After two years of unprecedented challenges faced by real estate, experts share their predictions for 2022.
Executive director UK, BC Invest
2021 was a year in which our residential property market showed incredible resilience, demonstrating its robust appeal as an asset class. However, environmental pressures and tax changes continue to make it tougher for domestic landlords. There is a huge cohort of international buyers, who are ready and willing to invest as they see the UK residential market as a safe place to do so, despite the additional 2% stamp duty levy for these buyers. Our hope for the coming year is that the UK residential market continues to thrive in a sustainable manner. As 2022 brings a further easing of travel restrictions – provided it remains safe to do so - our country’s quality developers can continue to place themselves in the international shop window to prospective landlords. This will aid the market’s continued growth in scale and quality to provide high quality, city centre accommodation for our domestic rental population.
Founder & CEO, Edozo
Over the last 18 months, rapid changes in the way CRE is transacted mean that up to date, reliable data and technology has never been more vital in making accurate valuations and predictions. In 2022, I therefore expect to see not only an increase in the use of AI and a move from data aggregation to process automation, but also an increase in technology being used to measure and manage the energy performance of buildings. Continuing technology adoption in the property sector will support transparency, efficiency and liquidity, and the smart use of technology will enable investors and professionals to navigate these changes throughout 2022 and beyond. In a bid to keep up with growing tech adoption, more and more legacy software providers will look to acquire innovative new solutions that help them to protect market share, meaning we’ll see more mergers and acquisitions across the tech space in the new year as well.
Sales & marketing director, Regal London
Over 2021, the real estate market was able to continue to relatively normal levels of build and sales, which has led to a surprisingly successful year. I’m optimistic that 2022 will build on those achievements, and we will see an ongoing drive towards market growth. Our current portfolio of residential-led projects has performed well demonstrating our industry’s resilience and ability to continue. We’ve several new mixed-use and residential projects in the pipeline, which we’re expecting to be as equally well received in light of a positive 2021. The rest of the residential property market will likely be feeling the same level of confidence too. In addition, we are rolling out a new sustainability strategy over the coming year, which is very much top of the agenda across the marketplace. 2022 will be a year of much change and development, and we are looking forward to rising to the challenge.
Six Senses Residences
In 2022, we’re expecting the continued rise of community living. Increasingly, we’re seeing more, and a wider range of, on-site amenities and facilities at new developments which are within easy reach for purchasers and provide spaces for connecting with others. In addition, what previously would have been a second home is now becoming a co-primary residence, with owners splitting their time more evenly between their properties – something we’re also expecting to see more of in 2022 – meaning more consideration needs within the design of properties to ensure there are the right kinds of spaces and we are creating the right kind of environment, like work areas and fast internet connectivity, responding to the rise in flexible working.
Placemaking manager, Activate Placemaking
The social side of town centres and high streets, rather than simply transactional retail, will be the key to success in 2022 and beyond. What we have missed is community and interaction, whether that is more food and beverage, leisure, or markets, the kind of engagement that people can’t get online will be a real opportunity. It’s almost like we need to regain the purpose and social cohesion delivered by market squares of a thousand years ago. When the time is right for people to return to the workplace, placemaking will provide that sense of community here too and the chance to network again, whether via a yoga class or around a coffee cart. Placemaking has a huge role to play in curating and providing those experiences, from finding out what occupiers want from their workplace to working with landlords to find a way to deliver it.
2021 has seen a slowdown in off plan sales in the UK’s new homes market, certainly for larger apartment led projects due to a mix of Covid, Brexit and, particularly in London and Manchester, a dramatic decline in Chinese investors. Developers will therefore be looking for new ways to sell off plan to both domestic buyers and those looking to buy here that can’t travel. We would therefore predict an uptick in proptech to support these sales, with developers looking for new ways to market properties online.”
CEO, SFO Capital Partners
2021 was a good year for real estate investors that were able to quickly adapt to market changes. SFO Capital Partners has swiftly recognised the price movement from an increasingly expensive US market to a more value rich Europe and UK. We have thrived by focusing on key macro trends and institutional capital requirements, and by capitalising on our deep relationships and speed of execution. Looking forward, we expect to cautiously navigate inflation; both as an ally and a foe, as we continue to reposition and manage our assets to capture an increasing demand for institutional core products. We will continue focusing in 2022 on the entire spectrum of value add and development strategies in the UK and Europe in particular the housing and logistic sectors, as well as centrally located capital starved office buildings in select European markets.
CEO, The Valesco Group
Given the substantial weight of capital, 2022 will see flight to quality and flight to opportunity. Allocations to alternatives are set to continue to increase and the prime office sector will likely see the largest allocation of capital of any real estate sub-asset class. The amenitised office of tomorrow, today backed by strengthening ESG and real estate fundamentals will be in greatest demand, given their attraction to occupiers and talent who are increasingly focussed on return on experience within the workspace. The yield delta between Class A (now defined with strong ESG credentials) and Class B offices will widen and ‘beds, sheds and meds’ will continue to attract capital given the wider dynamics at play. The smart money will seek out the dislocations across the risk spectrum.
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