After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Chief executive, Octopus Real Estate
Sustainability and the increasingly urgent need to build more energy-efficient homes will no longer remain on the fringes of the sector in 2022. With rising energy prices and consumers being hyper-aware of their impact on the environment, it’s essential that the whole industry – from developers to funders – pulls together to ensure the UK has a larger stock of sustainable homes and commercial real estate.
We can also expect to see greater regulatory pressure in this space, including the new government MEES regulations, set to be introduced in 2023. Under these regulations, buildings with an EPC rating lower than ‘E’ will not be permitted to be let out. As a result, it’s likely we will see heavy investment from investors, landlords and building owners to get their properties up to scratch, and the knock-on effect is that demand for energy-efficient buildings will only grow, as will their value.
Managing partner, FORE Partnership
It seems we will need to adapt to Covid-19 – and its aftermath – being part of our lives for the foreseeable future. Last year’s hopes of a quick resolution seem to have been dashed. But that doesn’t mean the property industry needs to remain in stasis until the pandemic resolves. Far from it. As we’ve seen with the wave of climate-related action in 2021, the new year will bring even deeper resolve and accelerated implementation of low-carbon initiatives – especially as asset owners come to terms with the mounting threat that vast swathes of their portfolios could be stranded.
Last year may have been the year we
realised that the historically idealised asset with a 20-year lease to a FTSE 100 company may in fact be a ticking time bomb in the context of an illiquid, leveraged, immovable and obsolete asset and a business climate under considerable pressure from all sides to transform.
Director of development, strategic land, Grosvenor Britain & Ireland
What does good look like for communities in 2022? On the one hand, the pandemic has permanently reordered buyers’ priorities: room to work from home and access to green space top the list. On the other, the march towards net zero is fundamentally reshaping how and what we build. People want healthier, sustainable places to live and work.
The geography of development is changing, too, as politics and investment focus on ‘levelling up’. This doesn’t just mean the ‘red wall’. It’s a trend that will cut across how we approach the promotion and delivery of any strategic sites – especially with changes to local decision-making anticipated in the upcoming white paper.
For me, success in 2022 is about creating places where people can see long-term futures for themselves. Early and meaningful community engagement is key to getting this right. Open and honest conversations with residents – about what they want and what’s achievable – are the most credible route to shaping places that people are invested in and proud of.
Chief executive, Target Fund Managers
Caring for the most vulnerable members in our communities and enabling them to live full and enriching lives should be an imperative goal for society. The last decade has seen a significant move in the care sector towards fit-for-purpose accommodation, and the past 18 months especially have highlighted the importance of care homes with enhanced infection control measures, including zoned separation, ‘households’ on each floor and individual bedrooms containing ensuite wet-rooms.
This year will continue that steady march away from less suitable accommodation (with about 74% of the beds in the sector currently falling into this category), with investors using the power of their investment capital to create and enable appropriate new accommodation, as the poorer, outdated stock becomes obsolete.
As ESG becomes ever more important, I expect investors to continue to prioritise assets that are environmentally efficient, impactful socially and tenanted by those who share a passion for great governance.
Predictions for 2022: Brace yourself…
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Predictions for 2022: Brace yourself (part five)