After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Chief executive, Savills UK and EMEA
In common with everyone, we would like to see the end of the pandemic and associated uncertainty this year. Beyond that, having witnessed a significant gap between the best- and worst-performing sectors in 2021, we foresee a harmonisation of returns in 2022.
We anticipate some further outflows from traditional commercial asset classes into residential, rural and infrastructure, but location, connectivity and new metrics of social and environmental impact are likely to guide investment activity rather than just sector alone.
On this theme, we are hoping to see more ‘courage beyond compliance’ in decision-making in 2022, reflecting changing mindsets and tougher environmental compliance standards now being the norm for all property sectors; although the cost of meeting these will often outweigh the returns, the risk of holding stranded assets is a bigger concern.
President and managing director, WiredScore
As we continue to move through waves of uncertainty brought about by the pandemic, my prediction is that employers will increasingly place trust in the hands of their employees when it comes to decisions around where to work in the safest, most efficient way. Bringing physical and mental wellbeing to the top of the agenda will be fundamental in allowing companies to get the most out of their teams, regardless of the location.
As we’ve seen over the last 18 months, homes have almost reached equal footing with offices as a place of work. When it comes to employee preference and productivity, I believe both spaces will continue to play intrinsic roles in facilitating the working patterns we’ve adapted to.
To get the most out of these working experiences, the real estate sector must take seriously the role of technology as an enabler for faster, more collaborative and increasingly human connectivity.
Head of real assets, LGIM
The role of private sector capital will be essential for meeting the government’s ambitions for levelling up and to drive the economic recovery through investment in infrastructure. With public finance constrained, the need for productive, impactful partnerships between the public and private sectors has never been more important. This goes hand in hand with the importance of ESG in the real estate industry. The transition to net zero provides a multi-decade investment opportunity.
Improvements in energy efficiency and carbon intensity for existing buildings is crucial to decarbonising the built environment – and recent data shows that stronger environmental standards in buildings can generate a rental premium of more than 12% compared with other high-quality but non-certified buildings. In 2022, we expect the range of opportunities in real assets to remain diverse. Supported by government investment plans and the transition to net zero, private market allocations will continue to help investors and occupiers achieve long-term investment and ESG objectives.
My hope is that we see the end of the pandemic and that the hospitality industry can focus on what it does best – giving us great F&B experiences unrestricted! We are currently entering an uncertain time again with further restrictions, each of which brings enormous challenges and hits the sector hard. The government needs to acknowledge this promptly with a sufficient support package in order to prevent even more casualties.
New restrictions coupled with the proposed end of the commercial lease moratorium in March will bring churn in the first half of the year. We expect demand to remain high for prime sites and the ‘flight to prime’ to continue.
The market was extremely buoyant post lockdown last year and I expect it to continue to be strong this year while continuing to evolve with many more new exciting cuisines and concepts.
Predictions for 2022: Brace yourself…
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Predictions for 2022: Brace yourself (part one)