EMEA Living Investor Survey 2024

19

20

CUSHMAN & WAKEFIELD

EMEA LIVING INVESTOR SURVEY

18% OF INVESTORS SAID FORWARD COMMIT/PURCHASE WAS THE MOSTLY LIKELY DEAL STRUCTURE THEY ENVISAGE USING OVER THE NEXT THREE YEARS.

Forward funding also scored highly amongst investors, with 24% of votes. Investors are attracted to its risk profile and the opportunity to build scale quickly. Forward funding also allows investors to have more control of the product and the delivery of the asset. However, in the last year or so viability has challenged the forward funding market. As the cost of debt and construction inflation eases over the next year or two, we expect the forward funding market to pick up.

Forward commit allows investors to build scale quickly, with only a down payment needed when the deal is agreed and the rest of the payment isn’t due until practical completion. However, a forward commit purchase is likely to be less favourable as it doesn’t allow the investor much control over the development of the asset.

Repositioning was the least popular route with only 6% of investors selecting it as their most likely deal structure. This is surprising given the opportunities which are arising in the living sector in response to the surplus office space which is forecast in the coming decade. However, investor sentiment clearly reflects the sluggish take up of real estate repositioning, due to the unpredictable macro landscape, uncertainties surrounding future office demand, the viability challenges discussed earlier, and regulatory and architectural obstacles.