Investing in the Right Sectors

• Last week, Bull shared the first part of a trilogy of musings from when he and his mates (Mal, Nick and Steve) from the old days were on a recent golfing trip to Mallorca.

• His first reflections were on valuations and performance indices.

• This week, he focuses on how demographics will influence the success, or failure, of certain types of assets.

• He concludes that, whilst some sectors are plainly more popular than others, it remains important not to lose sight of balance and diversification.

• Enjoy your Sunday.

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A Reflective Bull on the Rampage

• Whenever Bull returns from his holidays, everyone knows to run for cover. This time is no exception.

• Whilst away, he met up with some of his old mates and had a good old chinwag about the state of the market.

• Their Reflective thoughts, and some spirited guidance, will be revealed in The Weekly over the next couple of weeks.

• This week, Bull focuses on the use and abuse of valuations and performance indices and why it is important they reflect reality.

• Enjoy your Sunday.

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An Open-Ended Future?

• In light of some recent negative headlines, Bull and Bear discuss the future of the open-ended UK property fund sector.

• Over the last month, St Jame's Place has decided to suspend dealing in their £826 million property unit trust, M&G have set out plans to wind down their £565 million Property Portfolio fund and Canada Life Asset Management has suspended withdrawals from one of their funds.  

• There continues to be a mismatch between investor demands (for daily trading) and the liquidity of the underlying assets. 

• The property industry still awaits the outcome of the FCA's regulatory cogitations, but in the meantime have been working on possible solutions and alternatives including Reserved Investor Funds.

• Enjoy your Sunday.

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South Africa vs New Zealand

• Half term has taken its toll on Bear, so Bull has agreed to have a slightly shorter chat this week.

• In light of the Rugby World Cup final taking place between South Africa and New Zealand last night, Bull has done some research on both country's property markets.

• He presents his findings to Bear, who unsurprisingly can't be convinced to invest in either of those locations ahead of his safe havens of London and St Bride's UK Key Cities.

• Enjoy your Sunday.

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Single Family Housing

• Bull and Bear put aside their disappointment at England's last gasp semi-final defeat to South Africa in the Rugby World Cup, to focus on the Single Family Housing market.

• Bull, at least, is excited by the growing number of opportunities to invest in a sub-market that's underpinned by high occupancy rates and resilient income streams, as well as offering investors the chance to make a meaningful contribution to the UK's housing supply. 

• Enjoy your Sunday.

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Bottom of the Market?

• Bull is convinced that we have reached the bottom of the property market cycle, and it is time to buy.

• Bear is more cautious. He is particularly concerned that adverse news, both on the domestic and global fronts, may cause 10-year gilts to remain at, or above 4% for the remainder of the decade.

• Without a suitable risk premium between bond and property yields, Bear suggests that a sustainable recovery is in jeopardy.

• Notwithstanding their differences, and after undertaking a SWOT analysis of the market, they reach a happy conclusion on what to buy and what to avoid.

• Enjoy your Sunday.

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Manchester - Still Top of the League

• With the Government's announcement this week that they will be scrapping the remaining plans for HS2, Bull & Bear meet up to discuss what this means for Manchester.

• In line with St Bride's own UK Key Cities Index, a recent CBRE study revealed that Manchester tops a number of areas, primarily because of it's growing working-age population and strong expected GDP growth.

• The outlook for a number of the city's real estate sectors, including offices, urban logistics and student accommodation in particular, look very encouraging.

• Bull & Bear conclude that with or without HS2, Manchester is still one of their top UK Cities and wouldn't hesitate to continue to invest in some of its most promising sectors.

• Enjoy your Sunday.

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Golf Courses - A Hole-in-One Investment?

Bull has caught Ryder Cup fever and today leads a discussion on the health of golf. Some of the main takeaways include:

• Golf has seen a stunning rise in adult participation across the world, up by 34% over the last seven years. 

• There are an estimated 1,790 golf courses in the UK, with Yorkshire being England’s golf course hot spot.

• 11,000 acres of land in Greater London is given over to golf. That’s more than double the size of the London Borough of Hackney. 

• It’s not just those with the housing shortage on their agenda looking at golf courses as solutions to their problems. There have also been suggestions that some could become allotments, biodiverse green space or even urban farms. 

• Despite the rise in demand, lots of golf clubs across the country are having to evolve and enhance their offerings simply to stay afloat.

• Golf courses remain desirable for some investors and are expected to remain so if the growth of the game continues.

Enjoy your Sunday and come on Team Europe!

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Pausing Net Zero

• Whilst Bear expresses his deep frustration with the Government's changing policy on climate and perceived lack of global leadership on the issue, Bull believes that it is up to the property industry itself to drive the net zero transition for the built environment.

• Bull reassures Bear that, even if the politicians dither, the industry is already working together on ways to decarbonise our buildings, using exciting technological innovations as the enabler.  

• Enjoy your Sunday.

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Bull's Top Picks

• The imminent visit of a prospective investor from Singapore reveals some significant differences in Bull and Bear’s thinking about the best time to re-enter the market.

• Bear is worried that, despite the sharp fall in capital values over the past 12 months, the spread between property yields and gilts is still too thin.

• Bull simply sees the current apathy towards the market as an excellent opportunity to capture some top assets.

• The West End, Industrials within the M25, Oxford and Cambridge and selective Student Accommodation are his top targets.

• Enjoy your Sunday.

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Scrambling Students

• Bear's eldest cub is off to university at the end of the month, so Bull and Bear take the opportunity to have their annual discussion on the state of the UK's Purpose Built Student Accommodation (PBSA) sector.

• Rising student numbers, in conjunction with a lack of new development, has left students scrambling for space and universities offering desperate short-term solutions in some cases.

• That being said, they've found that the supply/demand imbalance has led to significant rental growth, steady pricing and consequently a resurgent investment market.

• Enjoy your Sunday.

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Subdued Summer

• After a well-deserved break in August, Bull and Bear meet up to discuss what they have missed. They conclude that they haven’t really missed much at all, with the commercial and residential property markets remaining very quiet.

• The UK commercial property market saw a third successive quarter of sub £10bn volume for the first time since 2012.

• BNP Paribas Real Estate expect just £41bn to be invested in the UK commercial real estate market this year, which would be down by a third on both last year and the long-term average. However, pressure on lenders is starting to build, and banks are being increasingly challenged to make a choice between holding their nerve or coming to the market with consensual sales.

• Opportunities are, therefore, likely to present themselves for those with the skill and appetite to capitalise... so don’t write off the rest of 2023 quite yet!

• Enjoy your Sunday.

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Artificial Intelligence

• In their final discussion before the summer recess, Bull and Bear employ the help of a friendly Chatbot to help them understand the full potential of Generative Artificial Intelligence.

• They also explore the wider implications of AI on property, covering everything from 'intelligent buildings' and AI-powered underwriting processes, to geographical shifts in market growth as AI companies and investments cluster around established tech markets.   

• They discover that, whilst it's not yet perfect, the potential to apply AI across the property sector is mind-boggling!

• Enjoy your Sunday.

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"Baz-Bull"

• Bull has been enthralled by this summer's sport.  He's been particularly captivated by England's adventurous and entertaining approach to the Ashes.

• As a convert, he believes the UK property industry could learn a thing or two from their refreshing, energetic and courageous brand of cricket.

• Bear is challenged to a Baz-Bull property cricket match.  Six balls, six questions.  Winner takes all.

• Despite some cunning bowling, Bull audaciously slaps the ball around the ground.  It is hard not to enjoy his bravado, but is his approach really the way forward?

• Enjoy your Sunday.

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