At the beginning of a new year and decade, property’s leading lights reveal their hopes, expectations and resolutions for 2020 in the first of a two-part special running over the next two weeks.
Chairman, James Andrew International
We have a strong government for the first time in many years and it now looks like the UK will have a withdrawal agreement agreed early in 2020. This would mean the government has to agree the exit deal before the end of the year, which is a tight timetable, but could happen.
For the industry, this may have interesting consequences. The pound has already strengthened against the US dollar and the euro, which has made property more expensive for inward investment, but the certainty around Brexit should ensure that the demand is not diminished.
So what will happen? There remains a significant weight of overseas money, particularly from the Far East, looking for prime investment property, which with limited stock available may strengthen prices. This will disappoint those hoping for a post-Brexit dip in prices.
For the letting market, with a shortage of speculative schemes in central London, office rents should stay strong. Retail will remain weak across the UK while rentals fall to match demand.
It is likely there will be further casualties on the high street. In the residential markets, against expectations, prices began to recover in 2019 and I expect to see this recovery continue. This will depend on whether further SDLT changes take place as any taxation increase could damage this fragile recovery.
I expect interest rates to remain steady internationally throughout the coming year although rampant inflation, should import prices begin to rise, could force the chancellor to take action. Any rise in interest rates is unlikely to be by more than 0.5% as it will damage the economy. Inflation is usually good for the property market; interest rate rises on the other hand are not.
My half glass is now full, following Boris’s victory. Bon chance and happy new year.
Head of UK and Ireland, Cushman & Wakefield
In 2020, I hope that our industry embraces the immense opportunities that are coming from the unrelenting pace of technology change and from changing consumer needs, not least the demand for the built environment to provide an effective response to climate change.
Three key themes will increasingly influence investor and occupier decision-making in 2020. The first will see our sector recognise the importance of really getting under the skin of the experience required by end users. While this will transcend sectors, offices and retail will be the most affected and successful owners will be seen as enablers of performance. The second is the use of technology, data and smart analysis to drive more evidence-based decision-making. Finally, the objective of carbon neutrality by 2050 will require investors to start planning in pathways to reach that target. We can further expect more and more occupiers to seek evidence of such pathways in their demands.
Resolutions: My resolution for 2020 is to truly believe that – after 30 years – Jürgen Klopp will finally deliver the Premier League back to Anfield. For the sake of my wife and children, I also resolve to stand more than six inches away from the TV screen while on our journey to the end of the season!
Senior partner and group chairman, Knight Frank
My hope is for a clear political agenda for the UK that re-establishes our credibility in the global environment and re-energises the residential and investment real estate markets. I also hope we develop a better solution for affordable homes and the UK high street.
My expectation is that as the increasing volume of investment capital searches the globe for yield, real estate will take a more pivotal role among the investment options. While we will see a continued rebasing of the retail market, there will be growing confidence in the future role retail has to play and greater investment activity. The specialist sectors will continue to develop centre stage.
Resolutions: My personal resolution is to try and maintain some semblance of fitness. Professionally, we must remember how incredibly fortunate we are in the UK. The real estate market is transparent and mature with a raft of opportunity. We must promote it accordingly.
Structured Property Finance, Investec
2019 was a year of speculation, division and uncertainty, with almost everyone hoping for the best but fearing the worst. Business plans, and often investment, were tempered as a result.
We now have a clearer picture of what lies ahead. This comes with great opportunities. As a nation and at Investec, we can focus our attentions on further growth and investment. We have the opportunity to fund and partner with new and existing experienced property players providing both debt and equity.
Globally, residential real estate saw an increase in investment in the first half of 2019. We expect this to continue into 2020 and beyond. Building on our established footprint in the purpose-built student accommodation (PBSA) and BTR sectors, this is where we see a large chunk of our loan book being put to work.
The nascent later-life sector in particular looks likely take off in 2020. Build-for-sale, fundamentally linked to the health of the secondary residential market, may get some much-needed support from the newly elected government.
But the rental model is the most exciting, particularly rent-to-rent, where couples rent out their family home and then rent an apartment in a purpose-built retirement block. For investors, getting comfortable with the dynamics of this new subsector compared with other alternatives will be the challenge, but the inflation-linked model is hugely appealing and offers clear mark-to-market returns.
Resolutions: To reflect more on opportunities for my own growth, both personal and professional, by taking more time to focus on my charity commitments, as well as collaborating with key industry players and wider Investec asset teams to expand the bank’s offering and reach even further.
Global head of real estate, Schroders
I really hope for stability and for people to return to a focus on fundamentals and what really matters. Positive social impact investing would be towards the forefront of my wish list. It is no longer good enough to just make financial returns. Investors and occupiers alike should be more interested in how we invest than just the financial outcome. As an aside, I hope England win the Rugby Union Home Nations Tournament.
My expectation is the UK will leave the EU and it may be an abrupt exit. This would subsequently require a lot of collaboration and good will from all sides to agree an appropriate ‘entente cordiale’. Having said this, the real solution to a positive social and economic outcome is for people and companies to be creative and innovative.
Successful entities will prove themselves by providing goods and services that the rest of the world wants to buy. Despite being a remainer, I think UK plc will succeed from 2020 onwards.
Resolutions: My wife would say I should lose half a stone and spend more time with the family. I would also like to simultaneously see Schroder Real Estate continue to grow and maintain our investment outperformance track record, while also being able to tangibly have a positive impact helping to make more urban areas sustainable and simply better places to live.
Senior partner, Clearbell
My hope is that there will be some degree of resolution to the uncertainty that has frozen business decisions for the past few years.
One would hope the market will return to fundamentals as it looks to the usual drivers that affect it. However, the continuing lack of clarity about the UK’s future trade relations with the EU and the future economic cost may still be a sticking point. There are also likely to be months of Brexit negotiations and perhaps uncertainty fuelled further by an expected global downturn.
In terms of investor appetite, with possible inflation increases, this would lead to inflation-linked investments being attractive. In addition, I expect real money investors, who have been cautious of the UK, to begin to put their heads above the parapet and start investing.
Resolutions: On a professional level, I would hope that my partners and I continue with the success that the business has had over the past few years and enhance and develop our team. On a personal basis, I want to continue to challenge myself to improve in all areas, including family life, and have a positive impact on the lives of others.
Founding director, Axion Property Partners
Last year was such an amazing and special year, launching my new businesses PropElle Network and Black Property Network. I hope 2020 is even more successful and I look forward to helping more people achieve financial and lifestyle independence through property investment.
Having more stability in the markets would be nice – although you do need some volatility to be able to make returns.
I expect the property market to pick up this year now that we have a bit more clarity around Brexit and a Conservative majority government. I expect to see lots more foreign investment into the UK. I expect 2020 to be a year of fantastic growth for my business ventures and I can’t wait to get going.
Resolutions: Read more and sleep more. Apparently sleep is more important than most people think.
Chief investment officer EMEA, UBS-AM Real Estate & Private Markets
I hope to see foreign buyers become increasingly active in 2020, particularly in the central London office market.
The UK real estate market will also be helped if the revaluation of the retail sector reaches a floor, both in terms of rental levels and yields, allowing some liquidity to return to the sector.
Being very hopeful, we might see some meaningful progress on the future trading arrangement with the EU, which would deliver the real long-term clarity that the market wants. It would also provide a boost to economic growth and thereby demand for office stock as occupiers regain confidence.
In reality, reaching a future trade deal with the EU is likely to present some road bumps and as we edge closer to the new deadline, the risk of a no-deal will re-emerge and UK activity levels may slow as a result.
The real estate markets will still be supported by the low-interest-rate environment with the more demographically and structurally driven asset classes, such as student housing and industrial, remaining compelling to income-focused investors as they are less cyclical than the core sectors.
While we expect liquidity to return for some core retail assets, it will still be challenging to find the real floor in values for more secondary and tertiary markets.
Resolutions: On a professional level, I’m keen to further enhance market awareness of UBS in a real estate context and to maintain the strong performance of the funds we run and capitalise on these to grow the platform. Personally, I would love to travel more with my family.
2020 vision: predictions for the year ahead
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2020 vision: predictions for the year ahead (part two)