A doctor friend just told me that having turned 60 I would now, in extremis, not be prioritised for a ventilator should one be required.
Hold on. I have private health insurance cover, have never made any demands on the NHS, I’ve always paid my taxes and my payback is my life being pushed to the back of the queue because I am now 60?
It is these understandable yet surreal and levelling choices – life and death – that distinguish this pandemic from all the horrendous financial crises we have been through in the past. It puts day-to-day property and commercial decision-making into some sort of perspective.
The battlefield medic on the frontline must choose who to save and who to let die. Anyone fancy that job?
Landlords and investors in the commercial world may well be making similar decisions about tenants and businesses.
As someone who is commercially battle hardened after four decades in the field, beyond health there is little I fear in our daily lives, but this is so much bigger than us. This is an existential threat from an enemy we can’t see, whose weapon is potentially deadly and for now we can’t fight it, so we must hide away from it.
To someone like me this is completely counterintuitive.
Property investors’ lifeblood is sustainable income. Covid-19 will prematurely euthanise many retail businesses that would have expired in relatively short order anyhow. Worryingly, generous alternative sources of funding that until recently have supported so many marginal SMEs are also likely to shrink dramatically.
SMEs are the biggest employer in the UK and starving them of equity and debt has the potential to produce unprecedented levels of unemployment. Furloughing is the life support of these businesses, but when it ends I fear there may not be enough charge in the battery to restart many engines.
Government debt is available, but it is still debt, and sums over £250,000 are only available with personal guarantees. This is making borrowers think very long and hard about their futures.
The winners and losers will set the trajectory for rents, with some traditional property sectors being on the wrong side of the divide.
Liquidity is the lifeblood of commerce. Chains of supply driven by demand require financial oil to keep the motor running and that comes from conventional funding sources, of which there will still be plenty, but which will now impose much more demanding terms with a focus on the fittest.
No valuation evidence
For investors, reliance upon valuations will have to be temporarily abandoned as lack of meaningful evidence and liquidity become the defining features of the next few quarters.
The misguided observers who predict a V-shaped recovery need to be conscious that we are all going to come out of this feeling less well off. In the short term, our pension pots will be much smaller, our homes worth less and generally the security of our jobs won’t be there. Bonuses will be looked back upon fondly.
The chastening impact of times like this is to naturally make us tighten our belts, which further constricts the economy and ultimately rents.
This is a period of great personal anxiety and worry for everyone, but it is at times like this in business when you learn the most about yourself and those around you.
Whatever you do in the real estate universe, there are huge challenges. It’s time to dig deep and remember that the skills and talents that got you where you are today are exactly what will get you back up there again, whatever the circumstances. You will rebuild and adapt and you will find a way forwards and be a better, more focused person because of it.
We will emerge from this scary darkness into the light, chastened but better. And hopefully, we will treat one another and the environment with more respect and much greater appreciation. Our resilient and wonderful property industry will adjust as it always does. It’s what we do.
Nick Leslau is chairman of Prestbury Investments