After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Founding partner, Silbury Finance
Supply-led house price growth, driven by low sales inventory levels and a shortage of new stock being delivered, is set to continue in early 2022. From spring, we expect the steady return to a more balanced market in which price growth is more moderate.
Inflation and interest rate concerns are likely to translate into higher mortgage rates, curtailing affordability and providing headwinds to high house price growth. Rising interest rates could result in rising arrears, although from a low base, and this is probably not a major concern for 2022.
The wild cards remain coronavirus and the government’s reaction to it, which could affect the economy and housing market in any direction. New-build starts will be influenced by evolving supply chain and labour shortage concerns. Generally, we don’t expect housing supply to meet demand for some years to come, which will underpin continued growth in house prices over the next five years.
Lisette van Doorn
Chief executive (Europe), Urban Land Institute
With yet another wave of cases and lockdowns upon us, there is a growing realisation in the industry that Covid-19 is here to stay and needs to be accounted for in business planning. With the industry having come through the pandemic remarkably well, the re-emergence of the virus does not appear to have massively affected the recent high level of confidence.
Having said that, the industry continues to grapple with what it means to restart Europe’s economies. The spike in inflation and supply chain disruptions create discussion about how this might affect real estate and how long it might take to ‘normalise’. The longer-term perspective is of fundamental change coming, driven by ESG, evolving consumer demands and technology. With more than two thirds of the European senior leadership in real estate identifying this as a key priority, there is a lot to get on with.
Managing director, Caddick Developments
This year will be one of delivery for all Caddick Group companies in the logistics and living sectors; following several high-profile funding deals announced last year, we have a number of significant projects moving into construction.
We are expecting continued demand for high-quality new industrial units as work and retail landscapes continue to shift due to the pandemic. In Q1, we will start on site at two landmark locations – Farington Park in Lancashire and Leeds Valley Park in Yorkshire – as well as progressing our other nationally significant logistics sites.
On residential, we are preparing to deliver our new suburban BTR offer, Casa by Moda. Our first scheme will start on site in Q1 and the offer will swiftly roll out nationally, with the intention of welcoming our first residents early next year.
We will continue to transform skylines with exciting mixed-use developments in key cities. In Leeds, the first phase of our SOYO regeneration project, Moda, New York Square, will open in the spring. We have got big plans for our home town, incuding the next phase of our scheme for Hestia.
Head of private equity funds, AEW
The pandemic and associated restrictions have made the world of retail asset management considerably more challenging. The combined headwinds of value adjustments, retailer uncertainty and changes in consumer confidence and behaviour have created the perfect storm.
Although this sounds dramatic, in reality it is mainly an acceleration of existing trends. The assets that emerge from the pandemic will be stronger, more relevant and better positioned for success. This will largely depend on a more collaborative approach between landlords and occupiers. Landlords and retailers will be acutely aware of who behaved well during times of crisis and I hope we are about to usher in a new era in which the relationship is redefined: shared vision, shared data and shared innovation will be the true markers of the retail renaissance.
Predictions for 2022: Brace yourself…
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Predictions for 2022: Brace yourself (part twenty-nine)