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Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
The effects of technological change on the equity market have been much written about and discussed, and the structure of stock markets profoundly changed over the past decade. The UK commercial property market is seeing equally significant changes which have gone under the radar somewhat, we suspect largely due to concerns about the consequences of Brexit. Whatever those are, they will be temporary and largely cyclical, but the changes effected by technology, chiefly the internet, will be long-lasting and secular and have a much more profound impact on the contents and structure of investment portfolios.
The main issue is the rise of online shopping and its consequences for retail property and distribution warehouses. Another issue is the change in how companies use offices: the growth in co-working, the rise in remote working, and more flexible ways of using property, all of which tends to trend towards a reduction in the footprint needed by commercial property users. We review how the mainstream UK property trusts are positioned vis-à-vis these trends and explore how this new reality can be exploited by investors.
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