Cushman & Wakefield RETHINKING: The Shape Of Real Estate 2040

LIQUIDITY = GOLD

MSCI UNIVERSE BY SECTOR

At a fundamental level, increased requirements should drive development. However, it is much more than this. The make-up of real estate determines the success of our cities as well as the flow of capital; and with that, the liquidity and value of UK real estate. While there will be an ebb and flow to this, the changes we are projecting will lead to a significant re-weighting of the investor universe. Investors may quickly expand their interest in previously underfunded, undersupplied, or stagnant sectors in the coming years. In 2005, 97% of institutional capital was invested in the industrial, office, and retail sectors. By 2022, this had reduced to 80% as other sectors including hotels, leisure, student housing, healthcare and PRS have expanded. In the aftermath of the GFC, almost 90% of the MSCI universe remained allocated to the office and retail sectors. This has reduced in time to now below 50%. While projecting values to the 2040 time horizon is not within of our scope, both these historic trends and our analysis suggests that this rebalancing will hasten rather than slow.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

2005

2010

2016

2023

RESIDENTIAL

RETAIL

OFFICE

INDUSTRIAL

HOTEL

OTHER

SOURCE: MSCI

RETHINKING: THE SHAPE OF REAL ESTATE IN THE UK

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CUSHMAN & WAKEFIELD