Property Investment Yields | February 2019

Property Investment Yields | February 2019

David Tudor

David Tudor

Senior Director, UK Valuation & Advisory Services

+44 207 182 2689
david.tudor@cbre.com

Property values stable outside the retail sector

  • Further bad news from retailers and rumoured CVAs in the pipeline continue to undermine investor confidence in the retail sector.
  • Core locations and sustainable rents attract investors looking to de-risk. Vacant retail requires a development angle to attract interest.
  • Demand strongest for South East multi let industrial opportunities where rental growth prospects are perceived to be better.
  • Distribution units single let to retailers proving less attractive.
  • Central London looking quiet in Q1, much like last year, until political clarity emerges. Expectations are positive for the year as a whole.
  • Limited new stock in South East and regional markets with stronger interest in established town centre locations

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Property Investment Yields | January 2019

Property Investment Yields | January 2019

David Tudor

David Tudor

Senior Director, UK Valuation & Advisory Services

+44 207 182 2689
david.tudor@cbre.com

Trends of Q4 set to continue into the New Year

  • Focus remains on retail capital values in a weak occupational market with very patchy demand from investors.
  • Core locations, longer income and inflation linked rental increases remain in demand.
  • Industrial sector calmed down in December but remains attractive with rental growth forecasts positive and funds keen to increase weightings.
  • Q1 expected to be quieter as limited new stock to market envisaged.
  • The market is still working through the new office opportunities available in Q4, with local authorities particularly active in the South East.
  • Requirements for Central London investments and development opportunities remain strong with a wide range of potential buyers.

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To get ahead and register for the remainder of Q1 today, please follow the links below:
13 February click here
13 March click here

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#11 Future of Autonomous Vehicles – “Future of Logistics” Series

#11 Future of Autonomous Vehicles – “Future of Logistics” Series

Ben Thomas

Ben Thomas

Director, National Valuation

t: +44 207 182 2663 Ben.Thomas@cbre.com

Judy Zhu

Judy Zhu

Associate Director, National Valuation

t: +44 207 182 2683 Judy.Zhu@cbre.com

In the last blog post, we looked at the current development of autonomous vehicle (AV) technology. In this post, we are going to explore the potential ways AVs could operate in the future and the benefits.

 

Possible stages of AV adoption in logistics

When we talk about an autonomous vehicle, the first impression is usually a self-driving car, but autonomous vehicles include self-driving trucks, vans, cars, robots, etc. Autonomous vehicles can be used on as well as off road, and even in warehouses and construction sites.

There are many players in this field at moment and we have briefly summarised the companies which are developing autonomous trucks and their latest technology.

AV Stages

Stage 0 – This is today, where all driving and deliveries are done by humans.

Stage 1 – Next, truck drivers will operate semi-autonomous cabs. Last-mile driving and delivery will still be carried out by a human. As mentioned in the last post, autonomous trucks are easier to adapt than other vehicles because driving on motorways is considered less complicated than urban streets.

The immediate benefit of using an AV at this stage is that truck driving hours could be extended. With motorway driving performed by an AV, truck drivers are only required in complicated driving situations. Therefore, with time for drivers to rest on the motorway, driving hours could be extended.

Stage 2 – At Stage 2, autonomous trucks operate independently. Last-mile drivers will operate semi-autonomous vehicles and deliver manually.

At this stage, big-bulk goods transport from airport, ports, national/regional distribution centres by trucks can be performed 24/7. The benefit is that motorway traffic in the day could be reduced, since trucks can carry out deliveries during night hours.

Then, by using semi-autonomous vehicles for last-mile delivery, van drivers can provide better customer service. With vans doing the bulk of the driving, the main job for humans will shift to delivery, and they can spend their time during the journey communicating with customers or other team members.

Stage 3 – Finally, all vehicles used in the delivery process are autonomous. Even delivery to doors could be performed by robots or drones.

The benefit of using an AV at this stage is that everything could be transported and delivered 24/7, regardless of size or type. 24-hour last-mile delivery can include non-food packages, meal orders, grocery and anything else.

 

Other possibilities

In the future, vehicles could be mixed-use and flexible.

Mixed-use vehicles

In the future, we may have mixed-use vehicles. Passengers and delivery orders could travel in the same vehicle. The travel route for passengers will be spontaneous and customised to their destinations. On the same route, drones will take off and deliver orders when approaching near the delivery destinations. On top of this, if the vehicles are autonomous, the transportation service can run 24/7.

With this model, transportation capacity can be maximised, so the fuel consumption and the damage to environment can be minimised. On the other hand, for passengers and delivery customers, they can enjoy faster travel and faster delivery.

Indeed, each compartment could be made flexible, depending on requirements.

Other Benefits

Once all the vehicles in the logistics process are autonomous, the distribution and delivery will be much more efficient. AVs will reduce the waiting time for customers to receive orders and will provide the flexibility to receive orders at preferred timing. Together with the use of blockchain, robotics and AI, AVs can make the journey of goods from manufacturers to customers fully autonomous.

If all the vehicles on the road are autonomous and follow the orders from a central hub, traffic lights will be redundant and traffic congestion will be reduced. The central hub will give driving/braking orders to vehicles, so overall traffic can run in the most efficient order, making traffic lights unnecessary. Since all the vehicles would be controlled by the same central hub, vehicles can accelerate and brake at the same time, which saves time between vehicles as they start moving.

AVs can also potentially reduce human mistakes. With all the possible driving scenarios being built in the central database and being updated with live data collected from vehicles in the network, the central database will be much more knowledgeable than any individual human driver.

Summary

Autonomous vehicles will probably be adopted into the logistics network over a period of time in phased stages. At each stage, the adoption will bring more benefits than the last and the maximum impact of these benefits will be seen when the entire transport network is automated.

But it’s not all plain sailing and in the next post, we will look at the potential risk and impact of AVs on the logistics industry.


If you are interested in more details of this report or our other logistics reports, please contact Ben Thomas, Director of CBRE National Valuation – Logistics & Distribution, or Judy Zhu, Associate Director of CBRE National Valuation.

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Property Investment Yields | December 2018

Property Investment Yields | December 2018

David Tudor

David Tudor

Senior Director, UK Valuation & Advisory Services

+44 207 182 2689
david.tudor@cbre.com

Retail problems overshadow stability in other sectors.

  • Rapidly reducing rents and weaker yields continue to pull down capital values in the High Street, shopping centre and out of town retail sub sectors
  • Very thin demand for traditional retail assets
  • Industrial sector yields stabilising as rental growth overtakes as driver for growth
  • Investor demand particularly strong for London and South East assets
  • More stock available in the office sector but most not likely to transact until Q1 of next year
  • Development opportunities in core Central London markets are popular

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One Billion Packages in One Day

One Billion Packages in One Day

Ben Thomas

Ben Thomas

Director, National Valuation

t: +44 207 182 2663 Ben.Thomas@cbre.com

Judy Zhu

Judy Zhu

Associate Director, National Valuation

t: +44 207 182 2683 Judy.Zhu@cbre.com

In China, Singles’ Day (11th November) is an annual shopping festival, like Black Friday and Boxing Day in the western world. Alibaba has successfully turned this day, which is a celebration of being single, into the world’s biggest online shopping event.
2018 Singles’ Day was a milestone for Alibaba, as it was the first time single-day package volumes surpassed the 1-billion benchmark. This blog post is going to look at the numbers, which in turn reflects the logistics network working behind the scenes of this shopping fiesta.

 

2018 Singles’ Day
Singles’ Day Sales and Packages Volume from 2009 to 2018

Singles’ Day Sales and Packages Volume from 2009 to 2018

2018 Singles’ Day Sales by Time of the Day and Comparison to Previous Years

2018 Singles’ Day Sales by Time of the Day and Comparison to Previous Years

Click to expand                            (source: www.alizila.com, wallstreetcn.com)

The total sales of 2018 Singles’ Day was CN¥213.5 billion, which is £23.6 billion or US$30.7 billion. By Comparison, in the UK, the one-day total sales of 2017 Black Friday was £1.4 billion and 2017 Boxing Day was £4.5 billion (source: BBC, Daily Mail).

In the US, 2017 Thanksgiving Day, Black Friday and Cyber Monday combined sales was US$19.6 billion, where US$14.5 billion was online (source: Practical Ecommerce)

The Logistics Network

Alibaba, not only as a platform for retailers but also for logistics partners, was able to cope with this large volume of packages mainly thanks to its own logistics data network, called Cainiao (means “Rookie”). Cainiao was established in 2013 by Alibaba to assist its retailer clients provide better delivery experience to their customers.

Cainiao is a large network of 3PL partners, drivers and warehouses, which expands to the most remote areas in China and beyond the border to rest of the world. However, what really empowers the network is not the physical network, but the enormous data it captures in the network. It uses big data to predict product stocks, plan driving routes, create package sorting solutions etc. Without all the elements of Cainiao working together, Alibaba would be unable to meet its Singles Day delivery commitments.

About Cainiao Network (by 31st December 2017)

About Cainiao Network (by 31st December 2017)

Click to expand

Summary

The Chinese economy is evolving from export-focused to consumer-focused. Previously China leveraged the large population as a source of manufacturing labour to support the export economy. Now China is turning this resource into an advantage again, as a source of generating demand and pumping up the consumer economy. Alibaba, together with many other technology businesses, has seized the opportunity to grow its own business as well as contributing to push the transition forward.


If you are interested in more details of this report or our other logistics reports, please contact Ben Thomas, Director of CBRE National Valuation – Logistics & Distribution, or Judy Zhu, Associate Director of CBRE National Valuation.

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Property Investment Yields | November 2018

Property Investment Yields | November 2018

David Tudor

David Tudor

Senior Director, UK Valuation & Advisory Services

+44 207 182 2689
david.tudor@cbre.com

Retail Sector to move All Property Indices negative in Q4.

  • Reducing rents and weaker yields continue to pull down capital values in the High Street, Shopping Centre and out of town retail sub sectors.
  • Demand from private investors and Councils is for low risk, ie. rack rented, prime, assets.
  • Industrial continues to evolve with occupational demand in the logistics and distribution sectors growing, but reducing from retailers.
  • Investor demand for single units remains good, but more restricted than for multi-let South East estates.
  • South East office sector has seen a flood of new stock offered, the majority secondary by location, condition or income.
  • Regionally, demand remains strong but with limited opportunities in core cities.

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