CBRE Group Inc · NYSE:CBRE

CBRE — Residential Capital Markets Conference 2018

26 slides from CBRE's conference presentation, November 2018

  1. Slide 1: Residential Capital Markets Conference

    RESIDENTIAL CAPITAL MARKETS CONFERENCE

  2. Slide 2: The global economy and real estate capital flows

    The global economy and real estate capital flows Miles Gibson Head of UK Research

  3. Slide 3: End of cycle fears are growing

    12 End of cycle 10 fears are 8 growing 6 U.S. U-3 Unemployment (%, Monthly, SA) 4 2 3y 8m 7y 7m 9y 6m 11y 6y 4m 10y+ 0 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: U.S. Bureau of Labor Statistics & CBRE Research,

  4. Slide 4: Brexit: There will be a deal (eventually)

    Brexit: There will be a deal (eventually) ‘Canada plus’ or ‘EEA minus’ Financial services access Migration policy low-skill workers CBRE’S on ‘divorce’ and trade will be tough House View most affected ‘transition’ agreement to secure

  5. Slide 5: An economic soft patch ahead

    USA Euro Area UK China USA 10 year bond 9.0 8.0 FORECAST An economic 7.0 soft patch 6.0 ahead 5.0 4.0 GDP growth, 3.0 selected countries, 2.0 2012 - 2023, % 1.0 0.0 -1.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: CBRE Research, October 2018

  6. Slide 6: UK interest rates up… eventually, and slightly

    1.2 FORECAST UK interest rates 1.0 up… eventually, 0.8 and slightly 0.6 UK base rate 0.4 0.2 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: CBRE Research

  7. Slide 7: Global savings increasing since 2000

    27 26 Global savings 26% increasing 25 since 2000 24 23% 24% Gross savings 23% 23 as % of global GDP 22 21 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: Oxford Economics/Haver Analytics, Macrobond, CBRE Econometric Advisors, April 2018.

  8. Slide 8: Investment holding up

    80 70 Investment holding up 60 50 40 UK real estate 30 investment volumes, 2004 - 2018, £bn 20 10 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f Source: CBRE Research, October 2018

  9. Slide 9: Globalisation works for real estate too

    Overseas Investors UK Investors Overseas share (RHS) 80 60% 70 Globalisation 50% Investment Volumes (£bn) 60 works for real 40% 50 estate too 40 30% 30 Overseas and 20% domestic real 20 10% estate investment 10 volumes, £bn and 0 0% % overseas share, 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

  10. Slide 10: And residential property has been a beneficiary

    2004 - 2018 Q3 a beneficiary And residential property has been UK residential real estate investment volumes, £bn, Investment Volumes (£bn) 0 0.5 1 1.5 3 2 2.5 3.5 2004 Q4 2005 Q1 2005 Q2 2005 Q3 2005 Q4 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3

  11. Slide 11: The rise of alternatives

    Other Industrial Retail Office 100% 90% 80% The rise of 70% alternatives 60% 50% UK property investment 40% volumes, by sector, 30% 2008 - 2017 20% 10% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: CBRE Research, April 2018

  12. Slide 12: Most investors have alternatives… and want more

    Already invested and actively pursuing further exposure Not invested, but actively looking for exposure Already invested, but not looking for further exposure Automotive/Car Parks Most investors Data Centre have alternatives… Leisure/Entertainment and want more Healthcare UK property investment Mult

  13. Slide 13: Alternatives: More traditional than 'traditional sectors'?

    Alternatives: Indexed Lower vacancy Granular Tenant returns rates underlying default rate More traditional Most leases demand than ‘traditional signed for 20+ RPI more Due to demand Can be lower sectors’? years common in such and supply Individuals, not than main-stream leases mismatch companies sec

  14. Slide 14: Conclusions

    Interest rates Global Brexit Elevated capital Alternatives have a fair economic drag flows are looking attractive Conclusions way to rise downturn substantial and structural Retarding UK’s But not immune Led by Likely, but should position in the With real estate from the cycle the US be moderate eco

  15. Slide 15: What does this mean for UK BTR?

    What does this mean for UK BTR? Helen Gray Head of Build To Rent Consultancy

  16. Slide 16: Economic backdrop will continue to support the housing market

    Economic backdrop Investor Supply and Occupational Strong economic will continue to demand demand demand fundamentals support the housing market Source: RICS, Land Registry

  17. Slide 17: Rental forecasts

    4.50% 4.00% 3.50% UK 3.00% LONDON Rental 2.50% forecasts 2.00% 1.50% 2018 - 2022 1.00% 0.50% 0.00% 2019 2020 2021 2022 2023 Source:

  18. Slide 18: BTR supply 131,900 units

    Average scheme size 350 332 300 64,700 248 250 BTR Rest of UK No. of units 200 supply Total UK BTR: 150 125 131,900 units 100 50 67,100 0 London Complete Construction Planning Source: BPF

  19. Slide 19: Product and price point

    Price Greater Suburban Flexibility point differentiation BTR Product Source: RICS, Land Registry

  20. Slide 20: Residential investment volumes

    £700m 2018 under offer £3bn £2.4bn £2.1bn -plus Total 2017 investment volumes 2018 yr-to-date £3,000 Residential Investment Volumes (£m) £2,500 investment £2,000 volumes £1,500 £1,000 £500 £0 2015 2016 2017 2018 ytd Source: CBRE * Excl. Wembley Park in 2008 ‘On the Market’. Rumoured asking price >£3

  21. Slide 21: Market Capacity

    £103bn (US$145bn) £91bn US multi-family (US$128bn) US offices £67.9bn Market All UK property Capacity £27.2bn All UK offices £4.6bn £2.4bn Purpose - built Total residential student investment accommodation volume

  22. Slide 22: HB 242852 © B2

    6 HB 242852 © B2

  23. Slide 23: Interested capital and transactions

    Interested capital Transactions Middle East Asia/Pacific 9% 16% UK 25% Canada Europe 13% 8% UK Middle East 46% 6% Canada US 14% US 32% 31%

  24. Slide 24: Transaction type

    Transaction type 2015 2016 2017 2018 YTD Standing investment Forward funding Forward commitment Land Source: CBRE

  25. Slide 25: The student sector investment volumes

    £4.0 Portfolios Single Assets £3.5 Portfolio - Long Term Average Portfolio - Single Assets £3.0 The student £2.5 sector Billions £2.0 Investment £1.5 volumes £1.0 £0.5 £0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017

  26. Slide 26: Thank you

    THANK YOU

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