Spring 2021 Issue - 28

2021 ULI Virtual

Europe
Conference

More than 1,000 real estate professionals tuned in for
ULI Europe's annual flagship event, held in February.

Marnix Galle, Lisette van Doorn

ULI Capital Markets Forum: What a Difference
a Year Makes
As part of the 2021 ULI Virtual
Europe Conference, high-level ULI members
from across the global finance and investment
sector gathered virtually to discuss capital
flows, real estate market dynamics, and debt
and equity markets. The invitation-only gathering, limited to 35 attendees, was held under
Chatham House rules and not for attribution.
ULI Europe Chairman Marnix Galle and ULI
Europe CEO Lisette van Doorn attended, along
with other members of ULI Europe's leadership team.
To kick off the two-hour discussion, an analysis by Avison Young of " 10 Trends for 2021 "
was presented. Among the trends raised were
an acceleration of deglobalization, shifting
from " just in time " to " just in case " deliveries, and more interest in the hyperlocal, also
characterized as " love thy neighborhood. "
Other key takeaways from the event include
the following:
l Retail, student housing, and hotel properties
were cited as the worst performers given the
start-and-stop status of national economies
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and international travel, with a few exceptions. In the retail segment, grocery-anchored
developments have continued to perform.
l So far, debt markets have been healthier
than might have been expected given the
unexpected downturn, with few missed payments or outright defaults. In some instances,
participants said, landlords proactively offered
a rent holiday or a delay in payment for tenants known to be in distress. The key issue
is to make assessments on the quality of
the tenant. One participant anticipated an
increase in defaults in 2021 if conditions do
not improve.
l Government stimulus certainly helped keep
businesses afloat. Also, the larger banks were
not as overextended as they had been in the
2010s, and governments have been quick to
accommodate to prevent structural impact,
which can help a quicker recovery.
l Inflation is not seen as realistic a near-term
concern in Europe as it may be in the United
States or in the Asia Pacific region when compared with the risk of damage to the economy.

l Since the start of the series of lockdowns
in the second half of 2020, there was already
less lending occurring year over year, as the
Bank of England and the European Central
Bank have gotten less lenient about capital
requirements.
l Some investors remained hungry for yield,
willing to take on more risk and in some cases
more aggressive bidding is seen. There is a lot
of pent-up demand, but the question is how
this will be deployed. It is all about the specifics of a deal, with a key focus on core, location, and quality of the tenant and sponsor.
l One of the participants said that while logistics and data centers had done very well from
a pricing perspective, as everyone gravitated
toward these sectors in their search for yield,
it was beginning to look like markets had
overshot, causing some investors to begin
looking elsewhere or to sell.
l From a capital flows perspective, the trend
was observed that real estate also seems to
have come on the radar of other " allocators
asset classes, " such as fixed-income and

SPRING 2021

3/31/21 7:07 PM

Spring 2021 Issue

Table of Contents for the Digital Edition of Spring 2021 Issue