Seizing Opportunities in the Evolving Landscape of UK Real Estate
Amidst the dynamic shifts brought about by the COVID-19 pandemic and the aftermath of Brexit, the current juncture presents a highly advantageous period for both our organization and our valued clients. Notable avenues for substantial earnings have emerged amidst the disruptions, owing to a convergence of factors including lowered asset prices, pervasive uncertainty, historically low interest rates, suppressed valuations, and distressed sellers. These elements have coalesced not only for Berkeley Assets but also for other private equity (PE) firms, where substantial cash reserves, once seen as a potential impediment to returns, have now evolved into invaluable assets.
The prevailing landscape has distinctly shifted in our favor, with a strong conviction that the PE sector will hold a more substantial portion of the global GDP post-COVID-19 than prior. The nimble nature of PE enables swift acquisition strategies while maintaining a patient disposition toward divestment. With an escalation in the demand for liquidity, private capital stands ready, with debt acquisition already attainable at levels as attractive as 60% of face value.
A recent exemplar is CalPERS, the largest public pension fund in the US, which has actively expanded its exposure to private credit and leverage utilization. A substantial deployment of $64 billion away from the volatility of public markets underscores the growing prominence of private equity, recognized as one of the select asset classes capable of outperforming the prevailing low-yield, low-growth environment.
In times of crisis, heightened sell-offs are commonplace, necessitating the identification of potential winners among the apparent losers. While sectors like tourism and transportation have borne the brunt of 2020’s impacts, the full extent of the pandemic’s fallout remains to be seen. Irrespective of the allure of seemingly attractive opportunities, our clients continue to prioritize the prudently secure asset acquisitions that characterize Berkeley Assets, particularly within the conservative and resilient real estate sector.
The allure of UK real estate as a global asset has been a longstanding truth, albeit predominantly centered around high-profile London holdings. The advent of remote work, catalyzed by COVID-19, has expanded the prospects for suburban locales, reducing the significance of commuting distances in the decision-making process. As a result, idyllic suburban landscapes hold an increasingly appealing edge over their urban counterparts.
Anticipating further spikes in unemployment, our steadfast commitment to affordable housing and assisted living projects remains unwavering. These ventures constitute pivotal value-add strategies, offering both capital and income yield protection, bolstered by their favorable letting prospects and ease of exit. Such attributes hold even more significance given the current market saturation in upscale developments. These considerations remain paramount for both us and our discerning clients in the current economic milieu.
Amidst the ebb and flow of economic conditions, whether challenging or fortuitous, the steadfast and ethical due diligence that has been a cornerstone of Berkeley Assets throughout its history should never waver.