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Managing real estate risk will require further work

The issues our world is facing will need leaders from across different industries to come together to solve them. 

Ten years after the financial crash hit it’s important the lessons of the past are not forgotten. We’re approaching the top of the cycle once again, as shrinking returns push investors into taking more risks, and alternative assets like student accommodation, healthcare and later living receive unprecedented levels of investment. 

It’s against that backdrop that the RICS’ Real Estate Investment Risk Forum (IRF), of which I am chair, delivered its first report – Perspectives on Global Real Estate Investment – this year. Ninety per cent of our survey respondents thought the industry’s approach to risk management has improved in recent years. But there is still some way to go before we can be confident the changes we’ve made will endure.

Despite a greater focus on risk management since 2007/08, moves to paint real estate investment as somehow now immune to the mistakes of the past only serve to reinforce the need for collective leadership in the industry.

With more knowledge-sharing and training top of the bill for the IRF, it’s fitting the report forms the basis for the Trillion-Dollar Question: Global Investment Risk Landscape panel debate at the RICS’ World Built Environment Forum Summit taking place next April. 

On the first day, I will be joined by other members of the IRF including representatives from M&G Real Estate, Aberdeen Asset Management and CBRE Global Investment Partners, all leaders in their field, for an engaging discussion on the investment risk landscape ten years on from the crash and the financial trends shaping the world we live in.

Now in its third year, the Summit is the centrepiece event in the RICS’ World Built Environment Forum’s calendar. A global network of top built environment professionals combining knowledge, skills and resources, the Forum attempts to address some of the greatest problems facing the world today.

In an increasingly urbanised world, the approach of city governments to transportation will be critical as we attempt to grapple with the Fourth Industrial Revolution. With some notable exceptions, there is now a broad consensus as to how mankind should approach climate change. But business and policy makers have barely made headway on how to harness the approaching surge of automation threatening to turbocharge our productivity while sending entire industries into obsolescence.

With these challenges becoming more apparent, the Forum is the perfect example of the leadership that is needed. The changes our world is undergoing do not occur in silos and will need leaders from across different industries to come together to solve them. I hope to see as many of you as possible at the World Built Environment Forum Summit in four months’ time.

On 23-24 April 2018, we welcome more than 1,000 international delegates to the Intercontinental London – The O2 for the Summit. We will explore the impact of industrial transformation, urbanisation and digitisation on the built environment as well as how new collaborative approaches can foster success.

For further information, please visit our website

 

Martin J. Brühl, FRICS, is chair of the RICS Investment Risk Forum and chief investment officer at Union Investment Real Estate.

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What the university staff strike reveals about our broken higher education system

The marketisation of our universities is facing its biggest opposition yet.

The biggest industrial strike ever by academic staff in Britain's universities has begun.

National newspapers are running panicked headlines about what may happen if the strike lasts: “University strike puts final exams in danger”, warns The Times. “University strikes could hit exams and graduation ceremonies”, says the Guardian. But as well as affecting the education of students who are heavily in debt, the strikes will hit academics with very different levels of job security, and university establishments at a time when higher education is on the political agenda. 

The University and College Union voted for strike action last month over a failure to reach an agreement with Universities UK (UUK), the body which represents of the Vice Chancellors of every university in the country, over changes to academics' pension plans.

The pension scheme at the heart of the conflict, the Universities Superannuation Scheme, currently has over 400,000 participants. UUK have stated that the pension scheme currently has a £6.1bn deficit and that the cost of future benefits has increased by one third since 2014. They are proposing a switch from a direct benefit pension scheme (fixed, guaranteed pension payments) to a direct contribution scheme (reliant on stock markets) to maintain the scheme's sustainability.

However, many academics argue the deficit is overstated, and is instead a cynical attempt to reduce the universities' pension liabilties. 

Older and more senior academics who have already spent several decades paying into the system will be less affected by the changes, as contributions will be protected under the old scheme until 2019. 

UCU however allege that this change will result in an average yearly £10,000 loss in staff members' pensions. Academics at 61 universities, including the likes of Oxbridge, UCL, Imperial College London, Cardiff University and the University of Edinburgh will be striking for 14 days. 

The strikes begin on Thursday, and yet no-one seems to know what will happen. FAQs provided by universities to students all appear to have a similar theme: Academic disruption will be minimised, but if you have a complaint, please email us. 

16 percent of academic staff at these universities will be on strike (because most academics aren't a part of a union) but lectures and seminars have still been cancelled. It is still unclear for students whether they will be examined on subjects that they will miss. 

But for the most part, students appear to support the academics. Mark Crawford, a Postgraduate Sabbatical Officer at UCL (the biggest university in the country to strike) says he has been pleasantly surprised by the number of students who have messaged asking him how they can help. 

Perhaps this is due to the pains some academics have gone to minimise the disruption their students will face. Some lecturers have made presentations available online, and have amendeded their reading lists. One academic at King's College London, KCL, has even rearranged her seminars off campus. 

Yet this feeling of goodwill may disappear when reality kicks in. Robert Adderly, a second year Law student at KCL, and a campaigner for the student group provocatively titled “Students Against Strikes” says he’s unsure how supportive students will be once the action actually begins. 

Adderly, while sympathetic to the concerns of the academics does not believe striking is the most effective way to negotiate with Universities UK. He goes on to say that he believes “neither side is willing to compromise” and says that the “only people losing out are students.”

He also says he believes a lot of students “haven’t assessed how they really feel about the strikes” and that the “longer it goes on, the more students who will get angry”. 

Adderly's thoughts are backed by a poll conducted by Trendence UK, a market research company, which found that 38 per cent of students supported their academics on strike, compred to 38 per cent who did not.

Several academics have spoken to the New Statesman off the record about feelings of uneasiness around the strike, arguing that there is a better, less disruptive way of resolving the pension debate. Others are unsure about the leadership of UCU and believe striking will only lead to a build up of work later. 

Professor Andrew Pomiankowski at UCL emailed his students saying while he supported the strike, he would continue conducting his classes this week. He later told the New Statesman “I have a lot of sympathy with the reasons for the strike - the loss of provision of pensions, especially for the younger members of staff. Talking is the only way of resolving this problem. However, I don’t feel that I should disrupt teaching of students. That’s a step too far.”

The strikes go to the heart of the debate about the marketisation of university. Even students who support the strike are in conflict with one another. Notably, students who support the strikes are unhappy with campaigns such as Adderly’s which are also demanding universities compensate them for lost teaching hours. Crawford says your “first instinct shouldn’t be how much am I losing? It should be how much is our staff losing.”

On the other hand, Adderly argues we shouldn’t pretend the marketisation of university hasn’t already happened, saying “It’s here. It’s happening. We are now consumers.” 

Though it appears unlikely that universities will refund students, these strikes are highlighting how our attitudes to higher education have changed in a short space of time, and causing some to ask if this is the future we want for British higher education.