambridge
as disruptive technology, ageing form of strong broadband 4 Berlin 14 Barcelona
populations and environmental and mobile infrastructure is 5 Amsterdam 15 Copenhagen
challenges, it is vital to identify necessary for innovation as 6 Munich 16 Frankfurt am Main
those cities that are likely to future technologies develop. 7 Dublin 17 Vienna
show resilience to change. A successful city must also be INSPIRATION 8 Lausanne 18 Bern
walkable, cyclable and have a 9 Basel 19 Oslo
The Savills IM Dynamic Cities good spread of public transport, 20 Madrid
10 Stockholm
index examines six factors that which helps reduce the risk of
in combination contribute to location-, employment- and Source: Savills Investment Management
long-term wealth, economic income-based disparities. INVESTMENTOUTLOOK 2020
20 21
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European real estate
market overview SOFTER OFFICE OCCUPIER DEMAND LIKELY,
BUT VACANCY STILL LOW IN MOST MARKETS
Office markets are still in good shape heading into the new
year, despite the slowdown in economic growth. Unlike
the manufacturing sector, which has seen output shrink,
the service sector has held up relatively well so far, and
employment growth remains positive. However, Oxford
Economics reports suggest office employment growth
in the Eurozone will slow to about 0.7% per annum (p.a.)
over 2020-24, from 1.8% p.a. between 2015 and 2019. We
expect this will feed into softer occupier demand over the
next few quarters.
Andreas Trumpp
Even so, vacancy rates are likely to remain low, particularly
for Grade A buildings in central city locations. While
development pipelines continue to pick up across Europe,
Overall, the outlook for pan-European occupier markets in 2020
they are still low as a share of existing stock in the
is weaker than during the last few years. Independent forecasters
majority of markets, PMA reports. In addition, speculative
expect economic growth to remain subdued over the next
development activity has been constrained across Europe,
12-18 months as global demand loses momentum and a number too. Thus, even as occupier demand slows and current
of geopolitical risks remain unresolved. While the Eurozone is constraints on supply ease somewhat, markets appear
expected to avoid tipping into recession, some economies such unlikely to see a major oversupply of office space in the
as Germany and Italy are struggling. The commercial property coming years.
investment market cycle is likely to be prolonged by the ECB’s
decision to cut interest rates further and restart its asset purchasing For this reason, we think that there is scope for further,
programme. But a lackluster economic outlook implies headwinds but slower, rental growth in CBD and central city locations
for occupier demand and rental growth. in the short term. Given concerns about the pricing of
core assets, regional markets where availability is tight
and pipelines small may look attractive. However, good
local knowledge is essential when considering assets in
these markets.
EXTERNAL FACTORS ARE SUPPORTING THE INVESTMENT MARKET Although the ECB’s looser monetary policy settings could
see some yields move in a touch more, in general we would
Due to a slow start to 2019, pan-European Second, due to very limited alternative
advise against value-add and opportunistic strategies
investment volumes look likely to come in investment opportunities and challenging
dependent on economic growth, strong employment
lower than in 2018, data from Real Capital pricing in the core segment, risk-averse
prospects or further yield compression. Rather, we favour
Analytics (RCA) suggest. However, lower core investors in particular are starting
long income streams at this point in the cycle.
investment volumes do not necessarily to extend the holding tenure of their
signal lower demand for property. Supply- investments despite attractive pricing for
We prefer CBD, fringe-of-CBD and central city locations
side constraints are limiting investor sellers. This partially explains why yields
where buildings are located close to good transport
activity on two fronts. have hardened further, particularly in the
infrastructure. Markets where modern, efficient office
office and logistics sector. We believe
space is in short supply can still provide some interesting
First, there is a persistent scarcity of that low risk-free rates potentially provide
opportunities. For investors who are prepared to take on a
new developments and refurbishments scope for additional, albeit limited, yield
little more risk, multi-let assets with short lease lengths in
in the most sought-after core locations. compression in some markets.
central locations provide opportunities for rental growth
via active asset management.OUTLOOK 2020
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DESPITE STRUCTURAL CHANGES, PHYSICAL RETAIL IS NOT DEAD
Oxford Economics predicts that retail have, so far, been more resilient to
sales in the European Union (EU-28) and competition from online can be broadly
Eurozone will grow by 1.9% and 1.6%, split into two categories: experience and
respectively, in 2020. While this is slightly convenience shopping. (We explore this
below the average over the last five further in our ‘Physical retail will continue
years, it is still notably above the long- to evolve – but is here to stay’ section.)
term average. Consumer confidence
dipped in 2019 but was still relatively Even so, we believe that rental growth
high, as households benefitted from prospects in the retail sector are limited
increasing employment and stronger to certain locations and assets in major
wage growth across most of the EU-28. European cities due to subdued overall
Indeed, unemployment is at its lowest occupier demand and cost pressure on
rate in more than 10 years. In spite of physical retailers.
economic headwinds, Oxford Economics
expects unemployment to fall slightly We prefer focusing on assets that offer
further in 2020. experience (e.g., luxury or outlet centres)
or convenience shopping formats (e.g.,
Online retail will continue to challenge retail parks or infrastructure retail such
and shape the future of traditional brick- as that in railway stations), which have
and-mortar stores. However, physical limited nearby competition and are easily
retail is not dead. Retail formats that accessible to large catchment areas.
E-COMMERCE IS A However, it is important to we expect this to limit rental
note that logistics is not all growth prospects in 2020.
GROWING ELEMENT
about e-commerce. Traditional Further ahead, investors must be
OF LOGISTICS occupiers such as manufacturers mindful of potential risks to the
DEMAND, BUT NOT remain an important source sector, particularly in the form
THE ONLY ONE of occupier demand. of government intervention to
Notwithstanding the current support high street retail such as
weakness in the manufacturing an online sales tax, which could
With the structural changes to sector, these firms are facing hurt online sales demand.
the way people shop continuing high relocation costs. As such,
to evolve – and very different locations around manufacturing Accessibility to main transport
levels of online penetration hubs with strong transport networks and labour are crucial
across European – demand connectivity can also provide ingredients in the logistics recipe.
prospects for logistics assets good investment opportunities. As such, investors should focus
continue to look solid. Savills on large modern distribution
Research expects e-commerce Slower economic growth will warehouses that are close to
sales as a percentage of overall likely be a headwind for industrial main transport networks as
retail sales in Western Europe to and logistics demand going well as smaller urban facilities
grow further to 15% in 2023 from forwards. Against a background within, or nearby, large and high-
11% in 2019. of rising development activity, density cities.OUTLOOK 2020
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BELGIUM
Country analyst: Judith Fischer
DENMARK
Country analyst: Nicole Tiblom
ECONOMY ECONOMY
Oxford Economics expects economic growth to remain subdued Domestic demand should continue to be the key driver of growth in Denmark as low
in 2020 at around 1.1% – slightly slower than the 1.2% expected unemployment and moderate inflation support households’ real income. The external
in 2019. The national unemployment rate is at a historically low sector is likely to slow due to weak global trade and rising uncertainties. The Danish
level. However, unemployment is likely to rise, according to Oxford central bank matched the ECB’s deposit rate cut in September, which will likely keep
Economics, which is of potential concern for occupier demand, investments at a healthy level, Oxford Economics reports.
particularly in fringe and noncentral city areas due to deteriorating
employment intentions in the industrial and retail sectors.
OFFICE
The occupier market benefits from high demand due to the positive economic
OFFICE environment, and the lack of modern space is forcing many occupiers towards the
Strong demand for office space in Brussels and historically outer parts of Copenhagen. There is a continued interest in shared workspace by
low vacancy rates are putting upwards pressure on rents. occupiers, and investors are focusing more on accommodating smaller and shared
The Brussels investment market remains competitive, which is office areas with more flexible office agreements, according to C&W.
putting downwards pressure on yields. Brussels office yields,
however, remain attractive compared with other major We see opportunities in the fringe central Copenhagen area where rental prospects
European office markets. are positive due to the robust economic environment, limited supply and positive
long-term demand prospects.
For leases of more than 12 years with high-quality tenants, prime
yields are below 4% depending on the age of the building.
For six- to nine-year leases, yields stand at 4%, according to BNP LOGISTICS
Paribas Real Estate (BNPPRE). Going forwards, yields should
Recent years’ positive economic environment has led to companies expanding their
remain stable or compress at a slower pace. We like modern
businesses and demanding more space to facilitate growth and optimise their supply
office buildings in well-connected areas of Brussels.
chain. However, the Danish logistics market is small, with a very limited supply of
modern facilities. From a historical perspective, though, transaction volumes are
higher, with a broadening investor base.
LOGISTICS
Speculative development remains very low due to the strong Demand is focused on modern premises along the main transport network. Rental
demand for build-to-suit assets and developers’ risk-averse levels are rising, with the strongest rental growth noted around Køge and Greve. We
approach. Prime rents for semi-industrial logistics assets should prefer modern warehouses and last-mile distribution facilities along the main Danish
remain stable in 2020, Cushman & Wakefield Research (C&W) transport corridors on Sjælland, where demand for modern logistics is growing. The
reports. The major logistics axes in Belgium, Brussels-Antwerp and Danish logistics market is expected to be further supported by the Fehmarn Belt link.
Antwerp-Ghent have attracted the highest demand for logistics
space over the last few years.
Investor appetite remains strong but there is a lack of available RETAIL
product that is limiting transaction volumes. The supply-demand Prime high street yields have risen slightly in Copenhagen, driven by the uncertainty
imbalance is also putting downwards pressure on yields, which around structural changes in retail, according to RED (Cushman & Wakefield). The
are, however, still higher than in neighbouring countries such as polarisation in the retail market is clear, with strong appetite for high-quality assets
Germany, the Netherlands and France. in prime locations. Parts of Strøget are struggling with vacancies, while international
brands are competing for the best assets around Amagertorv and Østergade. The
structural changes in the retail market mean more asset management is required, and
the polarisation between successful and unsuccessful formats can partly be explained
RETAIL by a gap between professionally and non-professionally managed assets.
Structural changes in the Belgian retail sector are in line with
the wider European trend. Yet appetite for retail investments Despite increasing competition from online sales, Copenhagen’s pedestrian zone
is generally lower. There are some areas of greater resilience, is seeing strong footfall, particularly around Amagertorv and Købmagergade.
however, such as convenience-led out-of-town retail, C&W reports, Interest in secondary assets is limited and there is a strong focus on pricing.
with good accessibility by car and plenty of parking spaces. We like Copenhagen high street opportunities around Købmagergade, where
Food-anchored retail is also a dynamic sector that is proving occupier interest is robust, as well as in regional cities with positive long-term
resilient amid changing consumer behaviours. demand prospects such as Aarhus.OUTLOOK 2020
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FINLAND
Country analyst: Nicole Tiblom
FRANCE
Country analyst: Matteo Vaglio Gralin
ECONOMY ECONOMY
The Finnish economy is slowing, with domestic demand Oxford Economics projects that the French economy will grow 1.2% in 2020, almost
likely to moderate over the next few years while remaining in line with 1.3% expected in 2019. Performance is slightly above the Eurozone
the bright spot in the economy as the external outlook is average, and unemployment is set to keep falling in 2020. Domestic demand is
gloomier, Oxford Economics reports. The unemployment steady, but external weakness and uncertainty are likely to weigh on growth. Capital
rate is still low, wages are rising, and moderate inflation is Economics expects fiscal policy to be tighter in 2020, with the government budget
boosting households’ real incomes. Consumers appear to deficit set to fall to 2.7% of GDP from 3.2% in 2019.
be adopting a more cautious attitude to spending, with
rising saving rates.
OFFICE
In Paris we believe office occupier focus will be on areas where public transportation
OFFICE is planned to improve in coming years. Demand should remain sustained by strong
Investor demand for the office sector remains very strong, office employment growth in 2020, Oxford Economics reports. Although PMA
with prime yield compression in multiple locations. expects that new supply is likely to lead to an overall increase in vacancy in 2020,
Rental growth is evident in the Helsinki CBD due to high availability in core submarkets remains tight, except in La Défense.
demand and still limited supply. PMA forecasts further
yield compression, which – along with stronger rental We prefer areas such as the Southern and Southwestern suburbs with new
growth in the near term – means Helsinki has a rather underground access (Métro Line 15) and the Western Business District, where prime
positive outlook. rents are likely to remain stable, or even potentially rise slightly, in 2020. Prime rents
in the CBD could undergo a modest correction as they are comparatively high. Lyon
We prefer modern buildings in well-connected areas. is our second choice due to good occupier demand and a low vacancy rate (below
Since limited supply in the traditional Helsinki CBD has led 6%, according to PMA).
to a stretching of the borders of the CBD, there could be
opportunities for rental growth in the fringe-of-CBD. We expect the French office investment market to remain strong in 2020, which
might lead to further yield compression for prime properties.
LOGISTICS
LOGISTICS
The fundamentals underpinning the logistics sector
are positive. Occupier demand should improve going Our top picks are along the major French logistics corridors, particularly Paris, Lyon
forwards, and new supply is limited. Demand is very and Marseille. We think demand will remain healthy and diversified at the regional
strong for prime products, and there is a growing level in 2020. However, we only expect moderate prime rental growth as agents
polarisation between such facilities in good locations report a lack of Grade A product and limited available land. We also favour some
and outdated stock in less-desirable ones. locations outside of the main corridor, such as Toulouse, Bordeaux and Nantes,
which are showing sustained rental activity and high build-to-suit completions.
We prefer modern, high quality distribution centres
along the main Finnish transport corridors and urban We expect the logistics investment market to remain strong in 2020, therefore there
warehouses around Helsinki, due to robust fundamentals. is room for further yield compression.
RETAIL RETAIL
Occupier demand is stable, with a focus on prime E-commerce growth and changes in consumer behaviour are impacting on occupier
locations and, particularly, retail combined with other demand. Agents report that the development pipeline is contained due
services, such as food and beverage as well as beauty or to restrictive planning laws. Given the high uncertainty in the sector, we believe
well-being, according to C&W. International retailers not prime high street units and prime out-of-town assets are unlikely to see rental
yet present in the Finnish market are looking for prime growth in 2020. We prefer good assets in prime areas and we think retailers
locations. There has been a strong influx of new supply, should be very selective on secondary locations.
meaning even prime rents could come under pressure in The retail investment market in 2019 is likely to have been quieter than in 2018,
upcoming years. Prime products should remain in high and we believe things will not change much in 2020; therefore, prime yields
demand among investors, while the outlook is more should remain at similar levels.
uncertain for other segments.OUTLOOK 2020
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GERMANY
Country analysts: Matthias Düsing & Andreas Trumpp
IRELAND
Country analyst: Hamish Smith
ECONOMY ECONOMY
Germany’s export-orientated economy is exposed to further headwinds and Like the wider Eurozone region, Oxford Economics expects the Irish
deteriorating business sentiment as global trade falters and technological adaptation economy to slow but to remain one of Europe's fastest growing
pressure in the manufacturing sector mounts. On the upside, robust labour market economies. While a no-deal Brexit is a risk for the Irish economy,
fundamentals are keeping domestic demand firm, although GDP growth slumped in the chance of this outcome appears to be receding.
2019. Consensus Economics predicts GDP growth to be close to 0.5% for the year
overall and does not expect a dramatic improvement in 2020: growth of 0.8% with a
possible spillover of the current industrial downbeat into the service sector.
OFFICE
The Dublin office market has been characterised by strong occupier
demand, particularly from the tech sector. Coupled with a lack of new
OFFICE development, this has put downwards pressure on vacancy.
Excess demand in Germany’s top seven markets (Berlin, Cologne, Düsseldorf,
However, the market appears close to a turning point. Completions
Frankfurt, Hamburg, Munich, and Stuttgart) is poised to endure. Healthy occupier
are set to rise sharply over the next couple of years, although Savills
demand is stemming from positive office employment growth, the expanding tech
Research notes that net additions will be lower due to demolitions and
sector and corporate consolidations. Savills Research expects average vacancy rates
withdrawals from the market.
to stay at the low level of around 3% in the top seven, and even lower in the CBDs.
Combined with restrained construction activity, rental growth is accelerating. Prime But with occupier demand likely to slow on account of weaker economic
yields are well below the 3% mark, and likely to compress further. activity, vacancy is likely to start edging higher. While this might not put
immediate pressure on rental values, we think there is an increasing risk
We favour multi-let core/core-plus assets in the CBDs of the top seven markets,
that rents could come under some pressure over the next few years. As
well-connected fringe-of-CBD locations with asset management and rent reversion
a result, even with Dublin office yields among the highest in Europe, we
potential as well as prime assets in major German provincials.
remain cautious about the prospects for the sector.
LOGISTICS
LOGISTICS
The German logistics sector remains investors’ darling. Occupier demand is still
Dublin’s industrial and logistics sector continues to benefit from strong
robust given its underlying sector diversity. Scarcity of development plots,
demand and a lack of available Grade A space, C&W reports. While
restrictive zoning, planning and construction sector capacity constraints are
occupier demand is likely to slow, the demand-supply imbalance for
keeping the supply side on the brake, fuelling product scarcity and capital value
good quality space seems unlikely to dissipate in the near-term. This
growth. Although the share of speculative development is picking up slightly, the
bodes well for further rental growth prospects.
foreseeable pipeline is largely pre-let. Backed by market size and high liquidity,
investor confidence remains high. Prime yields are at 3.80%, with further downwards With yields around 5%, industrial and logistics assets around Dublin’s
potential, according to BNPPRE. M50 ring road and main arterial routes remain interesting prospects.
Core and core-plus assets with strong covenants in well-connected, established
locations and second-tier markets with an interregional function remain our focus.
RETAIL
Ireland’s strong labour market and a steady pick-up in wage growth
RETAIL have supported the retail sector. However, consumer confidence
fell sharply in 2019, to below the long-term average. While Brexit
In spite of wage inflation, low saving rates and positive domestic demand outlooks,
uncertainty might explain some of this decline, lower confidence is likely
structural drivers and weakening consumer sentiment are putting high pressure on
to be a headwind for the retail sector. A number of retailers continue to
occupiers and landlords to adapt. New lease models necessitate increasing asset
be active in the market, although there is also considerable noise from
management activities. High street assets and shopping centres, which attune to
other retailers looking at ways to reduce store numbers and achieve a
these challenges by creating mixed-used destinations with food and beverage as
leaner cost base, according to C&W.
well as consumer goods anchoring, will remain competitive.
One area performing well is retail parks, according to Savills Research,
We maintain our positive view on food-anchored retail parks and supermarkets in
supported by residential development. With house price growth slowing
dominant locations to secure stable income streams. We also remain positive on
to more sustainable rates, according to Capital Economics, retail parks
high street assets in the top seven and major provincials with competitive formats
located close to large catchments and with limited nearby competition
and sustainable rental levels.
could offer potential investment opportunities.OUTLOOK 2020
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ITALY
Country analyst: Matteo Vaglio Gralin
LUXEMBOURG
Country analyst: Judith Fischer
ECONOMY ECONOMY
Oxford Economics predicts that the Italian economy will grow by just 0.3% in Luxembourg’s economy will likely grow by 2.8%
2020, having almost stagnated in 2019. A new pro-European Italian government in 2020, Oxford Economics projects, outpacing
was formed last September and needs to push for more fiscal stimulus in order to Eurozone growth notably. Due to the robust labour
boost growth. Assuming that it does lift government spending, Oxford Economics market and rising wages, consumer spending
expects the fiscal deficit to increase in 2020 but to remain within the 3% euro is likely to remain solid, but external risks are
convergence threshold (Maastricht criteria). dampening the outlook for exports and investment.
OFFICE OFFICE
Milan is our top pick. We expect it to keep performing well in 2020, sustained by After a robust office development pipeline
strong fundamentals that are above the national average and comparable with throughout 2019, PMA expects office completions
other main European cities. We think demand will remain driven by quality, image in 2020 of 103,000 square metres (sq m), or 3.3%
and flexibility. We anticipate that vacancy rates of the core submarkets will remain of current stock. INOWAI Research expects office
almost stable and prime rental growth to remain on a solid path in 2020, although vacancy in Luxembourg to stabilise below 4%, with
PMA reports rising completions. Rome is our second choice as PMA expects the CBD, Kirchberg and Station recording vacancy
positive rental growth in 2020 (over 1%) and low new supply.
rates below 2.5%.
We also expect a dynamic office investment market and competition for assets to
We like office buildings in the key markets as the
keep yields at similar levels.
supply-demand dynamics are supporting rental
values. However, due to the small market size, there
may be limited opportunities.
LOGISTICS
We expect a slight upwards pressure on rents to continue in 2020 given the lack
of quality space, while new high-quality completions should reduce the imbalance
between demand and supply. We expect prime yield compression to continue in
2020, as investor interest (both national and cross-border) is solid, particularly in
northern Italy and the Rome area. Moreover, logistics yields look attractive when
compared to other sectors.
RETAIL
We expect high street retail (especially the luxury segment) to perform well
in 2020, particularly in large cities such as Milan, Venice, Florence and Rome,
supported by strong tourist flows (over 62 million visitors to the country in 2018,
the UN World Tourism Organization reports). Selective opportunities remain in the
out-of-town segment for the best assets in prime catchments. The supermarket
sector is also attractive given the large size of the grocery market. According to
Euromonitor International, Italy was the fourth largest market (by retail value) in
Europe in 2018.
ALTERNATIVES
We like student housing. Demand is consistent and increasing, while the market
is highly undersupplied. We also like retirement housing due to favourable
demographic trends (a high percentage of the population is over 75 years old,
Oxford Economics reports) and a lack of assets. Hotels are also appealing as there
are opportunities to exploit a consolidation of current operators. These segments
offer stable income, low return volatility and good portfolio diversification, which is
attractive to investors.You can also read
