UK real estate gloom brightened by opportunities - PWC/ULI

The real estate crisis is set to get worse, according to participants at a real estate seminar organised in London by PricewaterhouseCoopers and the Urban Land Institute. The event, which presented the findings of their recently published report Emerging Trends in Real Estate Europe, took the form of a panel discussion to consider the implications of the survey for the UK.

According to the Emerging Trends report, respondents to the survey see a real estate capital markets crisis turning into an occupiers crisis as Europe slides into recession. The UK was seen as particularly vulnerable. Mike Slade, chief executive, Helical Bar said: 'There are no occupiers. There is no one about. We need occupiers. Until we have occupiers we haven’t got a market.'

Robert Houston, global head of real estate investment management at ING RE, added to the gloom and doom: 'We have a generation of people in the UK who don’t 'do pain'. Taking the UK and Europe as a whole, they are only 25% of the way through the down-cycle. Unfortunately, there will be much more pain along the way.'

Despite the general sense of pessimism, there are also potential opportunities, according to Fredrik Elwing, managing director Credit Suisse. 'If you followed consensus view in the UK a year ago, you would have invested too soon. If you follow the consensus view now, you may miss some early investment opportunities.'

The UK was seen to be further down the road to realistic pricing, with values having fallen there faster than elsewhere in Europe. Houston commented that the 'UK real estate market is more open than anywhere else.'

Stephen Barter, chairman of the Urban Land Institute in London, added in his closing comments to the seminar: 'The UK offers property values not seen for over 20 years, and interest rates at levels never seen before. But for investors and occupiers to plan, there needs to be financial stability, and an urgent need for government, both as policy-maker and now shareholder, to explain the new game plan for bank behaviour and regulation.'

John Forbes, EMEA real estate leader at PWC, said: 'It is going to be an extremely challenging year for the industry. What is positive, however, is that we appear to be moving away from hand-wringing about how we got here and instead, focusing on what we need to do to through and out the other side.'