After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Managing partner, Hartnell Taylor Cook
We have all heard the phrase ‘a flight to quality’, and in 2022, it could be the catalyst for significant change to the way landlords, tenants and advisers work together. Following Covid, occupiers are seeking higher-quality space to meet employee aspirations, placing a keener eye on details like air quality controls. Once nice to have, they are now critical.
The ESG agenda also gains pace by the day, requiring landlords and investors to further improve offerings. With Covid here for a while yet, this trend is only likely to maintain its incline. This means major change this year, not just for occupiers but for how landlords, tenants and advisers operate as one.
For example, our mechanical and electrical team is advising many of our landlord clients on improving buildings. In turn, new technologies will be essential for meeting demand, driving down costs and improving sustainable credentials.
Senior managing director and country head, Hines UK
We all look forward to brighter days once Covid restrictions are lifted, but the dark cloud still hanging over us makes it difficult to judge how parts of the market will perform. I expect the logistics market to continue to strengthen as bullish rental growth forecasts are borne out, and occupiers will demand better product, while investors will seek to upgrade the quality of their portfolios.
The resilience of the office will continue at the prime end of the market. Growing pressure around recycling and carbon emissions should yield a deep pipeline of refurbishment opportunities for creative developers, rather than demolition and new build.
Homes for rent will remain in demand, with a bounceback in London rents as Covid restrictions subside – driven in part by a return from overseas students. I also expect a strong uptick in investment turnover, with significant activity returning once investors can travel more freely.
Managing director, Keyland Developments
I can confidently predict that the continuing scarcity of well-located residential and industrial development land means we will continue to see increasing prices for both. This could be my prediction for every year going forward until the country faces up to and addresses land supply issues, which would involve having a grown-up conversation about development in the green belt and beyond.
With a development pipeline of more than 8,000 houses and 3.5m sq ft of industrial land all within ‘God’s Own Country’, Keyland is clearly in a good position to benefit from increasing land values, but looking at the country as a whole, it is an exercise in futility to carry on trying to meet the needs of a growing population without properly planning where they will live and work.
Chief financial officer, Re-Leased
The past two years have seen digitisation come to the fore for the commercial real estate sector and we can expect this to continue into 2022: digital is no longer a nice to have, but a must have, and will be item number one on many board agendas.
As well as premium space, ESG credentials and tech-enabled buildings, data and analytics will sort the winners from the losers, and landlords who act on data rather than gut feel will have the edge. We are not yet talking about AI or machine learning – leave that for 2023 – but landlords need to get their digital plumbing in order.
The sector also has a huge opportunity to automate mission-critical and manual workflows such as payments and lease renewals, freeing up vital time for innovation.
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UK real estate is in a precarious position, with chronic housing shortages and rising mortgages posing a significant challenge to the future development of residential and commercial properties. Homeowner confidence has declined dramatically, with 62% of Londoners dissatisfied with the state of the housing market since 2019.
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