LaSalle Investment Management is targeting London and the UK in 2021 and believes the market is set for its strongest three-year period of returns from real estate since 2016.
Julian Agnew, head of UK, said the manager has dry powder from overseas equity investors, ‘principally for value add investing, and we are active now trying to invest.’
At a webinar on 4 February, his colleague Simon Marx, head of UK research and strategy, said the firm is now ‘really keen on London, and very confident in the city’s position over the longer term.’
LaSalle’s UK investment strategy is to consider both ‘clear winners’ from structural changes such as the logistics, residential, life sciences and data centre sectors and retail and office assets, the latter being on what Marx called ‘the other side of the (investing) chasm’.
‘It is clear and obvious why there are winning sectors but it is also a very expensive way to invest in real estate,’ he continued. ‘If you ignore the other side of the chasm, the challenged sectors, you are ignoring at least half of the investment universe.
‘The point is, to invest in UK real estate, you really have to operate on both sides of this (sector) chasm.’
LaSalle believes there will be ‘winning’ office and retail assets. ‘There are going to be retailers that survive and adapt, and pricing is looking attractive for winners there. So investing into retail at some point in 2021 will be important.’
In terms of future returns, the manager is calling the bottom of the UK market in the next six to nine months. ‘It is a good time to invest to capture growth,’ Marx said. ‘Assuming you buy in 2021 you will capture three years of growth in 2022-2024.
'That is going to attract investors back in. We need to get through these last few months of really strong coronavirus concerns but at some point we're going to be looking at quite strong interest in UK real estate.’
LaSalle, which has £12.1 bn AUM in the UK, is also gearing up for a big push into impact investing there, led by head of UK real return assets Philip Nell. Nell said the business is ‘building a fund strategy’ for what is ‘an incredibly compelling opportunity.’
