Author: bsullivan

JLL Spark, a division of JLL, announced today the creation of JLL Spark Global Venture Fund, which plans to invest up to $100 million in companies focused on leveraging technology to improve everything from real estate development and management to leasing and investing, while enhancing the experience of those who occupy it.

The fund will also help entrepreneurs and their companies by connecting them with JLL’s business lines and clients for insightful feedback and distribution of their products.

“Having been entrepreneurs ourselves, we know how hard it is to bring a new product to market, especially in an industry that has been slow to adopt new technology.

That’s why our goal is to partner with entrepreneurs, and help them tap into the resources of JLL’s business lines so they can succeed in rapidly growing their companies while we also create value for JLL’s clients,”

said Mihir Shah, Co-CEO at JLL Spark.

The new fund will focus on seed and Series A investments, as well as select later stage rounds. Typical investment size will range from a few hundred thousand to several million dollars. JLL Spark will direct its efforts to technology startups with products that can help JLL investor and occupier clients, or that can be used by JLL businesses to better deliver their services.

The fund is also interested in companies that are inventing new technology-enabled business models in traditional JLL service areas or those that will help expand its services to new client segments.

“Creating this $100 million venture fund through JLL Spark allows us to continue to lead the real estate industry in bringing the best proptech ideas to reality. It complements and expands our substantial ongoing investments in innovative, cutting-edge digital solutions, which is a core part of our Beyond strategic vision and commitment to achieve ambitions for our clients,” said Christian Ulbrich, JLL’s Global CEO.

To learn more, please visit https://spark.jll.com.

Real estate investment trusts are growing in popularity around the world, as investors seek new ways to access an increasingly institutional market. REITs are listed as private funds which are tax-transparent, so investors are only taxed on their dividends.

This puts them on a level playing field with those who hold real estate directly. The Trusts are required to distribute the majority of taxable net income to shareholders and must adhere to certain restrictions on its operations, organisation and ownership.

The security of an institutional regime, low barriers to entry and more liquidity than direct property investment, offer an attractive option for investors. In Russia for example, REITs are attracting high levels of interest as the property market recovers, following a slump in 2014-2016.

Collective investment including REITs schemes have become more popular in Russia as macroeconomic conditions have improved, says Olesya Dzuba, Head of Research, Russia & CIS, at JLL.

“Their popularity is supported by declining bank deposit rates, which encourage savers – both individual and institutional – to seek alternative, higher yielding investment instruments.”

The market has seen rising interest from overseas investors and more equity deals in 2017 after two years of debt restructuring, according to JLL.

Why more property investors are looking to REITs | The Investor

Brand, intellectual property and real estate will be the key stores of wealth in the future. The question for investors is where and what to buy to store wealth for the next 10 years.

Rana Foroohar, from the Financial Times, gave that insight in her keynote speech at the ANREV conference late last year, causing a happy stir in the audience.  Institutional investors in real estate are well placed to provide a home for savings and incomes in the future.

In a world where the real US 10-year government bonds rates have delivered roughly 1% per annum over the last 10 years, Asia Pacific office total returns have averaged 9.6% per annum over the same period.  Although not directly comparable, it is pretty compelling.

The question for investors is where and what to buy to store wealth for the next 10 years.

At the start of 2018 we are observing a globalised economic recovery with all three regions growing. This year we should start to see a quickening of interest rate rises to a more normal nominal level following the global financial crisis.

However, interest rates are part of a longer global downward trajectory for which there are mixed opinions as to the cause[1].

Regardless of this 30-year cycle, central banks are signalling that rates may rise should inflation take hold. The potential for inflation to lift as growth continues means that even as nominal levels rise, the level of real rates is likely to be much lower than pre-GCF.

Low real rates and the prospect of inflation will continue to see investors allocate to real estate, either towards 10% of their portfolios or even greater for those well-versed in real estate investment.

The growing global economic recovery provides a broad swathe of real estate demand. You can find our short-term outlook for real estate markets in our quarterly Global Market Perspective

Here are some of the longer term secular shifts to watch in 2018 that will influence how real estate performs as a long-term store of wealth:

1 Winning cities with long-term demand for real estate

The cities with long-term demand for real estate and those with technology-based occupiers win as other tech occupiers co-locate to attract talent. Migration to winning cities will continue to be a global phenomenon.

No wonder, then, that there is a battle to host Amazon’s next HQ, given the spillover effects to young millennial talent it’s likely to attract.

Across Asia Pacific, we found the primary reason for the choice of location for technology firms is access to talent.

If you can get your city/suburb/neighbourhood to be the next tech hotspot, agglomeration works and long-term demand will sustain.

Since demand has the potential to be global (smartphone access) and supply very local – specific locations in tech-focused cities will win.

2 Falling cost of technology to shift transaction costs

This will allow a shift in transaction costs. Information and search costs, bargaining costs, and monitoring and enforcement costs of any exchange have moved fundamentally over the last 10 years.

Airbnb is a case in point.

Hotels survived because, from a transaction cost viewpoint, they were cheaper than trying to find a room to rent on a short-term basis.

That was until the arrival of the smartphone. Now hotels have to compete on service; location is less of a hold. This will apply to other forms of real estate.

3 Rise of the ‘co’ economy

Curating communities of co-workers and co-occupants will be the new role in adding value to real estate. Technology reduces the costs of outsourcing and freelancing. In turn, that changes employment patterns and a desire for people to co-locate with like-minded people – whether co-working, co-living, or finding friends and having fun.

The genius of co-working companies is not the…