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UK Real Estate Horizon Scanning 2020

With 2020 now upon us, we examine the key topics we expect to have an impact on derivatives and structured products over the coming year. Explore the tabs below to see our high level guides on what to look out for across interest rate reform, EMIR, SFTR, the Prospectus Regulation, PRIIPs, Sustainable Finance, CSDR, and Brexit.

Retail insolvencies

2019 was another challenging year for the high street with total insolvencies in the wholesale and retail sector increasing by 3.2% to 1,866 in 2019 Q1-3 from 1,808 in the same period in 2018, the highest for the period since 2013. As a result, there have been record high levels of store closures in 2019. Amidst continuing uncertainty regarding business rates, falling consumer confidence, the rise of the living wage and online competition, the challenging times in retail look set to continue into 2020.

"… record high levels of store closures in 2019… challenging times in retail look set to continue into 2020".

MEES

The recent Government Consultation on the Minimum Energy Efficiency Standards (MEES) sets even more ambitious targets for lettings of commercial properties than previously expected by proposing an increase from the current minimum E EPC rating to a C or even B rating by 2030…This new proposed trajectory as a stepping stone to achieving net zero carbon by 2050 will have a big impact for many landlords and investors despite the long lead time for the changes to be introduced.

"…there has been a steady fall in the percentage of F and G-rated certificates...".

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Co-living

Society is changing; the way we communicate with each other, the way we work and the way we live. The Real Estate industry is responding to and anticipating changes in how people are choosing to live and what people need and expect from the built environment, not least because the success of a project is increasingly measured by its social impact ahead of its bottom line. Change manifests itself in relation to three forms of living; co-living, later-living and multi-generational living. Of course these aren’t the only areas experiencing growth or change, but the common thread is that they are all driven by fundamental changes in underlying human behaviours.

"The Real Estate Industry is responding to and anticipating changes in how people are choosing to live...".

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Real Estate Funds

One of the prevailing trends in the current real estate fundraising cycle is the high number of perpetual-life and open-ended funds entering the market. What are the reasons behind this trend and what are the advantages and challenges of these types of fund, both to fund managers and investors? 

"…managers are increasingly utilising open-ended vehicles for strategies targeting a higher rate of return…".

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Telecoms

The new Electronic Communications Code (the Code) was already showing its teeth when we commented on the new “human right to mobile telephony” this time last year but developments in 2019 have seen the Code really starting to bite coupled with the continuing political drive to ensure wider and faster broadband access. The Code is clearly here to stay, so what are the key developments in 2019 that landowners need to know?

"… there has to be a balance struck. We all want better phone signal. We all want to be able to download things much more quickly so we have to have the infrastructure there”. Nicky Morgan (Secretary of State for Digital, Culture, Media and Sport) – August 2019 

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