As the pandemic started to subside, many of us in the investment community were ready to breathe a long-awaited sigh of relief: no more sitting in front of the TV nervously awaiting updates on the latest restrictions, tiers and lists.
Footfall started to creep up and international travel resumed, bringing with it fresh capital flows; office-based working, real-life meetings and in-person dealmaking were back to being the norm.
The sense of optimism in the air was palpable. It seemed as if the global economy, battered by Covid, could only follow one trajectory: upwards. Not without a few hiccups along the way, but that is to be expected after the shock of the pandemic.
But instead, we find ourselves bracing for multiple new challenges. The war in Ukraine and its implications for gas prices and food security; the cost-of-living crisis, rising interest rates and political uncertainty in the UK; and the slowdown in China’s export growth – all these factors create a sense of insecurity and instability, prompting both investors and consumers to act with more caution.
This, of course, is reflected in the state of the global financial markets, which have fallen sharply, leaving many investors disgruntled and at a loss.
But what does all of this mean for the world of property? Anything but a stalemate, I’d argue. If past experience is anything to go by, uncertainty can be highly conducive to dealmaking in property.
Despite the undeniable impact of macro-economic factors on the investment community, the way we, as individuals, interpret and respond to market conditions varies enormously.
What that means in practice is that in today’s climate, some market participants are naturally inclined to sell their assets, thinking their value has already reached its peak – and they may be right, at least in the short term.
At the same time, we are seeing thousands of investors desperate to deploy their cash for fear of it being eaten up by raging inflation – and their rationale is perfectly understandable, too.
This difference of opinion is not an anomaly – in fact, that is exactly what is needed to create a functioning market with room for both supply and demand, and we are witnessing it first hand.
Allsop has seen reassuring investment volumes, despite the challenging market conditions of the past six months – our latest commercial auction raised more than £97m, making it our biggest sale since September 2021, while the national investment team transacted nine deals totalling more than £110m in May alone, reflecting unwavering appetite for a variety of asset types and sizes.
Transaction volumes up
Research from PropertyData further highlights this trend – in the year to April 2022, property transaction volumes were up 8% on the five-year average, totalling £18.1bn.
The ongoing appeal of property, even in the most turbulent of times, is not hard to explain. Unlike other asset classes, it doesn’t just have the potential to deliver handsome returns on investment – it also provides the owner with a regular income.
What also makes the property market appealing for a broad range of players is its diverse nature and the abundance of opportunities on offer. Whether you are a private investor, a medium-sized property company or an institutional heavyweight, there are always a variety of options to choose from, depending on your risk appetite.
In a somewhat counter-intuitive way, today’s property investment world is our oyster – nothing is out of the question.
Unlike in March 2021, we’re not bombarded with gloomy headlines about the death of retail and the demise of the office market; and the logistics sector remains buoyant, fed by our desire for speed and convenience, despite Amazon’s recent profit warning.
Now is a good opportunity to step back, reassess your needs and plans and make a decision based on that and only that, without any background noise. That’s the beauty of living in an uncertain time and the beauty of property as an asset class.
Scott Tyler is senior partner at Allsop
Property is solid in unstable times