With the light at the end of the Covid tunnel getting brighter, it seems that barely a day goes by without another piece of positive news from the property industry.
A solid measure of the optimism in real estate is the number of upgrades to financial forecasts and raises in fundraising targets we have been witnessing among listed groups. These upgrades are not just emanating from those ‘trendy’ sectors such as logistics and buy-to-let, either. They are pretty much coming from across the board, from estate agencies to social housing investors and everything in between. Even retailers.
Let’s begin with Hammerson. Can it be true that Rita-Rose Gagné has, in a little over a year, turned a company many in the sector felt was heading towards collapse around? Say it quietly, but she may have done just that.
Last month, Gagné told investors she was upgrading both profit and revenue forecasts, after a year in which she slashed costs, offloaded the group’s retail parks and came up with a strategy for the shopping malls that appears to have finally convinced people Hammerson has life in it yet. It is an impressive achievement given that many – me included – feared the company would follow intu into administration.
At the other end of the property map sit the agencies, which in recent years have become better known for issuing statements about job cuts and departmental shake-ups than providing us with any good news.
But Savills is fighting back. While lockdowns may have hit residential sales temporarily, the pent-up demand has brought a welcome boost to income. Along with upmarket agency rival Winkworth, Savills has raised its guidance on profits. And it’s not just sales of those £1m-plus homes that are providing Savills with the confidence to tell investors that it expects pre-tax profit for 2021 to be “very significantly” above the top end of forecasts. The ongoing boom in the logistics and warehouse space is also adding to Savills’ bottom line.
Homes below £1m also appear to be selling well. Take a look at the recent announcements from the housebuilding giants such as Barratt, Redrow, Vistry and Taylor Wimpey, and there is a feeling the good times will continue both for investors and the pay packets of company directors.
On the fundraising front, investors from around the globe appear to have reacquired an appetite to put their cash into the UK property market. Take LXi Reit’s £125m share placing to help fund an ambitious acquisition programme, for example. This was launched three weeks ago, but there was so much investor appetite for the placing that the company doubled it this week and increased the value of its acquisitions pipeline from around £270m to more than £350m.
And while we now celebrate those once alternatives like logistics, student accommodation, healthcare and the PRS, we should not forget that the office is not quite dead yet. Central London investor Great Portland Estates is breaking letting records at the moment, and under the leadership of Mark Allan Landsec is rapidly becoming a modern, forward-thinking multi-sector real estate giant with City analysts predicting good times ahead.
Property types love to tell us they’re “busier than ever” and there are “so many opportunities out there”. But, for once, their optimism appears valid. Hopefully, we can expect even more cause for cheer as 2022 plays out.