After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Founder, James Andrew International
Just as I sat down to write this, the spectre of further restrictions came to the fore. I don’t think we will see another UK-wide lockdown. The government have set their stall out and are relying on the vaccination and booster . Wprogramme to keep the economy going.
In the last quarter of 2021, we started to see the return of overseas visitors. This may stop short term, but after an absence of two years, central London could do with these visitors. The restaurants and shops of Bond Street, Regent Street, Oxford Street and the wider West End need this revenue and footfall to survive.
For offices, we need Boris to end WFH to save our town and city centres. I hope to see this happen in the spring as the weather warms. This should reinvigorate the city and town centres, which have been very quiet over the last 18 months. There remains a vast weight of capital waiting to be deployed in the investment market. Stock shortages are supporting pricing and compressing yields for the best assets.
The elephant in the room for most investors is ESG and getting the existing stock up to the levels envisaged by the government. Not everyone will be able to meet the challenge, and opportunities should arise. Fortune has always favoured the brave but from what we have seen there are people overlooking the considerable cost price inflation which has occurred both in labour and materials. This Brexit legacy is sure to be blamed on the pandemic, but is ignored at investors’ peril.
Head of business rates, Colliers
My hope is that the promised £1.5bn Covid relief fund is distributed to businesses as soon as possible following the publication of guidance on how it will be allocated – before those businesses disappear. I hope the Valuation Office Agency (VOA) will engage with agents prior to the 2023 rating revaluation, and not be left to its own devices.
The government needs to confirm there will be no downward transition, allowing a new breath of life in the high street. I also hope the VOA becomes serious about transparency in dealing with ratepayers and we move away from the ‘Computer says no’ system of CCA to allow ratepayers to speak to human beings.
I expect some serious thought and engagement with the rating industry and retail sector on the proposed consultation on a new online sales tax to provide a suitable solution that will finally allow the business rates multiplier to be reduced from its current unsustainable levels.
Chief executive, BNP Paribas Real Estate UK
Amid concerns over inflation, interest rates, and climate risk, UK real estate is offering attractive returns in turbulent economic times. Despite travel restrictions last year, international investors increased their share of investment volumes, and conviction in real estate as a safe, resilient asset class is only improving.
Capital allocations for 2022 suggest the international weight of capital will keep growing. Central London will remain a key target thanks to a recovering office leasing market and the discount it offers to core assets in European gateway cities.
Industrial will likely continue to break records, while retail is showing strong signs of resurgence. We’re seeing increased leasing activity on prime high streets, and interest in shopping centres is returning now that average capital values have declined 55% in five years.
Sustainability will remain a key objective for us all. I am optimistic about our industry’s ability to take action on climate change. Following COP26, harnessing our natural capital, realising the power of local action and reinforcing green financial markets through regulation are now firmly on the agenda.
Practice group head for projects, finance and real estate (UK), Osborne Clarke
Responding to the sustainability challenge will continue to be a top priority in the residential market. We will see the early adopters moving from making plans to making real progress due to market demand and increasing regulatory pressures.
Decarbonising tech will be key. The power of the ‘individual’ will come to the fore, with an increased emphasis on the rights of occupiers and buyers. The focus will be on fairness and transparency but also wellbeing and the quality of their living experience.
Creating wonderful places to live will be the norm rather than a specialist niche. The priorities of ‘decarbonisation’ and ‘sustainable communities’ will become inextricably linked. And, as the fundamental challenge of land availability continues, there will be greater innovation and collaboration across the market with a focus on partnering and strategic land in order to deliver a deeper pipeline and wider range of accessible and enjoyable living solutions.
Predictions for 2022: Brace yourself…
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Predictions for 2022: Brace yourself (part three)