LIVE Report: Emerging Trends - RE Global Outlook

This panel consisted of Meka Brunel, Edward Casual, Lars Huber with Mike Philips as moderater.

Lisette van Doom, The CEO of ULI Europe, summarized the findings of the latest survey done by PWC jointly with the ULI. “With elections in the Netherlands, France and the results in the US and the Brexit vote, we have never seen so much uncertainty before. When you have an uncertain economy there is always a flight to quality. Capital flows remain strong. There is lots of money out there and some funds have been reallocating from stocks – now seemingly near or at the same peak level as real estate. There are some new allocations to infrastructure, student housing, senior housing and residential and other segments, based on technology and demographic changes are driving commercial real estate decisions.”

Lars Huber, CEO European Region, Hines Erope: “The geopolitical risk is leading to more uncertainty and this has driven the need to diversify. We are watching the French election. This can mean opportunity, but for now it simply means uncertainty. When you look at capital flows, we see less Asian capital coming into Europe today. Mostly this reflects curtailing by China. The US is also not that strong of an inflow source to Europe as it could be. Currency risk also remains, however at the same time we don’t see interest rates going up too much beyond recent increases, at least in the short term.”

Meka Brunel, CEO Gencina: “We look more at Paris than at France, and I agree, that around the globe, people are concerned about the French election. Normally people in France wait for election day before doing anything. We wait, we vacation and let time go by. This time however, we are worried about being too slow. The world hasn’t collapsed after Brexit or Trump, at least not yet. That being said, Brexit has not really been implemented yet.”

Edward Casual, Chief Executive Global Real Estate, Aviva Investors: “Aside from Trump, the real estate cycle is expanding. I went to AFIRE with record attendance this year. The signs feel very peakish. At the same time, infrastructure spending could extend to the next recession. But we feel like we are in nosebleed sections (referring the cheap seats in sports stadiums where the air is thinner) and we have been selling off weaker assets, trimming back. But you can’t sell off everything! I agree you need to diversify and be better at your own business, using new and better information.”

Lars Huber: “Brexit not bringing the end of the world gives us confidence that the US elections will also not bring us to the end of the world. We will see a market correction in London but maybe not so bad. By that same token, Trump has not really done anything yet and what he has proposed has actually buoyed up the stock market (lower taxes on corporations) and the same will hold true for real estate if capital gains taxes are reduced.”

Edward Casual: “Parts of London are doing fine, but we believe in London for the long run. This suggests there remains a market, at least in core markets.”

Meka Brunel: “Rents in Paris have not increased much at all. We are now seeing stronger growth in Paris, maybe 1.5 to 2% annual retn growth. Again, there is a great flight to quality in these times. On that measure, demand in Paris remains – we move towards quality and lower risk assets like Paris.”

Meka Brunel: “Logistics is the new way of consuming. The logistics market is growing from the strength of ecommerce and has become much more skilled today versus 10 years ago. We believe you can create value with the best properties in the best locations, or at least maintain value. Current yields will stay low as this is a growth area.”

Edward Casual: “We are probably at the lowest levels of current yields for a while. The prices feel quite high. Commercial real estate is benefitting from past performance and the fears in the stock market.”

In closing, the entire panel seemed to agree that prices were near peak, with different favourites for places to ride out a correction. No one seemed to suggest getting totally out of commercial real estate, in part, because there is no safe place to go…


About Author

Norm Miller, PhD is the Hahn Chair of Real Estate Finance in the University of San Diego School of Business and is affiliated with the university’s Burnham-Moores Center for Real Estate. Miller is also a faculty and board member at the Homer Hoyt Institute. Miller has driven a TESLA since 2012 and currently has a model with autopilot features. He has not moved further from work and does not intend to do so. His website is and he can be reached at

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