“We are very keen on the UK, which has been a real sweet spot for commercial property over the last couple of years,” she said.
“Fundamentals are still very strong. There has not been any overbuilding in this cycle – very few companies have taken on any speculative development, and as a result yields have compressed to such a low level that they may not be able to go much lower, and we are now seeing real rental growth coming through.
“We particularly like the London-focused securities in the retail and office spaces. We are stock-driven, but when we look at the UK it just so happens that we like the London-focused names.”
This outlook translates into holdings in Shaftesbury and Capital & Counties, the latter of which features in Tiltman’s top 10.
She is also keen on the European office market, which Tiltman believes is about to embark on an upward tick just as the UK threatens to wind down.
“We are most positive on UK and European property at the moment, the latter of which has lagged behind,” she explained. “Paris is a great example of how owning global real estate securities can protect you from a cycle.
“While London offices are on their way to peak – if not already there – Paris offices are just about to hit the bottom, which shows how two regions can be so close geographically but completely different in terms of cycles. There is a lot of value still to come through on the continent, and the macro backdrop means that it is ready to go.”
