Investment Strategy Insights

UK shop prices suggest slowing UK growth ...

Problems with US office now showing up in AAA rated CMBS ...

Commercial Real Estate Crisis Hits AAA Rated Bonds Tied to Office Buildings - Bloomberg

Supply....

Here you have a classic example of how submarkets can be impacted by differences in the amount of supply that gets delivered ... and also a stark reminder that even sectors and markets with solid demographic tailwinds can get overwhelmed in the short run if you build too much !

Power ...

Remembering of course that this is current power usage ... it doesn't yet include what is going to get built over the next decade ...

If France and Germany are slowing it is hard for Europe to grow in aggregates but ...

There are some pockets of really strong growth and if rates keep coming down - they will only strengthen ... this actually may mean we see some interesting dynamics in government bond markets ... Germany's is on a trajectory to a 40% deficit and the SEU position may continue to

This is a major secular theme ...

Great chart - we like to think of this as the economy 'balkanising' into different sphere's of influence ... I wouldn't use the same terms though ... I think China is way more important economically and geopolitically than Russia and the accepted term for the '

I'd never say never ...

But I would agree that it can only really be via a tail event  in this coming cycle ...

Echoes of the 1990s ...

This was the last time we saw cutting into a reasonably robust labour market ...  and the result was the same ... interestingly back then the curve was basically flat until LTCM blew up ... Oh and BTW ... the same fears about resurgent US inflation were at the heart of that 95 reaction

Climate change costs ...

Worth remembering that population 'peaks' are just as visible in other parts of the world as they are in Europe ...

Mag 7 transforming ...

With this will come different stock price behaviours ...

Nice piece of analysis from our friends at Green Street ...

We've spoken about this alot in the past - Europe and the US behave differently when it comes to urbanisation - Europe has been slower moving but few cities have collapsed in on themselves - growth may be a bit slow but 70% of the top 30 cities

The implications for monetary policy are clear ...

Rates are going to come down in Europe - perhaps further and faster than people think ...

Demographic trends are seen as rock solid ...

But demographers that produce forecasts are still vulnerable to errors ...  and the errors appear to be far higher in emerging economies where the fall off is precipitous ...Peak population may be coming sooner than we think (ft.com)

Value of something built vs cost of building something new?

Very Wicksellian ...

I've always liked the conceptual idea that the cost of capital should over time equate to the return on it ... if the return on a $ invested in the economy is nominal GDP then ... in equilibria ..

Strategic reshoring ...

One of this headlines?

Nov 2009 ...  October 2024 Brazillian stocks went sideways for a decade from the end of 2009 ...  just saying ...

What ever you might think of Germany from a macro perspective ...

It is the ONLY developed market that is looking after the interests of its bond holders (and almost by definition its real estate owners)...

Rate cycle is now fully underway ...

Rates coming down and stocks are expensive ...

Time to think about allocations?

Time to put Europe first when it comes to allocations??

If this chart is correct then our curve will resteepen ...  Europe's CRE market will strengthen quickly in 2025 and transaction flows will be surging - our medium term operating fundamentals will be strong (by virtue of low vacancy) ... and Europe will offer a more diverse range of opportunity

Breaking the neck ...

Is one way to put it .... but you do need to be careful you don't paralyse the patient ... otherwise you will find yourself back in QE ...

Coupled with the CPI all of this data looks abit recessionary ...

Interesting slide ...