AN IN DEPTH ANALYSIS OF RAPIDLY EVOLVING COMMERCIAL OFFICE BUY-TO-LET INVESTMENTS

THE COMMERCIAL BUY TO LETGLOBAL MEGATREND

Change is afoot in commercial real estate. Three megatrends — globalisation, demographic change and flexible working — are expanding the universe of economic opportunity and changing the way investors are thinking about the future.

Consider the pioneers of megatrends in the past such as Facebook, Uber, Instagram or YouTube. If you knew then what you know now you would definitely have invested, right?

Here we explore the three main megatrends in commercial real estate markets and reveal the implications for successful and profitable property investment in the current economic climate.

3 GLOBAL MEGATRENDSIN COMMERCIAL REAL ESTATE ANDWHY THEY MATTER

Globalisation is being driven by the explosion of information flows, services and know-how. And this is creating new opportunities for commercial real estate investment strategies.

In fact, commercial real estate is healthier (and more global) than ever before. Research suggests that global real estate investment could reach historic levels in 2016 at more than $1.1 trillion — an increase of 3 to 6% in local currency terms over 2015.

This globalisation of real estate is expanding investors’ appetites for new markets and asset types, resulting in larger pools of capital on the move. And while core office remains strong, traditional work environments are being challenged by new working practices which have introduced the new asset class of co-working offices, becoming increasingly popular in the international investment community.

Local knowledge remains critical in understanding market dynamics and despite the tremendous flow of capital and information globally, it is still the key differentiator for successful global commercial real estate investment.

MEGATREND 1:GLOBALISATION

North America

South America

Africa

Middle East

Asia

Pacific

GLobal Capital Inflow Summery 2015

94

133103

978

17,942

26,0229,680 2,857

1,357

465 3717

110

706

128

29175

25

19,333

45,788

62,336

17,576

1,020

10,522

11,993

8,434

4,827

2,823

999

88

404433

1,99958

495

Europe

Middle East

North America

Pacific

South America

Asia

Africa

Real estate usually is thought of in terms of buildings and addresses, but in today’s world, we need to think about it in terms of people and their communities, says Melina Cordero, America’s Head of Retail Research at CBRE. And these demographic realities have major implications on commercial real estate as talent remains a key driver of real estate decision-making.

According to McKinsey research, as the world continues to age, retiring and elderly populations will drive significant urban consumption and housing growth. Yet, the realities of an aging population also present challenges.

In contrast, emerging markets will not only feature younger populations but also see the rapid expansion of the middle classes with implications for retailing and housing as well as education and healthcare.

MEGATREND 2:DEMOGRAPHICS

Demographic shifts will also drive the importance of the urban core, with working-age populations, notably millennials and the ‘creative-class’, heavily represented in city centres, driving demand for office, residential and retail asset classes, but is equally impactful for industrial and logistics which benefit from adjacencies to urban centres.

There are also trends affecting how we work that are filtering heavily into the office sector of commercial real estate. The physical workplace is far more than just furnishings and real estate; it is also about how people work and are managed, the technologies that enable the work, and how businesses employs the workplace for its own ends. Going further, the workplace even reflects forces of the larger social and economic environment.

DEMOGRAPHICS

20%

15%

10%

5%

0%18 to 20 21 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75 to 84 85 and over

Distribution of Population by Age

Source: CBRE Labor and Analytics Group

Near City Center Suburbs

Advances in technology have given rise to a megatrend towards flexible working. Organisations may currently enjoy being able to choose from a surplus of qualified workers but in the coming years they will have to compete again for the best talent. Businesses will have to focus on ways of keeping valued employees, while being more sensitive to the preferences of existing and potential employees seeking improved work flexibility.

The desire for more work flexibility is, in part, a reaction to megatrend 1 above - globalisation. Working beyond normal office hours has become the norm for many in order to coordinate with colleagues in widely differing time zones. Workers can’t maintain these hours on a regular 9 to 5 schedule and attend to personal family needs easily.

In terms of the effect of this megatrend on commercial real estate, the unprecedented rise in demand for shared office facilities has led to the rapid emergence of a new type of office space provider. In place of traditional office provision, co-working spaces offer flexibility to workers in the freelance economy, particularly in terms of cost. Collaboration and networking are easily facilitated in these new work environments, often available on a pay-as-you-go basis allowing small enterprises to grow at their own pace.

MEGATREND 3:FLEXIBLE WORKING

Responding to the seeming endless demand for co-working office spaces has led to exponential growth in the sector. A perfect illustration of this is in the case of WeWork, an international co-working space provider founded in 2010. In March this year, WeWork was valued at an incredible $16bn on the strength of its third round of fund-raising which was limited to institutional investors and private equity funds.

However, there are opportunities for retail investors to enter the co-working sector with significant growth opportunities in the short to medium term. However, with co-working currently highlighted as an investment megatrend, the time to act is NOW.

“The office market is evolving, as companies tailor their spaces and locations to better suit the needs of employees, including more collaborative layouts and sites closer to public transit routes.” CBRE

FLEXIBLE WORKING

8,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

3 30 75 160 310 6001,130

2,070

3,400

5,780

7,800

6,000

4,000

2,000

0

40,000

2016 2017 2018

24,000

16,000

37,000

30,000

20,000

10,000

0

Global Growth of Co-working Spaces

Projected Global Growth of Co-working Spaces

GET INVOLVED INCO-WORKING INVESTMENTOur//Space is a rapidly expanding co-working office provider offering retail investors a UNIQUE opportunity to harness dynamic growth in the sector, earning returns of up to 13.25%.

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With four locations established and well-subscribed to by Members in Dubai, New York, Miami and Birmingham, Our//space continues full speed ahead towards global expansion and is uniquely poised to deliver a truly global footprint, extending across four continents.

Our//space is on the threshold of a significant growth spurt and there is an unmissable opportunity for retail investors to benefit with an investment vehicle that no only offers a low entry level but assures your place in the highest yielding investment market of 2016.

• Up to 13.25% P.A. assured returns• Paid monthly for the first quarter, quarterly thereafter• Attractive 5-year term• Call option after 6 months• The fastest growing asset class in global property investment• No developer Risk• No legal fees• No tenants to deal with• Investors have unlimited use of facilities• Low level investment starting from $25,000• Recession Proof Fixed Returns

CO-WORKING INVESTMENT

+44 207 043 2198

INFO@UNITEDPROPERTYINVEST.COM

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[Article 48(4) Financial Services and Markets Act 2000 (Financial Promotion) Order 2005]