Funds Europe talks to Clive Short, senior commercial director – fund services and James Morris, senior commercial director at TMF Group, about opportunities in 2021.
As we near the end of an unusual and turbulent year, James Morris and Clive Short anticipate that 2021 may be more promising, once coronavirus and Brexit challenges recede.
“There’s a lot of ‘dry powder’ out there, due to a mix of Brexit and Covid-19. Trying to deploy capital into purchases has been very difficult, with markets the way they are,” observes Morris.
“There is so much capital to deploy globally, especially in the real estate and private equity world,” emphasises Short: “As we enter the final throes of Brexit, we are seeing a bit more caution. But the UK should remain an attractive market, once we’ve established where we are from a European legislation perspective.”
Morris is also optimistic about the post-Brexit landscape: “I think we’ll see a growth in UK funds and I’m pretty sure the government will incentivise people to invest in the UK. So, the market looks quite buoyant, despite current uncertainty, with no deal having been reached yet.”
And he sees a shift, now that the threat of coronavirus is fading: “People are just looking for markets to settle. Certainly, now that vaccines are becoming available, they are starting to plan.”
Opportunities and challenges
As we move towards 2021, infrastructure will be a growth area, according to Morris: “Governments across the world will be backing projects such as roads and HS2 in the UK. I can really see these taking off because they’re solid, long-term growth projects, and it’s a good way of investing cash back into the economy.”
There are some challenges ahead though, as he acknowledges: “People are going to be chasing the same assets. So, finding the ones that are going to generate the alpha return you’re looking for will be harder.”
Short is keeping a close eye on seismic changes in the retail sector: “From a market perspective, the dynamic within the office-space sector is going to be very interesting, especially in central London.
“Everyone’s working practices have changed, so the question is, how will that impact on the office space market − will there be as much demand? Will firms look to have a flagship suite, maybe with hot desking, where you can reduce your capacity by 50-60% because people are coming into the office one or two days per week, on rotation?
“And there is so much vacancy in retail space now, across the UK, particularly when you look at what’s happened with Debenhams and Arcadia recently. There will be buying opportunities, but will they be a smart move?”
TMF Group, which has a presence in over 80 countries, is positioning itself for whatever the future holds: “From an IT perspective, Covid-19 proved to us what a nimble company we can be,” says Morris. “We had everyone working from home straightaway. There was no dip in service.
“Our focus is to keep enhancing our technology, to maintain the speed that we think the market is going to move at next year.”
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