Global insights. One firm
Matthew White

What are the main issues or lessons you'd stress to clients?

We can expect volatility to continue for the foreseeable future, so adopting strategies to manage uncertainty will be key to navigating the complexities of the market. It is important to be adaptable and forward-thinking in identifying opportunities. Incorporating flexibility in the development and use of real estate assets will help to maximise values according to evolving market demand. Alternative asset classes are being driven by macroeconomic factors, demographic changes and technological progress, offering resilience during downturns. There is significant dry powder ready to be deployed and pent-up demand for investment opportunities, so being alive to the sources of capital flows when the market turns will be essential.

What are the main trends in your practice area currently?

The real estate sector is navigating through significant macroeconomic challenges caused by the current geopolitical volatility, including trade tensions, supply chain disruptions and constrained growth.

But, despite these headwinds, activity is buoyant across a range of sub-sectors. Prime offices in UK and European locations close to major transport hubs continue to attract the greatest demand. Limited supply at the top end of the office market is sustaining high rents, and lease events are driving tenant interest in high-quality premises that are attractive to staff and meet the highest ESG standards.

Also, UK Government reforms aimed at streamlining the planning system are generating renewed interest in residential and mixed-use developments on 'grey belt' sites, as well as nationally significant infrastructure projects, although viability concerns are impacting spades in the ground deliverability.

Industrial investment remains resilient, driven by e-commerce and logistics. Other alternatives such as data centres, student, co-living and cold storage are expected to remain popular as investors seek value outside traditional asset classes.

We have been very busy on hospitality and leisure transactions, and retail is beginning to look more attractive following market corrections in the last few years. Retail spaces are increasingly incorporating experiential elements to attract customers.

Real assets in the wider energy and infrastructure sectors offer increasingly attractive returns and are generating significant work for us in conjunction with our corporate, finance and energy teams.

How might these trends develop moving forward?

Anticipated reductions in central bank rates should stimulate investment activity, leading to an improvement in market conditions across all sectors. The tendency for investors to 'wait and see' is holding back transactions right now, but real estate assets in the UK and Europe are seen as stable/safe havens for US and Asian private capital investors, so we anticipate more transactions as investors seek out opportunities. Although there is little evidence of major distress activity, and banks are not typically stepping in, we expect refinancings and fund closures to continue to generate a strong pipeline of work.

Matthew White managing partner, real estate, UK and EMEA, based in London.