In his annual outlook, Global Head of Investment Strategy & Research Rob Martin considers long-term performance as the combination of structural tailwinds and cyclical opportunities.
As inflation and growth dynamics vie with political risk for investor attention next year, we anticipate fresh volatility – and opportunity – in this higher-rate environment.
We remain cautious on near-term performance at the all-property level, given persistent upward pressure on yields, but some of this pressure has reduced as inflation has decelerated. UK real estate appears closer to the end of its re-pricing journey than in other geographies
In our CIO autumn update, teams from across LGIM assess the key implications of AI for our clients.
A year on from the inflation genie being released from the bottle, inflation is still nowhere near its long-term target level. Against this background, we examine the impact of a ‘higher-for-longer’ environment on private credit.
In this outlook, we assess why private credit has generally been resilient for the first half of 2023. But as we head into the second half of the year what’s behind the growing divergence between defensive and cyclical issuers?
During the passage from winter to spring, markets have continued to be swayed by the same drama that dominated investor attention in 2022: central bankers’ high-stakes efforts to rein in inflation, without sabotaging financial stability.
As the dust begins to settle following a turbulent 2022 and the recent banking crisis, we reflect on the varying dynamics of private credit markets, their differentiation and their role in investor portfolios
As 2023 unfolds there remain several plausible outcomes for the performance of UK real estate. In our view, the repricing seen over 2022 positions the sector relatively favourably.
While a recessionary backdrop may mean private credit investors stay cautious in the short term, we believe there are grounds for optimism in 2023, not least higher starting yields.
This past year has been one of the worst periods on record for investors. We assess what could signal a turnaround in 2023.
Brexit, the pandemic and the Ukraine conflict have all disrupted supply chains and marked turning points in the priority that European policymakers place on their own self-reliance.
As delegates gather at COP27, they confront the same long-term challenge posed by climate change as they did last year. But the context has changed dramatically: in light of the war in Ukraine, governments need to balance net-zero goals with a new imperative for energy security.
Looking back, private markets have experienced robust returns, with 2021 making a high point. Fast forward to this year and the six months to June 2022, and the wider economic and markets environment is barely recognisable.
In our market outlook at the start of the year, we noted that investors should prepare for the unexpected, since we believed the road ahead was unlikely to be smooth. We were correct in our thinking, but not in the way we envisaged.
What might happen in the second half of 2022 in European private credit markets?
While consensus forecasts suggest further economic recovery in 2022, we remain prepared for bumps in the road.
The growth in private markets, helped by institutional participation, has been one of the most prominent investment themes of the past decade.
In this report we focus on consumer-facing sectors as the economy recovers. Understanding trends in consumer behaviour and how they interact with different elements of the real estate universe remains key to positioning investments and favours selected parts of leisure and retail warehousing.
As we emerge from the latest lockdown, the extent to which real estate as an investment asset class will be permanently changed is unclear.
Based on our current expectations for the progression of the pandemic and the associated economic and financial impacts, our central case for all property returns is 5.2% p.a. over the 2021-2025 horizon.
Covid-19 and the resultant economic impacts represent a genuinely unprecedented set of circumstances in which to forecast real estate equity returns.
Unprecedented circumstances mean high uncertainty
Those who choose not to embrace this shift could be left behind. Those who challenge convention, embrace technology and change their mindsets to a service oriented model will likely deliver better outcomes for owners and occupiers alike.
