Jones Lang LaSalle Incorporated (JLL) Earnings Call Transcript & Summary

So let's get started.

I will start with Anthony, and we can just keep the round going. Anthony, what word would you associate with the year 2020?

Opportunity?

Abhinav?

Survival.

And Hugh?

Opportunity. Sorry, Anthony, but I had to copy you because it has been a year of opportunity.

That's perfect. Let's switch gears and look at question number two. How would you characterize the performance of the real estate sector in 2020? Let's start with Hugh.

Challenging.

Abhinav?

Is it just one word again or...

Only 1 word. Maximum 2.

Survival, again, so.

And Anthony?

Surprises.

And we have now Jonathan on the line. So Jonathan, a question for you. How would you characterize the performance of real estate sector in 2020?

Challenging.

Okay. And let's switch gears to question number three. What was the best real estate opportunity in 2020 that surely none of you missed? Let's start with Jonathan.

None of us missed or that was the sarcastic part of the question?

That was the sarcastic part of the question.

Well, clearly, logistics is a stronger set.

Abhinav?

Probably distressed hospitality.

Anthony?

Well, I'm with logistics as well.

And Hugh?

Looking across the entire asset classes, partnerships.

Partnerships, perfect. Now because you will identify the best opportunity of 2020, but no one is a life of past returns, where do you see the best opportunity going forward? Let's start with Abhinav.

Going forward, I think the hunt for yield is going to continue with a lot of dry powder with a lot of sovereign funds and pension...

So, the 1 word?

Oh, is it still 1 word? Okay.

Still 1 word.

Really, this is easy.

This is tough.

Best opportunity going forward probably office.

Office. Anthony?

I'm still with the logistics.

Hugh?

Yes, I'm going to have to say logistics as well, I think.

And Jonathan?

I'm going to be an outlier and go hospitality and leisure.

Perfect. Where do you see the biggest risk going forward? Hugh?

Partnerships.

These partners are giving you a hard time, I can tell. Abhinav?

In which subsegment you're asking?

In general, in real estate.

In real estate, probably overleverage is going to be a big, big -- depending -- it doesn't matter which sector it is, but that's what's going to kill.

Jonathan?

Retail.

And Anthony?

Hospitality.

We have very interesting and differentiated ideas here, which is exactly the purpose of this panel. Now how many days per week will we end up working from home in 2021? Abhinav?

This affects my business directly, so I'd rather not say.

Okay. Fully in business, every single day. Jonathan?

Two.

From home 2 days? Hugh?

Yes, I think 2 to 3. I'll go 3. So it's a different answer to Jonathan's.

And Anthony?

It's not a number. I don't think you can generalize.

That's true. But let's say in your business?

Half a day.

Poor people at JLL. Now another very quantitative question. I'm sure you have precise answer. How much will office demand decline going forward, let's say, over the next 5 years? Jonathan?

20%.

Hugh?

10%.

Abhinav?

Globally, there might not be an overall decline because there will be markets that -- I hope I have more than 1 word. Do I?

No.

No.

So 0.

No, it might not decline globally. But if what Hugh says, 2 to 3 days is right, we're looking at a 50% reduction, which is pretty scary.

Not necessarily, but we can talk about that after...

Yes, I'm done with the 1-word thing. I can't do that.

So what's the number?

It's probably flat.

Flat. Okay. And Anthony?

Over 5 years positive.

Okay. So that leaves us -- let's say, that's about minus 5% decline is the consensus of the panel on average. Is industrial still an attractive investment opportunity? We have already touched upon that. So I guess it depends on the panelists. Let's skip that. Everybody talks about ESG. What does ESG mean in your investment process? Again, only 1-word answer, and we start with Hugh.

My investors.

Investors. Okay, driven by investors. Jonathan?

One word is impossible. The desire and need to approach investment from a diverse perspective.

Okay, diversity. Anthony?

Critical.

And Abhinav?

Yes, going forward, very, very important.

Okay. That's great. That coincides very well with what was said earlier in previous panels. Now an interesting question. I'm sure the women in the room will like it. What's the percentage of women working in your company? Let's start with Abhinav.

[ Challenging ].

Low.

Low?

Well, I'm in real estate and construction, so in India...

It's a great number.

Yes. I'd love to have more women around me, but I have 3 daughters at home and a wife, so I'm good.

Jonathan?

It's about 35% to 40%, but not high enough in senior positions.

Anthony?

34%.

And Hugh?

42%.

Okay. That leaves us roughly with 30% to 40%.

No, no. 42%.

I know, but overall average of the panel is around 35% to 40%.

42% then, I'll say again.

Okay. Last question, with 1-word answer is what's the prediction for the performance of the real estate sector in 2021? Let's start with Anthony.

If you said volumes, volumes up 15% to 20%.

Performance?

Define performance as in capital values?

Yes.

Broad range, I would say, 10% to 15% average?

Up?

Yes.

Abhinav?

No, I think we're in for more pain in 2021. So I don't know how much negative, but a little bit.

Hugh?

Yes. I think we're up 15% -- 10%, 15%, the same as Anthony. I mean, in the markets that I'm -- we're involved in, we see confidence and growth opportunity.

And what's the perspective from London, Jonathan?

Well, if it's 1 word, mixed.

Excellent. On our real estate security side, we are today underwriting high single-digit and low double-digit returns. So I would concur to what the panelists have said. But yes, definitely, it's mixed by sector and by geography. So now let's dive a little bit deeper into the discussion. And I would like to start with a question, what impact has indeed COVID had on the real estate business in general. What are you seeing when you talk to your partners, to your clients? And what are you seeing in the market? Let's start with Anthony.

And this is not 1 word, right?

No. This is no longer 1 word. We can...

Okay. That's easy then.

You're out of your verbal confinement.

Okay. Excellent. Look from an Asia Pacific lens, where the capital markets business is off about 28% in volumes, the leasing market demand side is down 25%, which is why I said surprised because I think if you started the year around March time, you wouldn't have said those types of numbers, it have been a lot lower. And it's different across different asset classes. So some of the bigger falls, not surprisingly, office is down 37%, retail is around 47%, hospitality is about 64%. But on the flip side, there's some positives. We're seeing logistics is up 20%, multi-family is up 30% and data center is up 200%. So it's a real broad spectrum. And that's why I said it's a surprise. I think the second part is looking really into Q3. Q2 was particularly tough. Q3, we saw a rise of about 30% volumes. And where you saw those rises were particularly markets with high domestic liquidity, markets like China, Korea and Japan. In fact, if you look at those 3 markets, Q3 of 2020 is flat with 2019. So it's a real broad spectrum of impacts with some positives and then there are some negatives out there.

Great. Thank you for giving us the data on the transactional volume. Hugh, what about your business? Where have you seen the biggest pain and the biggest headaches caused by COVID?

Well, we haven't seen perhaps the degree of pain that the hospitality. We don't have any hospitality at the moment. So I would say in our markets, hospitality would have seen the most pain. In Europe and North America, we have a lot of exposure in hospitality, and it's been painful. Retail, surprisingly enough, for us, has been quite good in Australia. As Anthony said, Q2 was painful. Q3, there was a phrase coin, which was shopping revenge. And we've seen phenomenal sales performance from our retail tenants. Admittedly, in 2 large-format centers where they're doing a lot of homeware and outdoor activity stuff. But nonetheless, it's retail. Offices across the region have been strong. We haven't had record leasing, but we have had really any vacancy or further vacancy. So we're all running at about 90% plus. And where we focused our attention has been to continue to develop relationships with one of the most important stakeholders, which are the tenants that pay the rent to our funds, and that pays the investors the distribution to understand what their pain is. And then as a partnership, and I talked about partnership being an important part of 2020, understanding how we can work with them to see them through the short term. And then we benefit mutually through the medium and long term. And that's still going on in some of our F&B -- with some of our F&B tenants, particularly here in Singapore. But there hasn't been as painful as perhaps people would suggest, my comment.

The Indian market has also come somewhat to standstill given the pandemic. What are you seeing, Abhinav, directly in the commercial space? And what are some of the operating metrics that you are seeing today within your portfolio?

Office as a segment in India has been less impacted in the immediate to short term. So unlike retail and hospitality, where there's been a lot of pain, we haven't seen it in office yet because all of them are long-term leases and the tenants are invested. But I think in the medium to long term, we're going to know what the actual impact is because it's not like tenants can just wind up their lease and vacate their office overnight since they're all committed. But in the short term, the last 6 months, there's been basically a freeze in everything. No decisions are being made. Everybody is in a wait-and-watch mode to see how the return to office is going to look like. Because as of now, I think across the country, office parks are operating at single-digit occupancies, which doesn't affect the rents and things like that, but it gives the company's time to think how much they really need the office. And hopefully, after the vaccines are rolled out, things should start getting better in terms of occupancy. But right now, it's very, very low occupancy.

Given that you both operate in the commercial space, how much pressure on office rents do you foresee over the next 12 to 24 months as naturally the negotiation power is shifting from the landlord to the tenant?

Yes, I think short term, there's going to be a lot of negotiating power with the tenants, not just for new leases, even renewals, we're going to see a lot of developers and asset owners drop their pants just to keep the tenants. That's my view. But you have a much larger...

I mean, I do. But it's here, in Singapore, particularly, it's hard to measure because we were about to enter a period of supply. There was a fair chunk of supply coming on the market this year -- sorry, '21 and '22. So trying to identify what the arbitrage is for the lockdown is harder to do. But certainly, the overall economy has taken a bit of a slug. And therefore, plans to expand start-ups, they've all been put on hold or they've canceled. So that has a natural impact. But I think the rental decline, we see 15% -- 10%, 15%. But look, with short-cycle business, it's 3-year leases. So I think that we will see that recover with -- alongside the other factors that changed the supply and demand equation.

If -- I mean could I just comment on?

Yes, of course.

Look, it's very interesting because people tend to generalize when they talk about the office sector, and it's broadly a cyclical business, anyway a very supply and demand driven over many, many years, and we've seen many cycles. And each time we have a cycle, people kind of write-off the office is an asset class, and GFC was the last time kind of people wrote it off. If you actually look -- and I'm very focused on APAC, so apologies for that. But if you look at the spectrum of markets in APAC for the whole of Asia Pacific, rents have come off 3% this year, which is why I use the word surprise. But on one end of the spectrum, you've got Hong Kong, which has come off 25% as Hong Kong notoriously does. In other markets, Southeast Asia are up 6% or Bangalore, some of the markets in India are up. I think it's very dangerous. People are attributing rental decline in office to work from home. They're related, but it's not the driver. The driver of office demand is basically companies either hiring or firing staff. And again, it's cyclical. We're in a global recession. Companies retrenching huge numbers of staff, which means they don't need office space. So I think it's -- I think the conversation is office is dead because everyone's going to work at home. And I will qualify my half a day later.

We will get back to that later.

It's about retrenchment, and it's about tough times, but economic times will come back. We saw this post-GFC. Everyone had written-off this sector off. And there's this demand theme called technology. And the technology companies really flew hard after GFC and absorbed all of that space. And if you look at Asia Pacific, the office industry in 1995, I think Peter Drucker wrote off the office because I think all the Internet. And here we are in Asia Pac, all these years later, there's 5x as much office space as there was in '95, and it's fully occupied.

But it's very interesting also the changing nature of the demand and what's driving the new incremental demand for office space. And it used to be the financial sector a long time ago, but it's no longer the case. It's now definitely the new industries and also the change for reconfiguration of the office space. But Jonathan is waiting for an answer for me. And I would be very interested to learn what fundamental changes do you see within your business, given your exposure to hospitality and the fact how hit this sector was this year? What are you seeing also in terms of operation metrics in your splendid hotels in New York, L.A., Miami?

Well, look, listening to the other panelists, I think that it's also very easy to broad -- to express broad conclusions. When you really have to look at it sector by sector and country by country, and we've got exposure across Europe, I haven't got the exposure in Asia that the other gentlemen have. But obviously, in Europe and the United States, we're seeing very, very different pictures. So in our residential portfolios both in London and in Warsaw are trading fantastically well, continuing to be extremely robust. Office in Spain has been challenging. But in other parts of Europe, the demand remained strong. And I think that -- again, the point that's made about, it's not just about working from home is important. There's no doubt the hospitality in 2020 has been -- challenging is probably not the right word, let's -- you can think of a more aggressive adjective. So our hotels in Los Angeles, The Waterfront Store and the Beverly Hill, which this time last year, were trading at almost 90%, 95% capacity, occupancy are now trading in the 20s and 30s. And that's hardly surprising, bearing in mind that cities like Los Angeles and London and New York conveyed in and out of different stages of the virus which was directly impacted people desired to be outside or be in hotels. So I think you have to believe in your fundamentals of your asset when you own them in the way that we have in 1 or 2 situations. And then you've got to ensure that you've got the right cash flow because I don't think we can expect much recovery before if you want to look at when we're going to get back to 2019, we're not before 2022 at the earliest. I mean it's wonderful. And obviously in Britain, yesterday, the first global dispensation of the vaccine. The second one to a man called William Shakespeare, which is quite poignance. I think. But I mean, yes, that's a great sign. That we are on the road to some level of recovery, but we have to assume it's going to take at least another 12 months before people start to feel more confident and start to get back to some levels of 2019. So tough. I mean, I was talking to hotel owners in London yesterday. We don't own a major hotel in London, 15% occupancy. And they're lucky to get there, I think. So I think we have to understand and accept that this was unforeseen. No one would ever have predicted that the hospitality sector will be hit the way it has been. You've got to make sure that there you have the cash to live through that cycle. And where I think -- and I think it's been said already, I think the flip side to that is that the opportunity to build a hospitality business over the next 24 months from levels of which you could never have dreamt of before will probably not be seen again for a generation because of the situation of their people, where the forbearance of the banks disappears, equity will be totally under pressure, but I think that will create huge opportunity.

Considering that there is very limited lending to hotel owners and operators at the moment and the distress in the operational metrics, what kind of opportunities are you seeing? And maybe also, Anthony, you can chime in, what kind of deal volume are you seeing on the distressed side of hotel space? And I would agree, looking at the public market that, that's the area of the biggest distress within real estate today. And for those who have patience and capital, perhaps an opportunity with a lot of pain in the interim to make some outsized return when the world comes back to normal.

I mean I'll in fact just quickly answer that. I think that you're not seeing grade A opportunities yet in bulk because the banks so far have given the levels of forbearance through 2020 because they have not wanted to trigger those situations. I think through 2021, you will start to see a higher-quality assets to come to the market. You are in London and New York and Los Angeles seeing secondary assets already hitting the market. There's well 2 assets hitting the market, they're not even completed where the equity owners have given up that goes to this consensual sales. So I think that you just have to be patient and be clear in your thinking as to the way in which this is going to unravel. I mean just take conference hotels as an example. I mean, 0 income all year. 0 income well through 2021, one would have thought because people are just not going to meeting groups the way they have done previously.

Anthony, how much distress or deal flow are you seeing in the hotel space and change in valuation, let's say, over the past 12 months?

Yes. I mean I think just generally, not just the hospitality sector, but the levels of stress or even distress in the system is very, very limited. And as Jonathan said, the banks are not squeezing anyone. The more mature institutional-type markets, there's a little bit of pressure coming. But the weight of capital that's built up in this long cycle of post GFC is $40 billion of dry powder in Asia Pacific alone, chewing to get into real estate. People have masked enormous amounts of cash during that period of time, and the cost of capital today, interest rates are all-time low. So there's no genuine pressure certainly in 2020 on investors of all asset classes. I think what you will see in 2021 is much keener sellers in the marketplace. And I would agree, if you want an opportunity in real estate today, it's the hospitality sector. I don't think you're ever going to get an opportunity like this ever again to build a hotel portfolio from '21 onwards. So it's exciting, but we're not seeing distress, which is what we would normally see in a global recession, which is what we're in at the moment. So it's a kind of a unique situation that we found ourselves in, in 2020.

So the flip side of the opportunities by sector that we discussed is industrial. The cap rates for industrial are reaching all-time lows. Nevertheless, both Hugh and Anthony expressed strong preference for the industrial sector also going forward. We have seen a lot of transactions also in the Singapore market. CapitaLand just disposed $1.6 billion of science parks to CRCT. A-REIT has acquired $1.7 billion worth of business parks. You seem to be very positive. But isn't there a risk of overpaying for growth that's embedded in this sector. Hugh?

Look, there's always a risk of overpaying. I mean is that the art of the deal, it's getting the right price, depending on where the markets are. And we always look at things for the risk-and-reward optic. And pricing is a key part of that. Obviously, our intention is to invest and create value for our investors, most of whom are pension funds. So we're not on the aggressive side of the risk spectrum, we're on the conservative side. But you have to take some chances in order to meet the needs. So that industrial logistic class area for us is extremely interesting. And we believe that the basic metrics, there's very little land in the key markets. China, you just can't get land. The European markets, you can't get land. Australia, you can't get land. Japan, you can't get land. It's a very, very limited supply chain on the land. And for that asset class, you need big pieces of land. So then you convert, and that requires a bit more cost, offers a little bit more risk, and it reduces your revenue earning time because you've got to do the work. But there is no doubt that, that interest is sparked by the phenomenal success of online trade, retailing, both B2B and B2C. And I was with somebody from Unilever last week, and he said to me that 5% of their goods in Asia Pacific are bought online, and they're expecting that to go to 50% by 2030. So the growth is phenomenal for it. And for all of that, you will need a supply chain solution, which will include big box, cheap to build, cheap to run. That's the other thing you have to think about. These are small ticket investments relative to hospitality, retail and office. And so of course, they become more attractive because you're potentially investing. You are investing small amounts of money, and that's less risk in your broader portfolio management.

That's an interesting part of the structural change that we are seeing the distribution channels. And I think it will be also very important in the distribution of the vaccine, the focus on storage of vaccines. And for that, the industrial sector is very important. Abhinav, you are focused on commercial assets in India. Are you seeing any structural changes, long-term changes? And how is the company adjusting to that? How you adjusting to working from home? Do you have to redesign the office space? What's the future of your sector in the market?

Commercial real estate is like a big elephant. You can't really change things faster overnight because of the volume of investment and just sheer size of the spaces, but I am seeing a structural shift in terms of the ownership of these office assets in emerging markets, especially in India. Even today, I think Blackstone, Brookfield and GIC are the largest office space owners in India, by far. So in terms of structural shift in ownership, yes, I'm seeing it consolidated into either REITs or pension funds owning most of them. To your question on work from home, I think it's too early to tell. It depends on whether it averages out at 1 day from home or 2 days at home. It's just too early to make crystal ball predictions is my view.

We would like to know from Anthony about half a day of work from home for 2021.

Yes. So that's what happens if you try and answer the 1 word, you see, create a bit of tension in the room. So look, I think what you need to understand is it's not really about work from home, it's work from anywhere. I think the core in the phrase, it's remote working. So if you take JLL, for example, our portfolio in Asia Pacific, I mean, we have a big business here, it's 43,000 people. But at any point in time, our office is 60% occupied as a maximum. And our desk ratio to people, we've got 1.3 people per desk. So to answer your question, 40% of our staff are working remotely. So the work from home thing has really sort of accelerated the importance of flexibility. And the new world that we'll start talking about in office is actually much more about flexibility, flexibility with your employees, flexibility with your landlord. It's that lack of the world of everything being fixed in a point in time. So you can see we have a lot of our staff working remotely. And all of us have been working remotely for years in whether it's an airport, on a train, on a plane, in a hotel. So there's nothing new to this. It's just work from home was forced upon us because it was the safest place to go. So if you look at it, it's too simplistic to say it's about work from home. And I think the JLL policy now towards this is we take a flexible approach to flexibility. Meaning, there's no policy, there's no guidelines, you can talk to your manager and request whatever your personal circumstances are. That's the way we're going to deal with it. And I think a lot of companies will be offering that flexibility, but you still need the office space.

I think this is a good segue into what was your biggest managerial challenge from human capital perspective? Because the way how offices are run today is very different to 12 months ago. And how have you really empowered employees to feel connected and engaged? Jonathan?

Yes. I mean -- can I just pick up on Anthony's point? I mean, I think that the word flexibility is the right one to talk about the future. The things that surprised me the most in 2020, maybe not the most, but one of the things that surprised me in these large technology companies that decreed that all their people should stay at home for 12 months or certainly through the summer of 2021. I mean I'm a big believer that the only way that you break down glass barrier is the only way you create great companies and great environments and allow people to flourish is to give them some level of human connectivity. And to answer your question, the biggest challenge I think we've all had is motivation and ensuring that people remain focused during 2020. It has been a very, very challenging year. It's been a mentally straining year for so many people from top to bottom and bottom to top. And therefore, for me, the biggest challenge has been -- and I think we've all seen it wane during the year has been keeping people focused, keeping people into use, keeping people motivated. And I think as we reach the end of the year, we're seeing a clamor for people to get back to their offices, get back to being with their colleagues, being with their friends. And I think it's something that -- it's an encouraging sign, which is why I think flexibility is the right answer rather than the work-from-home narrative, which, as I completely agree, was a drive for safety rather than a drive for something which people wanted to see long term.

Another important topic that was touched upon here today many times is ESG, and it seems no longer a matter of choice, right? It's no longer whether, but how. And I think within real estate, real estate is a big emitter of CO2 emissions. We have, for example, seen the data centers have been on their eyes, but within real estate, data centers are really the biggest emitter of CO2 emissions. So how are you coping with these challenges? How are you reporting the data? What kind of data are relevant? And who is pushing the agenda? Is it the investors? Or are you taking the lead in the space? I would start with Hugh. I know it's a complex question.

There's lots of answers I could give. I'll try and keep it as simple as possible. So first of all, the quick why question is clearly this is the topic of the moment and will continue to be the topic because it's not just a moment that we need to manage this. The investment will take time. It has taken time already, and it's going to be at the forefront of what we do for the foreseeable future. I use the word investors because they are one of our key stakeholders alongside our business partners, people like Anthony, our partners that we might joint venture with, and people like Abhinav, and then our tenants, their stakeholders and then the communities in which we own assets and that we operate assets, there are stakeholders as well. We're not killing ourselves. We're not suddenly stopping making returns because we want to be a green investor. There are plenty of funds that do that. And that impact investment is something BlackRock does as an aside. But our objectives are to make sure that we're satisfying what the investors want but also being a responsible manager of their money as well. So we've set our own guidelines for sustainable investment. And they're driven by how we believe as a market leader, we're the largest investment manager in the world that we need to be showing the way. Larry Fink has not been shy about telling the companies in which BlackRock invests, what they should be driving themselves to. So we need to hold up the standard to show them the way. So across our real assets business, which includes our renewable and our nonrenewable infrastructure businesses and then across our securities business, as you know, we do have a number of very key benchmarks that we look at. But at the end of the day, we have an obligation to create value for our investors. And so the two must work alongside each other. And so it's being responsible, but also making sure that you are making that value proposition for your investors.

That's very important. And which 5 of geographies within your partnerships aren't driving the ESG theme?

Which geographies?

Yes.

Well, our mandates are across the board. There are some countries perhaps where it's -- there's more advanced thinking. So Australia, for example, would probably be a good example of where that advanced thinking is. There's lots of what desire and want in China, but on the ground is harder to implement. But in Australia, for example, we've entered into partnerships with solar companies where we put solar farms on roofs of buildings. We increased the value of the asset, but obviously, we're also producing power for the tenants and for the grid. Japan, again, expressing their desire, but not so easy to get things done there. There's a lot of government incentives on utility bills, the utility costs. Singapore and Hong Kong want to be up there. And so we work hard to make sure that we match and beat where we can to be competitive and to be the leader, the requirements in those jurisdictions.

I think that what's also great going into 2021 will be the change of gears in the U.S. In this domain, the U.S. is the late adopter or lager. So with the President Biden's administration, hopefully, we will also see some catch-up and reactivation of these efforts in the U.S. Maybe the last topic that I would like to touch upon is the importance of proptech and fintech within real estate. And to what extent are you innovating and keeping pace with these changes? Anthony?

Yes. I think everyone would agree that the real estate sector on the whole has been a laggard adopting technology across the board. But I would say, in a strange way, that in 2020, COVID actually has been an incredible accelerator of change in terms of the adoption of technology. I think the products and tools are there in the market, but the business hasn't necessarily adopted quickly until this year. I think one of the barriers for real estate is quite a people-intensive business, and it's actually quite an emotional business, particularly if you look at the residential sector, which arguably is going to be the most expensive thing that people ever buy in their life, and it's an emotional decision. And there's still this need to look, see, inspect, walk the building before you make a decision. COVID, that changed a bit, but not as much as we thought. And I think some of the areas that I'm sure Huge would agree with this, is the whole IoT and utilization technology and software to manage the performance of asset, whether it's a shopping center or an office driven by social distancing, health and safety, sustainability, ESG. So from an asset management standpoint, I think that's a phenomenal opportunity to improve the efficiency around energy and health and safety. So it's a short answer, it's a huge opportunity. And great to see real estates finally grasped this.

So we have covered a lot of ground in the last 40 minutes. I think the future for real estate, despite of it being challenging, remains also bright for specific sectors and specific geographies in the world of very low interest rates, the benefit of real estate is still the embedded yield that is very, very attractive. There is roughly 400 basis points spread on average today around the world, which is historically unheard of. So I would like to conclude by saying that 2021 will be the year of real estate because it has been the laggard and the underdog in 2020. Please join me with a round of applause to help our distinguished panelists in making this session interesting interactive and in depth.