Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome Lisette van Doorn. As Chief Executive of ULI Europe, Lisette is responsible for the development of the Institute’s activities across the region, including its pan European conferences and over 200 local meetings and events across fifteen countries. Lisette joined ULI from her own consultancy business which advises international institution real estate investors and fund managers on strategy, organisational optimisation and portfolio structuring. Prior to this she was country manager for CBRE Global Investors where she managed a 1.6 billion euro portfolio of assets in Italy. Before joining CBRE Global Investors, Lisette was founding chief executive for INREV, the European Association for Investors in Non-Listed Real Estate Vehicles. She started her career at ING Investment Manager where she became managing director of the Search and Strategy for ING Real Estate Investment Management Europe. So now we are going to hear from Lisette van Doorn about ULI Europe and the current challenges for European real estate. Lisette, good morning, where are you speaking to us from today?
Lisette van Doorn
Today, I’m speaking from the office in London, so I am in London for a few days since quite a while actually.
Susan Freeman
Okay. So, home is normally Amsterdam, isn’t it?
Lisette van Doorn
Yes, I live just outside Amsterdam in Haarlem, small provincial town just between Amsterdam, the sea and Schiphol.
Susan Freeman
Sounds wonderful. So, you I think have always worked in real estate and you’ve been CEO of ULI Europe for nearly nine years and I just wondered why did you choose real estate as a career in the first place?
Lisette van Doorn
Well very much in the beginning of my career, I started in investments, so not real estate, so equity bonds and I’ve always liked investments because I studied economics with a special focus on finance and investments and I was working as an account manager for mutual funds at ING who had a lot of labels under which they sold mutual funds. That was the end of the ‘90s, everybody thought they could invest so we did a lot of education on that and actually, I wanted to invest more directly myself and then I started thinking I didn’t really see myself behind a screen all day and I had always had an interest in the built environment while I studied a couple of subjects focussed on real estate and I really liked that and being a part of such a big firm who also had a significant real estate business, but why not have a conversation and that’s how I ended up in real estate. Never left again.
Susan Freeman
Well it’s a wonderful sector to be in and obviously, we’ve met ULI, Urban Land Institute, and just to start us off, I think it would be useful if you told us a little bit about Urban Land Institute and obviously, particularly Europe, which you run because I’m always staggered by the number of members that ULI has across the world so, give us a little bit of background on that.
Lisette van Doorn
Well, ULI is a network of professionals in real estate all across the value chain from architects, urban planners, developers, finance people and investors to also public sector and the idea is knowledge sharing. We’ve been set up in the US many years ago, 1936, and for a long time it was an American organisation but with kind of the globalisation of the real estate industry, ULI also started to operate more globally, just because members moved around the world and continued networking under the ULI flag, as they had done before, and that’s also how ULI started in Europe. But because of that, it’s got quite a different face to it than it had in the US where it was much more multi-disciplinary, much more development focussed, while in Europe it was more capital markets focussed and also much more say pan European and local, there were some local activities at the time but not that much and then when I joined, I looked at, kind of also based on my previous experience having set up INREV quite some time ago, so I had some familiarity with the membership organisation and tried to look at what is so special about ULI, how can we make it resonate better and imbedded better in Europe. And then what I found as a key strength is that multi-disciplinary focus and really that local approach or mission is about making impact in communities worldwide, to be able to do that you need to operate very locally, otherwise it’s not going to happen. So, based on those things, we started to focus very much on building up the local activity, did far more in research, well the themes are really universal across the different parts of the world, what people want to learn from and how it plays out is very different so, a case study from somewhere in the Midwest in the US doesn’t necessarily resonate in Europe. So, we started to build up far more research that resonated in Europe. Early days we started to focus on how to densify in a sustainable and liveable way. We did a lot around city competitiveness, with European cities generally being much smaller, so they can’t compete by size, they need to be say smarter and better and also looking ahead at how do these membership organisations work in Europe and in Europe, it’s very much focussed on corporate membership. Well, ULI traditionally was an individual membership organisation, so we also built up a corporate membership model and added that to the individual membership and based on that, we started to grow and the strength of ULI started to resonate more and now we’ve got to almost 5,500 members so, it’s really going well.
Susan Freeman
Just to put that into context, how many members are there in The States?
Lisette van Doorn
Yeah, that’s a very good question. Globally, we have close to 50,000 members, of which around 40,000 in the US and then 5,500 in Europe and about 2,500 in Asia Pacific.
Susan Freeman
And are there regions that you have as yet to get to?
Lisette van Doorn
Well, even within Europe there are parts where we’re stronger and say there’s more development opportunity, the 8.21, for example. We are still very much looking into, we’ve kind of set foot on the ground in Denmark a couple of years ago and that kind of gradually rose. We see a real interest and opportunity for ULI to contribute when the market opens up more. When it’s dominated by local players, often the interest to know what’s going on elsewhere is also lower. So this is a real correlation between that. Middle East is an important part. Officially, it’s not just focussed on Europe but 8.57. But Africa definitely is an area where we only have very little members now but given ULI is not just a member organisation but also focussed on making impact. Africa clearly is an area where you can have impact.
Susan Freeman
So there’s still work to do and certainly with one of the, you know, some of the issues that we’re going to be talking about, they are global so, you know the more reach you have, the better. And you hosted the ULI Europe annual conference in Madrid last week and you know I’m so sorry I couldn’t be there, I would have been there for the Tech and Real Estate Product Council but I have listened to you know some of the recording and clearly there were some very interesting takeaways but and we will talk about those but I wondered if there were any surprises, anything that surprised you from what you heard last week?
Lisette van Doorn
Well one of the key surprises was the weather, which was very different than expected and I think it is a clear signal that things are changing. It was 19 degrees with heavy rains, which I don’t think ever happened in Spain and Madrid that time of year before, so that was a clear surprise. The thing that sort of resonated and somewhat surprised me was not the focus so much on AI, there was a lot of discussion on AI which of course is not surprising given the recent news but how technology, climate and macroeconomic developments are so fundamental now for geopolitical issues across the world which, well I hadn’t realised so much and I think even if a few years ago it was still very different, it was much more about historical relationships and so on and I find that very interesting but also somewhat mindboggling how, that link.
Susan Freeman
Totally, and sort of underlines the fact that you know one has to be connected across the world because something happening you know on the other side of the world is likely to affect us and I absolutely understand what you were saying about the weather because I was in Portugal last week and we had rain and storms and we were told this was the worst weather that they had had in that particular week, ever, so I understand what you are saying. And I saw something in the press that concerns were expressed that ESG will take a back seat because all the other challenges that the real estate sector is facing at the moment and I know that was a concern at the start of the pandemic, people thought well you know we’ve got the pandemic to focus on, will sustainability have to go onto the backburner but it seemed to have the opposite effect and it seemed to serve as a sort of wake-up call. Now, I mean did you get any feeling that people were focussing on other things so much that they were going to pull back on sustainability?
Lisette van Doorn
I don’t think it’s an issue of the focus; I think everyone is very well aware and constantly reminded how important it is. I would say that’s my personal view, I hear much more about the ‘E’ than momentarily about the ‘S’ and the ‘G’. And yes, there may be more issues in how do you create social impact, how do you measure it but I also think it’s a sense of the ‘E’ is so overemphasised at the moment that we leave the ‘S’ and the ‘G’ for the time being. I think everybody is very well aware of what needs to happen, long term, high level. What it means on a day to day action and especially now where to find the money to make those investments, I think is more difficult. The thing that I think is totally underestimated or not part of the conversation is the value impact. It is all about CapEx, it costs money and as if there is no return and I think that part needs to be highlighted far more because were are convinced there is a definite, at least value preservation if not upside potential in there and therefore I also think that people may think they have a choice, especially if we consider offices, it is a huge topic for tenants and it used to be far more about it’s nice for the narrative, like we attract talent with our focus on environmental sustainability and we retain talent, now it’s about the bottom line because their energy costs have gone up so massively, which is actually a waste of money because you don’t get any better service from it, it’s actually you’re in an energy efficient building, less quality, and you’re paying more and I think upon rents were low, tenants will very critically review their existing building stock and think why are we paying this, so they will either move to more energy efficient buildings or where, if you pay more rent, you get more value for it or maybe reduce their office holdings for the time being. It’s still uncertain how much people will come back to the office, when exactly that they need, what the perfect configuration is, given the uncertain economic circumstances we’re in right now. There are quite a few factors that may kind of result in tenants moving so, in that sense; do you really have a choice to not make the investments? I’m not really sure.
Susan Freeman
Interesting, and obviously you know decarbonisation and sustainability was a key focus I know at the conference and I think it was a real call to action to decarbonise, to stop or slow down climate change and when you opened the conference, I think you mentioned that there were too many competing initiatives and I know you also said that a fragmented approach is the greatest threat to our progress so, you called on the industry to unite. How do you go about doing that because we have such a fragmented industry, you know even if I just look at the UK, you know we look at it and it is a fragmented sector. How do you go about getting real estate organisation across the world to come together?
Lisette van Doorn
Well, I think first of all, it’s a step by step approach. I think the investment side of the industry has a very important role to play because ultimately they own the buildings and they manage the buildings and I’m convinced that when regulation will come, it will come to the building owner. So it’s in their interest to bring the rest of the industry on board and therefore to stand behind and speed up the process and scale up those initiatives to make the whole decarbonisation process more efficient and I think that can work as a sort of oil stain, if we start there, they can bring in other players in the industry, developers, construction, advisors obviously have an important role, planners, and then hopefully we get that going and then I think also, with so many players now operating globally, I think critical mass is a key element but critical mass doesn’t mean the whole industry needs to stand behind some bits at some point, when you have sufficient players, which can be sort of limited in numbers but have enough reputation and gravitas in the market, I think it can come together and again, it’s a step by step approach so, start with one initiative and build it up. And it has happened before so, we have done this, long ago we did it with INREV when we, there was nothing in the non-listed funds industry, there were no performance 17.55, there were no standards how to report what good corporate governance looked like and by taking that step by step approach, we managed to kind of professionalise that industry with investors getting behind it and whenever they liaised with their managers, requesting that they use those guidelines or everybody recognising that’s not perfect and that I think is the important thing here too is, the common approach may not be the perfect approach for any individual player but it helps the whole industry forward and if you stick to your optimum individual approach internally, you’ll never advance the industry and ultimately, that’s also at the individual’s disadvantage because especially now we’re looking at climate change and you can sort it but it doesn't help the planet and therefore I think it’s really important to bring this, it’s going to kind bring the industry together and maybe one more recent example, is CRREM. It’s the tool to kind calculate the pathways to decarbonisation. It’s now these standards actually in a pretty short period of time, it’s become the standard in Europe and now with the support from the industry, it’s making important steps to which also becoming the global standards used in the Americas and Asia Pacific with the industry helping to find the right data sets to kind of feed into the tool.
Susan Freeman
And so you see this needing the various real estate membership organisations, lobbying bodies across Europe coming together because certainly in the UK we have, you know we have a number of organisations that represent different parts of the industry. Will these organisations need to come together to really get this initiative going?
Lisette van Doorn
I think so. This is not just the industry. The industry or associations that support the industry also need to work much closer together and ensure that they are not overlapping on initiatives. We’re about to launch a web-based interactive tool that maps out all the big initiatives that are going on across the industry, globally, focussed on the biggest barriers to progress, for example related to lack of definitions, how do you measure whole life carbon, energy efficiency databases. For each of those interventions that we mapped out when we started with our C Change programme to support the industry to speed up decarbonisation and scale up initiatives, that will all go 20.57 so transparency is key here, knowing what others are doing so you can also make informed decisions of where to focus on. That’s also been missing in the past so, don’t know whether it exists so let’s then start a new initiative and therefore we think it’s extremely important to provide a transparency on what’s already been done so that if new initiatives are being started, they don’t compete with what’s already gone on.
Susan Freeman
Do you want to just outline a little bit what the C Change programme is and the guidelines that you’ve just published.
Lisette van Doorn
Sure. We set up C Change about one and a half years ago. Actually, we were inspired during our virtual Europe Conference that we held beginning of 2021 by Sir David King, one of the keynote speakers at the time and he called on the real estate industry because at that time not a lot was happening and everything that was happening was extremely fragmented. And he called on the industry to come together and say get serious about climate change and contribute to it. So, we thought, okay, let’s then see what we can do and so we had lots of conversations with members and other industry organisations looking what everyone was doing and we came to the conclusion that there were already lots of road maps, toolkits, kind of action plans, first do this then do that and then when we spoke to members the general feedback was, that’s really helpful but the key issue is in implementation, making it so hard because of all the different like 22.50 regulations, some materials you can use, some you can’t and every country is different so we felt being a global organisation working across the value chain, that could be a route control for us because often those frictions were at the 23.07 between different parts of the industry and that’s why we set up C Change, to really help the industry speed up the decarbonisation process. Focussing on systems change, elements that really stand in the way of making progress and then trying almost you can compare it to acupuncture where there is a blockage, you are trying to focus on that one specific thing and then remove that so the energy can flow again, that’s what we have in mind with C Change. And then we asked our members based on the mapping we did of all the initiatives that were going on in the market, what we should focus on. Recognising also what was already being undertaken by other organisations, the overwhelming response was focus on retrofits, given such a big proportion of the building stock in Europe that now exists will still be there in 2050 and the enormous amount of carbon emissions that comes from the built environment and underneath that there were two items outstanding that kind of our members said that those are by far the biggest hurdles. One was around the real estate valuations and how to incorporate the transition risk because in other words the cost of doing noting is not in a real estate valuation so why would you be the first one to act and the other big topic was around the collaboration between occupiers and landlords, which obviously in the past has not been always so positive and smoothless but here there is a real need to collaborate. We tried to look at what are the hurdles and what can be done to make that go much smoother and then on the valuation work, we kicked off with just having conversations with players in the industry, that is also the key element of C Change, recognising that there is already so much knowledge in the industry, we don’t need to reinvent the wheel, we don’t need to go off and say oh we’ll create a solution and come back when it’s ready, it’s just working close collaboration with the industry on what’s already there, what the individual players are doing and then trying to kind of distil the best practice from that as a common practice. We had over a hundred people involved in workshops, interviews, technical panels etc and along the way it became clear that it needed to be a set of guidelines on how to incorporate those transition regs to almost get to a standardised approach and then from that you can build on it with tools etc to help the industry implement, so we launched consultation guidelines at our inaugural summit, C Change summit, last October in Rotterdam, had the consultation opener until early March, got tonnes of feedback, really useful and very, very detailed, people really kind of went into the detail, provided feedback, very much related to how would this work in practice, we don’t have the data for that yet, how do we do this, everybody supported the initiative, there was really nobody that questioned the importance of it. And then last week in Madrid we launched the final guidelines and I’m very proud of that, so now the real work begins in how can we support the industry to start using this.
Susan Freeman
So, you mentioned collaboration with tenants and occupiers and obviously this is an important part of this. How do you take C Change to the occupiers because again, it’s a whole different sort of network isn’t it?
Lisette van Doorn
That’s true and it’s, I must admit, it’s not been easy initially. We started off really with best intentions last year and thought maybe we can do a couple of workshops with some occupiers and landlords and then at some point bringing them together. That didn’t work. So we at some point we said what do we do, we know kind of switched to individual conversations with tenants, which worked really well. There was a real interest to speak, to contribute, to give their views. Based on that, kind of we’ve drawn a set of conclusions that will actually also be published before the summer and what was really interesting, it’s both parties see a real need for collaboration so it’s not that one kind of doesn’t think it’s necessary, a lot of the disconnect almost has to do with different priorities. For many tenants, consider a chemical company, a retailer, a fashion producer for example, the buildings they have make up only very little proportion of their total carbon emissions so why on earth would you focus on that, you have other things to focus on. We, at some point we did a session together with CoreNet at their summit and we had a group of occupiers and a group of landlords in the room and there was a lady from a food production company and she said what do you mean with 37% carbon emissions from the built environment? For us it’s only 3, so what is that talk about that it’s so important? And it’s totally logical because you come from a different perspective so we think it’s a lot about education, about size and then getting the bigger picture across in terms of your 3% may not be so much but it is a lot for the total built environment and now we’re actually setting up a community of practice, initially with a small group of around 14 or 15 players, occupiers, landlords and a few service providers who really almost as an onion, peel it, what are the real biggest issues? Do already any solutions exist that maybe we can modify a bit or test again and then scale up or develop new ones together. And then along the way we hope the group gets bigger and we can also address more issues.
Susan Freeman
So, I mean the collaboration between landlords and the occupiers requires trust so that data can be shared. There’s also the issue of property companies being prepared to share data with each other, I mean that has always been a problem. Are you seeing more of a willingness to share data now amongst the investors because of the you know common challenge?
Lisette van Doorn
I think the picture is still very mixed if I’m really honest but I do on the positive side see a difference and a need for more data sharing. I think what’s a huge help obviously is technology in that sense. If buildings can be equipped with sensoring so that energy use with also the intensity of the space use can be measured objectively and there’s the respectful treatment of the data and basically it’s shared among the parties not just from one to the other, I think it can definitely work. Ultimately, the as you say it’s about trust and alignment of interests and if both parties have an advantage many occupiers now also obviously have their own net zero targets, so in that sense there is already far more alignment of interest and on top of that the tenants pay significantly for their energy use and those costs have gone up significantly, so I think things are moving in the right direction. I think there is also clear differences per sector where maybe office tenants may be further advanced generally than for example retail tenants. Logistics probably also very advanced, also because it’s easier to kind of make the building more sustainable and I think residential is a totally different world.
Susan Freeman
That’s true, definitely and do you think that there’s enough of a focus on measuring embodied carbon because we seem to know exactly where we are now on operational carbon and what we need to do about reducing it but now embodied carbon seems to be more of an issue.
Lisette van Doorn
We just talked about data and I think that that is the big stand in the way for embodied carbon is what are you exactly measuring and what assumptions do you make? And that is the, that is the difficult thing I think and then also trying to predict what the future value of it is in terms of how can you reuse it after thirty years, the cement and the steel that’s in the building. There is definitely a lot more focus on it, as you say operational carbon, I won’t say it’s under control because it’s still a lot of work in progress but it seems to be clear what needs to be done. Embodied carbon is indeed far more difficult. The other thing I would say is that the increase in level of regulation we see is not always helping. We see very mixed signals coming. For example, cities like London or Brussels have adopted a policy to really focus on retrofitting existing buildings and you need to have exhausted every option almost to do that before you get a permit to knock down and restart, which is I think very positive. At the same time, at EU level, not so long ago, SFDR has been implemented with kind of different articles for different types of funds depending on the level of sustainability and the Article 9 Fund is sort of the Holy Grail which is the most sustainable one. But that doesn’t allow for brown field regeneration from brown to green regeneration, the buildings need to be already green. So, not taking into account carbon emissions will obviously then might lead to choosing the easy road and just buying new or building new and I think therefore the whole industry still needs to get their heads around it so that we all move in the same direction and the assignment is clear. Reuse existing, try whatever you can to do that and if, whilst it’s not always possible, and then focus on maybe then new building and reusing existing materials. I do think that technology, the data collection and the innovation in the field is growing really fast so it may still be difficult but I think things are moving really quickly now in data collections etc.
Susan Freeman
And I think just perceptions sort of seem to be changing really, really quickly, I mean certainly in the UK after COP26 it was you know very much well you know should be demolish and rebuild you know and we’re still waiting for the result on the Marks & Spencer’s in Oxford Street which has been a big focus. So, from what you’re saying, it’s not consistent though across Europe, so different regions will have a sort of different attitude towards sort of rebuild. Do you see that changing? Is there going to be more consistency?
Lisette van Doorn
Many cities are thinking about it. Not so long ago we held a roundtable on just say the question of retrofit only. Some cities have like London, and have taken a very advanced approach you could say, a determined approach. Some cities more recognise the different options they need to have available but from what I can see generally, cities are very much focussed on it and if there is a request for demolishing a building and rebuilding, there needs to be a very well founded argument why that is the case and why the existing building can’t be used, so we definitely see things moving.
Susan Freeman
And do you compare what you’re seeing on this for instance with what ULI in The States are seeing or is that such a large area, it’s difficult to look for consistency?
Lisette van Doorn
Well, a lot of the members and other companies we work with operate on a global scale and I think their practices are very aligned across the regions. I think it’s very interesting if you look at say climate change policy in the US because obviously there’s much more political debate around it but with the Inflation Reduction Act, while not mentioning any of it, it’s clearly subsidising all sustainability investments that people make and at the same time while Europe sort of takes much more of a stick approach in terms of regulation and reporting things that need to be done, EPC, Energy Performance Certificate, standards that need to be fulfilled and if not either you can’t let the building anymore so it’s much more of a stick approach and the other thing we see actually in the US is some cities are really advanced with limiting carbon emissions of buildings, for example, New York implemented a local law 197 I think, as part of which buildings can only have a maximum level of carbon emissions and above that you need to pay a sort of fine and obviously that level will go down over time and what we’ve actually seen you could then conclude that investors might kind of not be so interested to invest there anymore but they actually see it as a proactive sign of dealing with the issues by the city and it also gives sort of comfort that the assets there are far more futureproof than maybe elsewhere, so I think that’s really interesting to see.
Susan Freeman
It is interesting and do you think we’re going to see more of the sort of New York type approach across Europe with carbon taxing?
Lisette van Doorn
I think two things, I think we will see far more on a city level which we just talked about, we already see embedded in urban planning laws or approaches, some is not even law but it’s the approach to it. We are actually, in our guidelines, we have also addressed carbon price and we actually think it’s a very important element to create a level playing field across the industry and that is also the way to focus not only on operational carbon but also on embodied carbon. The key difficulty in the industry is what’s the price tag and being at such a capital intensive industry, the price that needs to be high to make players move. In our global emerging transfer report that we launched at MIPIM earlier in the year, we addressed a special chapter on carbon price sort of as a first inventory of what’s happening in this field on a global scale, what our view is, what practice has already been applied, both from an external carbon price so a regulation system like for example the EU trading systems or some other aviation sectors and some other sectors, but an internal carbon price by companies and then you really see indeed the difficulty of setting the right carbon price. Many people speak about 90 euros now a tonne but the question is does that really move the needle and again, like decarbonisation as a whole, it’s really important to also address potential unintended consequences. While decarbonisation, we have a sort of 41.11 responsibility as communities not only the real estate industry public sector to transform all our cities, not just those CBD offices, high end residential, where it's easier to make the business case, no, because the cost to value is much lower for affordable housing, maybe buildings in somewhat more deprived neighbourhoods, listed buildings, it may be extremely hard to make the business case but by taking into account the potential societal cost of not addressing this in terms of further deprivation of neighbourhoods or buildings and therefore having to rebuild them altogether is very important because that can help to make the business case. Also recreational value like repurposing of buildings, 42.08 adding other uses to it. I think it’s really important and the same applies to carbon price because some players might be hit harder because they don’t have those comfortable profit margins than others have and I think that is important, if you want mechanisms like this to work, you need to take that into consideration.
Susan Freeman
Do you think the banks could be doing more to stimulate decarbonisation or are they doing enough?
Lisette van Doorn
That’s a very interesting question. Actually, we think a lot about that. I actually think in the current market they hold the keys to also where the market might go. I think they’ve many of them have already increased their requirements in terms of ESG by either linking loans and the financing costs to building certifications or bespoke ESG score cards and then improvements made over time. Clearly we are in a tough situation in terms of financing right now with costs having gone up massively, values going down, so refinancing most likely you are 43.33 even if the 43.34 fee might stay the same, you need to add more equity. Add demanding at that moment to immediately have more investment in ESG might be tougher for the players also coming back to the previous discussion we had at the beginning of the conversation. So I definitely think say in normal market circumstances you could say regulation coming via banks can move the market much more quickly than any other regulation can but I think under these circumstances it needs to be treated with care because otherwise we can kind of push the market in distress a lot of assets in a very short period of time and I’m not sure that’s of any interest to anyone.
Susan Freeman
No. And while on the subject of banks, I just wondered what sort of discussion there was at the conference on the availability of debt finance because it was one of the sort of major concerns in the emerging trends in real estate report that you issued in March, you know just a few months ago so, you know as you said the you know the banks in many ways hold the keys and one of the concerns for real estate is the cost of debt finance and availability of debt finance at the moment.
Lisette van Doorn
I wish I had a very positive answer but I’m not sure. I’m not sure. The continued uncertainty we face is I think around the interest rates go up further. We haven’t reached that say comfort level yet but I think many recognise that interest inflation and interest rate may stay higher for longer. I think the key element that the industry is sort of waiting for is have we now reached the top of interest rates? You tend to hear that many people think that we’re nearing the peak but not fully there yet and actually, this week there might be maybe news again and I think with that, it remains very uncertain and people are still in a wait and see mode. And the other thing I think that kind of is in direct connection with that is obviously how much have real estate valuations adjusted? Because on the one hand the values, some values it seems that logistics has repriced more than many other asset classes but what is going to happen and that gap basically determines why the financing costs have gone up massively so that discount is not yet in the pricing and with the EU moving towards recession, I think now we’re now in a technical recession, and unemployment is increasing, so where will that balance end up? Will we be pushed into much deeper recession if interest rates continue to rise? So, financing is very limited but in a total subset of a market where we face a lot of uncertainty in terms of where is economic growth going, what are tenants going to do, I think there is the real mismatch between even if you could get the financing, you probably can’t make the deal work because the values haven’t adjusted sufficiently yet.
Susan Freeman
Yeah, it’s an interesting, interesting time. So, just to just change direction slightly, we have discussed before the image of the property industry and you know it’s something that you know we have been looking at in the UK, you know there have always been concerns about the sort of reputation, negative image of real estate despite the incredibly positive things that the real estate industry does, somehow those messages don’t get across, whereas you know anything negative immediately makes news. I mean is that something that you know you are also concerned about and what do we do about it?
Lisette van Doorn
It’s definitely not just the UK. In The Netherlands we see the same and in many other countries I think it’s the same perception. I think it’s very much about keeping up the good work we do and try to showcase that more and kind of hopefully at some point that stands out and especially also I think in the positive collaboration between public and private sector, showcasing those examples, look at what great things have happened in the collaboration. Recently we had another session about King’s Cross, we’ve been talking about so many times but I think we need to continue to showcase the positive things that are happening and the contributions that are made to quality of life and liveability in cities and then hopefully one day kind of the sentiment will turn.
Susan Freeman
And one of the important things is obviously bringing in you know the younger generation, you know the next generation are going to change things and I think you do quite a lot of very valuable work at ULI Europe to encourage young leaders.
Lisette van Doorn
That’s right. About 25% of our membership is young leaders, we define them as younger than 35, and it’s just tremendous to see a) their energy but also their contribution to the total of ULI, the new ideas they bring in and the discussions they have and especially that exchange, I think is so energising. We’re currently running a prop tech innovation challenge, trying to really bring prop tech closer to the say traditional real estate industry and the level of enthusiasm but also what interest we see in the market for that has just been outstanding and there are so many more initiatives they have created, system cities where young leader groups from cities across Europe are being paired up to learn from each other, to exchange ideas. We do a study tour for young leaders every end of September, the next one’s going to happen in Athens, after summer, it’s just incredible the level of energy and given the challenges or opportunities the industry is facing, climate change, technology, it’s so important to bring those views from the younger members of the industry in because it’s almost reverse mentoring if you will. That part of what is the impact? And also how do they want to live? How do they want to work? Ultimately, what’s now being built is for them and maybe even their children.
Susan Freeman
It’s so true and I’m always so impressed when I come to the ULI Conference that you know so much of the programme is devoted to you know the younger members and that they’re getting together and their ideas are carried forwards, I think you know that is so important. So, as we finish this discussion Lisette, what do you hope will be achieved by next year’s ULI Europe Conference in Milan?
Lisette van Doorn
I definitely need to say something about our seated programme and I actually hope that the guidelines by then will have been picked up the industry. We’re in the process of creating tools to help that, so I also hope by then they will be up and running so the industry can use them, that we are able or have been able to address a couple of the most prominent issues in the collaboration between occupiers and landlords and try to kind of develop and test solutions, that would be great. And for the industry, I actually hope that any potential downturn won’t be too massive because there’s so much we need to get on with, we need to build new houses and I really hope that doesn’t come to a standstill so, if any, I hope that kind of the market downturn if you will, is not too negative so we can keep, keep going.
Susan Freeman
I hoe so. I hope so as well. So, Lisette, thank you very much. I will definitely be seeing you in Milan next year and we hope for better weather than we had in Madrid. And thank you so much for joining me today.
Lisette van Doorn
Thank you, Susan, really appreciated it.
Susan Freeman
It was great to talk to Lisette on the challenges of decarbonisation and how your members are tackling the very many headwinds facing real estate just now.
So, that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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