Renewed interest from international investors leading to increased deal flow means real estate practices are back in favour again. We ask leading practitioners about the future of this volatile market
Solemn vows
‘We’ve treated real estate like a marriage – in sickness and in health, for richer, for poorer. We haven’t reneged on our responsibilities, so when potential new clients talk to existing ones about our relationship, they hear the same thing – that we’re a committed and consistent team that has continued to deliver.’
Leona Ahmed, real estate divisional managing partner, Addleshaw Goddard
Magic profits
‘Magic Circle firms seem to think they don’t get enough of a profit out of real estate. My view is that they’re probably not approaching it in the right way. It’s all about having the right structure for the team – it’s not going to work to just have a handful of partners with one associate each. You need a strong team.’
Jackie Newstead, global head of real estate, Hogan Lovells
Global portfolios
‘All the Magic Circle will be chasing after very large transactions worth billions. If you look at some of the logistics portfolios that have been sold recently, there’s been an increase in sales in those which would be of interest for firms with international coverage. That’s when real estate becomes more global.’
Adrian Levy, global head of the real estate sector, Clifford Chance
Flight to quality
‘One of the challenges is recruiting high-quality people, because of the nature of the complex work we’re doing. In a downturn, property is often hit hard in law firms, but in those circumstances there is a flight to quality, which we’ve benefited from. As a result, great people come to us and we have thought about building the team when others have reduced theirs.’
Ciaran Carvalho, head of real estate, Nabarro
Cut-throat
‘It’s extremely competitive out there and we need to work hard to maintain client satisfaction. It’s not a cliché; it’s important to be client-led as there are many more fixed-price deals. You have to be smart with fixed fees and make sure the job is done properly. If I were a bright young real estate lawyer, I would want to be in the place doing the best deals.’
Martin Wright, head of European real estate, Mayer Brown
International power
‘I see a resurgence in confidence. What’s picked up for us are multi-jurisdictional deals – by that I mean portfolio deals with multiple assets in different countries. It started in the industrial space and has built up in the last year. The international nature of deals has become more significant. In the current market it’s important for real estate firms to be international – to have that string to your bow.’
Andy Bruce, UK real estate head, Linklaters
London loves
‘Certainly in London things will get better – it’s where we do most of our work and where the highest-value real estate is. There’s an overseas investment market and a big-ticket development market – those are areas we’re focusing on. There’s obviously a divide in the City for firms who have invested and maintained their real estate practices and firms who have made a strategic decision to de-prioritise it.’
Richard Forsdyke, partner, Herbert Smith Freehills
Gilding the lily
‘Where fees can become a big issue is if there’s over-gilding. It’s about managing the deal and retaining control, not letting the legal work run away with itself. When it comes to fees, many of our clients are enormously loyal and we’ve done deal after deal with them. Others will cherry-pick law firms on a deal-by-deal basis to secure the lowest price each time. I don’t have a problem with that – we provide a quality service and our fees reflect that.’
Dominic Cunliffe, partner, Macfarlanes
People shortage
‘One of the problems we have, which I guess is a nice problem, is that we still need more resources. I’m therefore pleased that we started hiring more than a year ago. Most of the firms that you speak to are struggling to get junior resources now. I’ve even heard rumours in the market that some firms are looking for any lawyers, regardless of whether they’ve got real estate expertise or not.’
Ian Brierley, UK head of real estate, DLA Piper
Building momentum
‘If you look at the numbers for real estate investment in Europe, London saw by far the biggest spend. We’ve seen a huge amount of office investment. In addition, the house building market is certainly keeping us busy, with developers very much looking at building. A host of factors, from government support, to changes in the economy, to house price movements, to interest rates, have all contributed to the builders going out and looking at more development. The government pushing for more infrastructure projects is also going to be a major source of future work.’
Hugh Lumby, partner, Ashurst
New opportunities
‘We kept our team of mainstream real estate lawyers and our specialists intact throughout the recession. We’ve seen recessions before sadly and we know property is a cyclical business. The main way we took advantage of that is benefiting from new opportunities from inward investment instructions brought about by the firm’s global expansion during the recession.’
David Sinclair, head of real estate, London, Norton Rose Fulbright
For further analysis, see: Back in the game – revival at last for real estate but the players have changed