The Age of Analytics

• Bull and Bear meet up to discuss the release of the MSCI/ IPF UK Quarterly Market Results for Q1 2023 which took place on Thursday morning.

• The Index total return for the year to 31 March 2023 was -13.1%, with all sectors, barring healthcare, recording negative returns over the twelve-month period.

• Encouragingly, however, the Index posted an improved total return of 0.1% for Q1 2023, with capital value falls appearing to have moderated. Retail was the best performing sector over the quarter, last ranking top back in 2009!

• The session concluded with a fascinating discussion about the creation of the UK Property Index back in the mid-1980s and an assessment of how the real estate industry, and in particular its reliance on data, has evolved since.

• Enjoy your Sunday.

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Coronation Special

• Bull & Bear are keeping things light this week as they celebrate the Coronation of King Charles III.

• They've decided to discuss some of the more interesting and quirky facts they've learnt this week about the King's property portfolio.

• From owning a branch of McDonalds to paying Prince William rent, some of their learnings may surprise you.

• Enjoy your Bank Holiday Sunday.

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Big Business

• Bull is feeling rather smug at having been invited to Rishi Sunak’s Business Connect Forum.

• He is convinced that the route to solving the UK’s financial problems is to promote Big Business.

• Bear, on the other hand, has some startling statistics that show how hugely influential SMEs and micro-businesses can be on the economy.

• However, both of our protagonists are rather surprised, and disheartened, at how little real estate services contribute to the bigger picture.

• Enjoy your Bank Holiday Sunday.

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UK plc - Ageing Gracefully?

• Against a backdrop of strikes and industrial action, Bull and Bear discuss the UK labour market and the potential impact of demographic changes on UK productivity in the future.

• They conclude that a focus on the unemployment rate masks a recent rise in the number of people classified as "economically inactive", a figure that will only increase as the working-age population in the UK declines.   

• These wider demographic changes impacting the labour market and the Old Age dependency ratios will inevitably have implications for the property sector over the next 20 years.

• Enjoy your Sunday.

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Time for Bottom Fishing?

• Bull and Bear meet up to discuss the state of the UK commercial property market following the end of Q1 2023 and the Easter break.

• Property investment volume numbers show that investors remain in wait-and-see mode. Only £5.6bn was transacted in Q1, making it the lowest quarterly volume since 2009.

• Investor confidence has, however, started to return. Pricing levels have generally plateaued, but in some sectors, such as retail warehouses and regional offices, yields have sharpened. There are still, however, some sectors where further yield softening should be expected. 

• There is an estimated $US811bn in dry powder sitting in the accounts of unlisted funds globally waiting to be deployed. 

• Enjoy your Sunday.

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Happy Easter

• After a challenging first quarter to the year, Bull and Bear have been given this weekend off to enjoy the sunshine, watch The Masters and, obviously, to eat far too much chocolate.

• They will return at the usual time next Sunday. In the meantime, The Weekly would like to wish you and your family a very happy Easter Sunday.

UK SWOT Analysis

• Bear is particularly excited to have received an out-of-the-blue invitation to meet the Chancellor of the Exchequer.

• To ensure that they present a balanced view, Bull and Bear agree to draw up a SWOT analysis of the market.

• After three months of mixed fortunes, our protagonists share their hot tips for the remainder of 2023.

• However, both of them pay a high price for not being attentive to the passing of March (end Q1) into April (start Q2).

• Enjoy your Sunday.

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Retail Revival?

• Bull and Bear revisit the case for retail investment, particularly in the forgotten High Street sector.

• They discover that the e-commerce penetration rate in the UK has fallen back since the COVID-19 pandemic, with online pure-play retailers now facing their own set of challenges.

• Not only has the sector now been re-based and re-priced, the retailers who have survived are also 'battle-hardened' for the future.

• They conclude that if investors can buy high-quality retail assets and potentially aggregate ownership, they’ll benefit from both a high income return and good capital recovery prospects.

• Enjoy your Sunday.

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Singapore Spring

• Bull and Bear meet up to discuss their trip to Singapore, the current trends over there and, most importantly, to assess whether they are likely to have an impact on the UK property market.

• Singapore is an incredible country but currently ties with New York as being the world’s most expensive cities to live in (according to the Economist Intelligence Unit Worldwide Cost of Living 2022 Report).

• Singapore is making steady inroads towards achieving its' aim of becoming Asia’s dominant financial hub. 

• There has been massive growth in the family office market in Singapore, with families coming not just from Asia, but from Europe and America too.

• Whilst there clearly remain some question marks regarding the pound, there is no doubt that UK real estate remains very much on the Singaporean investor' radar. The UK property industry needs to be ready to receive them and to react accordingly. 

• Enjoy your Sunday.

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A Compelling Opportunity

• Our friendly protagonists are making themselves at home at The Bull and Bear on Pekin Street close to Singapore’s Chinatown after a rather traumatic flight from Heathrow.

• They are part of the St Bride’s Managers’ team who are in town to promote the case for UK property investment.

• Upon exchanging their briefing notes, they conclude that the key messages are as follows:

1. Whilst acknowledging that the recent political and economic backdrop has been challenging, there are signs that the worst is now behind us.

2. The 41% fall in the value of sterling against the dollar over the past 15 years provides an attractive starting base for Singaporean-based investors.

3. The UK have been first movers in hiking property yields and history shows that it will probably be the first European market to recover.  

4. With private equity firms currently priced out of the market by the cost of debt, 2023 is likely to present a compelling window for investment for cash-based investors.

• Enjoy your Sunday.

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The Regional Selection

• Bull and Bear review the case for office investment in the UK's most dynamic regional cities.

• They are encouraged by the strong rental growth for Grade A office space. 

• They caution, however, against a 'catch-all' approach to regional office investment.

• With a clear divergence between prime and average rental growth performance, it is clear that investors will need to be selective.

• Enjoy your Sunday.

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London (Offices) Calling?

• Bull and Bear meet up to discuss the London office market and explore whether it should be on investors’ buy-lists.

• The Central London office leasing market in 2022 was broadly in line with the ten-year average, despite a subdued end to the year.

• Prime office rents across all the UK’s key cities are now growing again. The very low availability of prime space, coupled with the appeal of high-quality buildings located in the most sought-after areas, is driving rental values up.

• Bull and Bear don’t foresee a stampede for London assets over the next few months. With plenty of capital sat on the sidelines ready to be deployed, the revised pricing should offer significant opportunity for buyers later in 2023. 

• Enjoy your Sunday.

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The 'Off Piste' Edition

• Bull and Bear venture 'off piste' to review the vertigo-inducing property prices in some of the world's best ski resorts.

• They discuss the challenges posed by climate change, the need for a year-round resort offering, and the new breed of executive sNOwMAD driving demand for mountain living. 

• They conclude that investment in ski destinations that show resilience to climate change and offer dual-seasonality appeal remains a safe bet.

• Enjoy your Sunday.

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A Taxing Moment in Time

• Bull and Bear are having a taxing time.

• They use their Weekly get-together to analyse how the Government spends our money and from where the tax originates.

• Whilst Income Tax, Capital Gains Tax, National Insurance, Corporate taxes and VAT are the ‘big-hitters’ at the national level, Council Tax and Business Rates provide the life-blood for local authorities.

• The revaluation of rateable values comes into effect in seven weeks’ time. Yet, for many other pubs and retail outlets, it cannot come soon enough.

• Enjoy your Sunday.

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