Despite many macroeconomic and political challenges, the market for operational real estate businesses remained resilient in 2019, and continued to attract interest from a diverse range of domestic and international investors, according to the latest annual report by specialist business property advisor, Christie & Co.
The report, ‘Business Outlook 2020: Focus on Business’ reflects on the themes, activity and challenges of the previous year and forecasts what 2020 might bring across the sectors in which Christie & Co operates, including leisure, hospitality, childcare, healthcare, retail and medical.
We saw increasing demand for our all our services including strategic disposal advice, consultancy and capital valuation services. This increase in activity was underpinned by markets recognising the resilient characteristics of operational real estate, resulting in continued yield compression. Operational real estate has been at the heart of Christie & Co’s activities for the last 85 years.
Ongoing Brexit negotiations continued to impact consumer and business confidence throughout the year, and we observed some investors pausing their interest in the UK market; opting to pursue opportunities in continental Europe. Our teams across the continent were increasingly busy working on many significant assignments, as there was an uptick in interest in the French and German markets.
Despite these headwinds, transactional activity and deal pipelines remained resilient, with demand for properties across our sectors continuing to outstrip supply. Notably, in 2019 we were delighted to complete the sale of 145 Wyevale Garden Centres through 57 individual transactions. The project generated an avalanche of interest, pointing to a strong appetite for investment in markets not previously seen as mainstream. The landmark transaction illustrates our expertise in handling the sale of portfolios across our sectors, creating competitive bidding through a comprehensive sales process. This utilises our extensive regional network, in-depth local market knowledge and seeks bids on an individual, subgroup or portfolio basis to maximise price.
Average prices remained economically positive throughout 2019 across most sectors in which Christie & Co specialises. These are as follows:
Dental: + 5.4%
Pharmacy: -3.6 %
Care: + 5.5%
Childcare: + 4.6%
Retail: + 0.5%
Pubs: + 4.0%
Restaurants: – 2.7%
Hotels: + 0.5%
The business landscape looks even brighter in 2020 and we anticipate a more stable year. Funding remains readily available and competitive in all our sectors, as new lenders seek to establish themselves as reliable alternatives to established high street banks. Additionally, a majority government, with promises of increased investment and infrastructure, and greater clarity on Brexit will influence opportunistic investors to return their attention to the UK, generating positive business activity and growth across the region. We anticipate the demand for properties across our specialist sectors will continue to outstrip supply in 2020.
As a business, Christie & Co celebrates its 85th anniversary this year and Darren Bond will assume his position as the new Global Managing Director, following Chris Day’s retirement.
Darren Bond, Global Managing Director designate at Christie & Co comments, “2020 is a very exciting year for Christie & Co and our team. We find ourselves in a time when interest in all of our operational real estate markets is strong. These sectors should no longer be described as ‘alternatives’, as they now form more mainstream investor demand. With greater clarity on the macroeconomic environment, we anticipate that we’ll see an increase in confidence in the UK market and continued demand across the continent.”