After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Group managing director, Ballymore
We’re expecting 2022 to be a continuation of the recovery that started in mid-2021. On the back of a stronger residential market, we hope to see more people in rental properties looking to buy and to create growth in the owner-occupier market. We’re anticipating many businesses will start to make decisions they have put on hold for quite some time, especially following the return to offices we saw in 2021.
We also expect to see an even greater focus from the industry on carbon reduction. This includes delivering what occupiers and homeowners would like in properties, and how they want their buildings and homes to perform as they become more aware and, in turn, seek to be more environmentally responsible.
Sir Stuart Lipton
Co-founder, Lipton Rogers Developments
This is the greatest period of change in opportunity we have seen for decades, because of ESG, health and wellbeing and carbon reduction. So, are we going to use it productively to increase the quality of life for people? Or are we just going to saunter along worrying about my local neighbour? What would it be? Will it be humanity? Or will it be nothing?
Managing director, Tudor Real Estate
Anyone who managed to predict how 2021 played out should be buying a lottery ticket this Saturday. Covid-19, lockdowns and WFH directives should have seen the UK investment market grind to a halt. But the markets and people in them remained resilient last year and in many instances, the key sectors TRE operates in (predominantly industrial, last-mile and value-add) saw impressive yield compression.
The outlook for the industrial/warehouse market remains strong, with record yields, land prices and rents all set to better 2021 levels. Developers and investors specialising in both big-box and last-mile should enjoy a busy 12 months. Close on its heels, the data centre subsector is emerging as a potential front runner with impressive rental growth and growing investor interest.
Offices face a mixed 12 months, with landlords needing to adopt a flexible approach to tenants as the new working environment continues to unfold. Life sciences and R&D in centres of excellence such as Oxford and Cambridge look set to continue the impressive growth seen through the latter part of 2021.
Real estate is transforming: virtual land in the metaverse was sold [for] above $2m (£1.47m) in 2021, and this year ESG solutions took off. In 2021, one asset owner in Europe gave us some of his portfolio based on ESG considerations above pricing. This is the beginning of a trend.
Through the pandemic, building owners will consider transitioning assets from a ‘contract management asset’ to a ‘value-add experience’. Cost reduction will remain imperative as tenants won’t be returning to pre-crisis levels any time soon. We will see owners understand that the digital twin of their buildings may be worth more than location and bricks and mortar.
The smart city movement will move from physical builds towards the creation of digital assets. Blockchain will be used more across real estate, for smart contracts and data tokenisation to asset valuation and transactions. This will reinforce trust in the industry as we enter changing times.
Predictions for 2022: Brace yourself…
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Predictions for 2022: Brace yourself (part twenty)