A Reflection on 2023 and Strategic Insights for Tomorrow - A Managing Director's Perspective


Author: Zohra Alidji

As we step into 2024, it seems only fitting to pause and reflect on the challenges and achievements that shaped our journey through the previous year. In this special blog post, we have the privilege of sitting down with our Managing Director to gain insights into the past, present, and future of our company.

Join us as we delve into a candid conversation with Doug Burton-Cantley, exploring reflections on 2023 and uncovering the exciting prospects that lie ahead.

Firstly, you have been with Avignon in one form or another for many years and seen multiple cycles of the economy. How can you bring this prodigious experience to bear?

“Well, first and foremost, I’m not that old, but I have seen a few cycles and experience tells you that the markets always find their place. The thing that we’ve got to do within Avignon is understand those market trends and the timings. We can’t necessarily control the timings, but I believe that we are focused on the right strategies, in terms of both the medium and long-term sustainability of real estate, which will always be a long-term asset class, even though investment business plans can be much shorter.

Experience tells you that it’s never quite as bad as it looks and there is certainly a vast spread of information on the marketplace compared to previous cycles. The simple fact is that real estate remains a fundamental part of many investors diversified portfolio, and remains a key function of the way that we live, work and enjoy this planet. The long-term sustainability of real estate is there, it’s a matter of working around the subtleties of the trends and the demands that work within that and ESG is at the forefront of that, so we’ve got to make sure that we strive to improve this important product.”

In the Post Pandemic office environment where do you see the ‘working in office/working remotely’ balance falling, and what do you see for the consequences for the office real estate environment.

“There’s certainly a diversification of views on the office market. We’ve seen different working environments coming out of COVID and the way people use their space. We are seeing more of a focus on quality, location and particularly ESG credentials in terms of running costs and occupiers demanding better quality space, which is as it should be. As an example, we as a business, have a policy where we work from Tuesday to Thursday in the office, and I think a lot of businesses have adopted this and are looking at how they use their space better, and providing more employee services for example. Our views are, that demand for good quality office space will continue to grow and our strategies in respect to repositioning assets to meet the more focused tenant demand will serve this well.”

What do you see the biggest challenges the investment market will face in the next 12 months?

“Macro wise, I think the real estate industry needs confidence. We are in an environment where inflation appears to be moving in the right direction. Central bank policies have been aggressive in terms of trying to counter inflation, which seems to have taken effect in stalling economies and rate drops are now being priced in by the markets. Uncertainty remains, but I do believe that a few more months of positive data in early 2024, will allow the markets to reactivate into mid-2024. The challenges for us are to continue to source the quality of investments that suit our investor profile well and have, as mentioned earlier, the long-term real estate strategies that we believe in.”

Which countries will have the fastest moving property markets in the next 12 months?

“This is a good question; I think there’s a potential that the UK could be the fastest moving purely because of the size of the market but also the impact of central bank rate movement. For example, the UK Central bank may move quicker than the ECB in terms of setting interest rates purely by nature of the UK’s separation from Europe and that it was more aggressive in rate hikes.

Another example is level of stagnation of the investment market, we have seen a huge drop off in German transaction volume throughout 2023. So, there is an argument that Germany then has an ability to move faster in its recovery. We continue to look at opportunities within all our markets, all of which have been suffering or in the same position in terms of market volumes. So, I don’t necessarily think there’ll be one particular market that will move faster, but we believe that the UK and European markets will respond accordingly through 2024 and into 2025.”

Will we ever see zero interest rates again?”

“I think not. Do I think that we’ll be in a low interest rate environment again within the next few years? Quite possibly.

Generally speaking, I think that government fiscal policy and western world debt requires us to be in a low interest rate environment of sub 3%, but I would be highly surprised if we come back to zero again in my career.”

Will ESG continue to influence markets the way we have seen to date?

In short: I think this is going to accelerate dramatically and we’re in full support of that.

Demand for ESG performance will increase both in the investment and debt markets, and we’re already seeing it in terms of the operational market.

Tenants and operators want to have the best ESG credentials, in both cost and energy efficiencies, but also providing the best space and impact for their teams / clients and working environments, whether that’s in industrial, office, hotel, leisure and so forth.

I think that principle will continue to have even more of an impact and from Avignon’s perspective, we’re excited about it because we believe we have a very good understanding of the many variances and are able to implement the strategies. We view ESG not just as a market influence but as an integral and exciting dimension of our work. It is also a learning curve and that’s the exciting part as we can try new things be more creative in terms of finding the right solutions and having the right impact.

What are the medium and/or long-term goals for the Avignon team?

Avignon remains relatively consistent in its real estate investment strategies. In terms of the business’ medium and longer-term goals, we want to continue to grow and then excel within our track record on ESG and so therefore we will need to potentially continue to expand on the asset management side of the business to meet the requirements of that.

We also want to enhance our property management, fire consulting and accounting services to the external market. The business has and continues to work within the private family office and institutional capital space and we remain focused on ESG driven real estate initiatives which we believe will serve differing investor demand.  In terms of the way that the business is structured and resourced, we have offices in London, Manchester, Rotterdam and Berlin, and we believe that is the right platform and will look to expand in each of those locations.

In a rapidly changing industry, what measures will you implement to ensure Avignon remains adaptable and competitive? What strategies do you see as crucial to drive Avignon’s success in the coming years?

“Avignon has grown through its ability to be adaptive. This is not about implementing specific measures, but more about continued communication with all our stakeholders (whether it is equity partners, tenants or advisors) to ensure we maintain this integral part of our DNA. Staff and management feedback, through formal and informal communications will enable us to adapt to changing market conditions.

On real estate Strategies: we remain committed to our ESG focused thematic of:

1/ Project Re-Work

2/ Project Nest

3/ Project Keys

and a new ESG small business space platform.

On the equity side: We continue to grow our network of Institutional and Family office capital partners to ensure we represent a valued advisor and partner in our real estate strategies.”

What are your main targets for Avignon?

“My primary targets for Avignon are rooted in building and solidifying our reputation within the marketplace. I firmly believe that when reputational targets are met, business success naturally follows. I want Avignon to be recognized for its transparency, clarity, and creativity in our interactions with investors across all real estate strategies and for us to be distinguished for our commitment to Environmental, Social, and Governance (ESG) initiatives, fostering a positive reputation built on transparency, creativity, and ESG excellence. If, in 2-3 years, stakeholders affirm that these aspects hold true, I consider it a substantial achievement in realizing the vision I have set for the company.”

What key challenges do you anticipate facing as Avignon’s Managing Director and how do you plan to address them?

“Another good question. I see the word ‘challenge’ as a positive word. We know we’re in difficult market conditions, but I believe Patrick and I have built a seriously talented team that has multiple facets of skills in different geographies. We think that we are really well set up to meet our various investor requirements to facilitate real estate strategies.

Yes, we’ve got to be realistic and cautious in the current investment climate, but for us, we’re in a very exciting period in terms of what we can roll out on our asset management strategies, which have been in process and implementation since COVID times. They take a lot of time and hard work to come to fruition and even whilst the investment market isn’t where we want it to be right now, the asset management side of the business is certainly flourishing.

I mentioned earlier, we are also looking at marketing our property management, accounting and fire safety services and it gives us an opportunity to raise awareness on those services a little bit further.”

What makes Avignon individual and sets itself apart in the market?

“Avignon’s DNA is about the people and the knowledge and skills we bring. Added to that is the geographical spread that our relatively small business has, which we think is important to provide on the ground skills in local markets across the UK and different parts of Europe. I think it also comes back to the way that we approach our work and relationships with our clients and other stakeholders, where we can provide tailored solutions to multiple challenges, both positive and negative on the many variations of real estate investment.

We have a very diverse non-hierarchical skill set within the business, covering many elements of the real estate investment cycle for different investor requirements.”

What according to you makes a great team?

“A great team comes from a few components: The skills of the individuals within that team, but more importantly, the attitude and the culture of the way that team integrates.

A group of individuals needs be varied to make a team strong. If you hire 10 people who all bring different skills to the table, whether it’s experience, ideas, technical or creative, and there is a forum and culture in which they can all present and implement those skills, we can dial into that talent, and the output will follow.”

Can you share some insights into your leadership style and how it will impact our team’s development and the company’s overall direction?

“My approach is all about the team and my style is to ask them to follow actions and not words. I will seek to provide individuals with ownership in their roles to contribute to the growth of the business and their respective teams. I believe in a ‘collective brain’ approach and my role is very much to guide and develop the individual, the team and the business in our direction of growth.”

What aspects of Avignon’s culture and values resonate with your own, and how do you plan to integrate them into your leadership?

“Transparency and Integrity are fundamental to me as a person, and I believe, are already well embedded in our culture. I will push my passion for Impact and encourage us to be creative and brave, particularly in this area, as we develop new methodologies in Real Estate.”

What steps do you envision taking to foster innovation and creativity within our teams?

“I think this comes down to communications and culture and regular think-tanks: From regular business strategic review at Management Board level, through to regular Real Estate strategic review to adapt to changing markets and new business concepts, to ESG ideas forums covering every element of impact ideas.”

Finally, if you were given £500m equity to invest, where would it be and what sector?

“Well, this is relatively easy one because we have 3 core strategies within the business and I would certainly champion these strategies within an opportunistic market conditions: Project Re-Work (Offices), Project Keys (Hotels) and Project Nest (Commercial Living).

In terms of geography, sticking again within our known markets and quality locations within. There are subtleties and variations to each one of those strategies in terms of more exciting opportunities in different markets; but I would be sticking with those.

All three of these have ESG at the forefront and that continues to be a primary driver for me and Avignon.”