After a tumultuous 2020, property’s leading figures share their hopes and expectations for 2021 as the year gets off to a rocky start with yet another lockdown.
MD, Lamington Group and room2
We hope to experience a largely V-shaped economic recovery in 2021, driven by the successful vaccines rollout. For the travel and leisure sector, we believe there will be a bounce-back in traveller confidence across the UK from both corporates and consumers. In addition to holidays abroad, we expect to see a release of pent-up demand for UK guests continuing to enjoy the benefits of staycations.
Investor and market confidence in the long- and extended-stay product will continue to grow, with the sector benefitting from the resilience in occupancy and income shown during the pandemic compared with the traditional hotel market.
As the market recovers, we will see increased transactional activity as normality returns and investor willingness to commit to deals resumes.
Commercial director, The Argyll Club
Real estate that offers a place for people to connect, regroup and collaborate will be the most sought after once people are allowed to return to the office. Our clients have relayed that face-time with colleagues is what they’ve missed most during lockdown and we saw that play out with demand for day-working products surging in September and October.
Real estate – particularly workspace – must be experience-led. The office needs to be a ‘one-stop-shop’ if it is to incentivise workers to return: a well-designed, safe place to work but also catch up and eat and drink with colleagues after months apart. On-site offerings such as yoga classes or good-quality bars and restaurants are no longer optional extras.
Real estate must become a destination rather than just a location. Offices should look to successful retailers to get a steer on how real estate can adapt in the face of this existential challenge. Just as shops had to move fast to combat the rise of e-commerce, so offices must transform in a post-Covid world to become a lifestyle destination that meets employees’ high expectations.
The flexible workspace industry has shown its resilience and the sector’s outlook remains both challenging yet promising, with businesses looking for greater flexibility from their office footprint.
I expect landlords to increasingly look to work with operators to take advantage of their expertise and enter the market through joint ventures.
However, the market is also primed for greater consolidation. Although there is increasing covenant strength in the sector, operators more greatly impacted by the pandemic as a result of unbalanced portfolios, geographically and structurally, are likely to look at their exit and/or rationalising options.
Undoubtedly, the biggest challenge flexible workspace faces is grey space entering the office market. But sub-let space with cut-price occupancy costs is a fixed-term solution and offers far less than flexible workspace in terms of service, quality and convenience – including more flexible lease terms and opportunities for personalisation. I believe flexible workspace, far more so than grey space, will be perfectly placed to serve business needs.
Covid-19 and the homeworking revolution it ushered in could well mean 2021 will be the year of BTR. Last year, homeowners and renters spent more time under one roof than they have at any time before, giving them ample time to take stock of their current living arrangements.
With it no longer being as important to live as close to the office as possible — and a chronic shortage of high-quality rental homes coming onto the market — the private rental sector is fast-becoming a buyer’s market.
The pandemic afforded tenants more flexibility when considering a home move that will offer them better value, more space and higher quality amenities — attributes build-to-rent developments excel in.
Many buy-to-let landlords, especially those based in central London, could withdraw from the sector, or target investments in more profitable areas.
According to Rightmove, buy-to-let sales are soaring in northern England, where returns are potentially higher and demand consistent.
Traditional landlords will need to go above and beyond if they want to keep up with build to rent and its growing popularity among an increasingly demanding demographic of renters.
Founder, Heaton & Partners
There will be a significant economic price to pay for the seemingly limitless giveaways the chancellor made last year. Due to Covid and the lockdown, divorces are increasing and there will be a spike in probate sales, whilst others will have to sell because of financial stress.
In a normal world, this could only lead to a drop in house prices. However, a significant proportion of our clients fared extremely well in 2020 and there is still an awful lot of money sloshing about.
The abundance of buyers and lack of stock makes it unlikely that there will be a dramatic movement in prime rural house prices. We should also note that rural prices haven’t
really done very much for well over a decade, so there is an argument that no correction is even required.
Last year defied all expectations. Who could have anticipated that a year that saw a global pandemic and businesses shut down for three months would be one of the best for those in the prime property market?
What the future holds is anybody’s guess. We have a very diverse, talented and successful client base whose views on the matter are equally diverse. Interesting times lie ahead.
Forecast for 2021: looking ahead with hope
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Forecast for 2021: looking ahead with hope (part 35)