After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Chief executive, Grainger
I believe that there will be three key themes for real estate in 2022: flexibility, quality and talent. The pandemic has taught us all to be flexible and willing to adapt and I expect this will apply to physical real estate as well as human capital, as we find new uses for, and repurpose, the current overhang of old offices and retail, as well as leisure and residential environments.
The second theme will be quality of space. Where real estate users choose to spend their time will be a key success factor. Offices and retail space will need to be more attractive to succeed. We have already seen this theme emerging in residential.
Finally, there will be a fight for talent as many of the features that made the sector attractive for young people have been eroded. As an industry, we need to widen our appeal and attract the best.
Chief executive, CO-RE
The ‘lines’ between work and home life will continue to blur, but our occupier research firmly indicates that we will see a further shift away from the WFH mindset, with people returning to the office, where they can achieve their personal, social and work-related goals.
Large pre-lets, particularly for aspirational space with character and strong transport connectivity (for example Crossrail in 2022) will continue to be a market feature as occupiers compete for the best environment for their employees, which will drive rents up accordingly. Occupiers will increasingly promote their brand values via their real estate strategy to assist them with retaining and attracting the best talent.
Investors, occupiers and developers such as CO-RE will see their mutual interests increasingly aligned as we all seek to be involved with high-quality, aspirational office buildings that have strong ESG credentials and that offer character and an invigorating working environment.
Chief executive, Jo Cowen Architects
As the UK’s BTR sector continues to grow, 2022 will be the year that single-family rental housing starts to shine. Despite lagging behind its European counterparts, the single-family sector has witnessed rapid expansion over the past few years and is now one of the country’s fastest-growing asset classes.
Single-family has a slightly different appeal to the larger multifamily sector. As rental demand grows among young families – the primary market for single-family homes – as well as in suburban areas, it is likely that developers and investors alike will look to seize upon the opportunity in the year to come. With rents usually rising in line with inflation, BTR homes, including single-family, will be especially appealing to investors given the opportunity to hedge against inflation.
Chief executive, Pocket Living
This year will see the Department for Levelling Up, Housing and Communities (DLUHC) take a more holistic approach to intermediate provision, with greater variation and a broader definition than the current focus on just First Homes. This will include further refinement of what classifies intermediate provision and how it can be incentivised through Community Infrastructure Levy (CI)L exemption and Section 106, plus being more integral in enhanced brownfield land release.
We will see more prescriptive targeting on planning authorities to deliver housing through a mix of regional targets and local determination, closely linked to devolution deals. The DLUHC has a thoughtful team intent on modifying the planning framework to enhance delivery.
Labour shortages and inflation will dominate and result in less development in the most expensive areas such as London. This will present a real challenge to policymakers as numbers decline. Sustainability will be a significant focus for the mortgage industry, driven by the ESG agenda, plus consumer demand for more sustainable homes.
Predictions for 2022: Brace yourself…
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Predictions for 2022: Brace yourself (part twenty-three)