Ukraine, Stagflation, Interest Rates

Key macro challenges shaping investment sentiment as we enter the final quarter of 2022.
Rising interest rates, FX and valuations, alongside and much more.

Speakers:
Sabina Reeves, Chief Economist & Head of Insights& Intelligence for CBRE Investment Management
Kieran Farrelly, Head of Global Solutions, Real Estate – Schroders Capital
Tom Mundy, Head EMEA Capital Markets Strategy & Research, JLL

Moderator:
Adam, Smallman, Director of Memberships, PEI

We have summarised the key takeaways below:

• US unlikely to enter severe recession due to energy and food independence, however a milder recession could still be on the cards and it could be here to stay for a while.
• Europe is in a much worse position and markets are in unchartered territory.
• China, hasn’t hit a recession but is already in a growth recession due to growth reaching a low 4%. China are able to cut interest rates nor have they run up in government debt, however 30% of the economy is tied up in the property market and this does not stop a lack of jobs and anxiety for people.
• China can also be concerned as the Western consumer is bitten by the cost of living crisis.
• Whilst in the rest of Asia, Singapore is benefiting from safehaven status, and is still consider to be a good place to do business and as a prospective investor, rental price is going up.
• Many countries are also suffering from shrinking working age population, predominately in: China, Japan, Italy and German. This is particularly worrying for China as they are stuck in a middle income country before reaching high income and this causes inflationary pressure.
• On the other foot, robots are likely to being replacing people in jobs in the near future, meaning real estate will have to cater for robotics. This will lead to product and sectorial change to cater for increased energy and automation demands.
• When the panel were asked what’s the best piece of advice? Understand your assets and tenants. Engage in equity research: find out, what’s driving the rent and this will allow you to defend capital value, look at forms of infrastructure that looks like real estate, for example data centres and towers and finally take risks, this market could lead to terrific tactical opportunities.