Stephen Elliott, Royal London Asset Management

Stephen Elliott is the Manager of RLAM's Royal London Property Fund, which invests in UK commercial property across all major sectors and regions. RLAM is one of the UK’s leading fund management companies, managing investment, pension fund and other assets on behalf of a wide range of clients. Here Stephen Elliot talks about the company's current projects and shares his view on the UK real estate market.

Tell us a little bit about RLAM. Which locations and segments are you focused on?

RLAM currently manages £2.7 billion of commercial real estate assets on behalf of a number of institutional clients, constituting approximately 5% of RLAM’s total assets under management. Property assets are spread throughout the UK and Ireland, and include the main sectors of retail, office and industrial, as well as more specialist areas such as leisure, hotels, student accommodation and car dealerships.

The delivery of performance from these real estate assets is vital for our underlying clients therefore a particular strength of the team is the expertise in stock selection of specific assets and the knowledge of how to drive performance through asset management and rental enhancement. RLAM’s property team totals 14, including nine investment professionals focused on delivering performance in excess of our peer groups.

RLAM was recently in the news with a regeneration project in North London. We can see there are a lot of large-scale regeneration schemes in London at the moment-what has triggered this development and where do you see London in 10-20 years?

RLAM has a number of major development projects, both on site and currently in the evaluation phase. These include a mixed retail and residential scheme in Colindale, which comprises 90,000 ft² of retail floor space, 301 private residential units and 159 residential apartments that will provide affordable accommodation.

Other projects recently completed by the team include a BCO award-winning mixed-use development in Manchester incorporating a 150-bedroom hotel, 20,000 ft² of speculative office space and some complementary retail space, and the redevelopment of a 1960s retail store in Liverpool to provide a new flagship store for American fashion retailer Forever 21, comprising a brand new 48,000 ft² store over four floors.

Ongoing projects in London include a number of substantial office developments/refurbishments to provide improved accommodation and enhance rental income in a buoyant London market. We are also considering a number of change-of-use opportunities on existing commercial assets with a view to provide further residential accommodation to suit specific markets. 

This change-of-use trend will continue in London over the short and medium term, as the capital continues to evolve, with more mixed-use opportunities being constructed providing good quality residential accommodation alongside more traditional commercial uses.

In your opinion, which real estate segment is most promising at the moment in London and in the UK in general? Why?

London’s global status means it remains a very desirable location for investors in both commercial and residential real estate and we do not see this appetite changing in the short term. This raises the question of pricing and whether more value can be found outside the ‘London bubble’. As the above examples demonstrate, we have invested considerably in real estate in locations outside the capital, where detailed market knowledge is key to ensuring the assets provide performance balanced with limited risk to investors.

Most investor demand is focused on prime assets, of which there is a finite supply, particularly in London and the wider South East area, where we have seen an increase in prices over the last 12 months. We expect this demand to continue in the near term, as the consensus view of a UK economic recovery continues to improve.

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