This week I learned a new word, although I’m not sure it’s a real one that has made it into any dictionaries. ‘Cycology’ is the belief that events will run in predictable cycles, with the implied hope that you can make better decisions if you can see where you are in one.
I was introduced to this term by research firm Ipsos. In December and January, it ran a study involving members of the British Property Federation (BPF), on behalf of the BPF and property firm Grosvenor. It seems there was quite a bit of cycology in evidence among respondents.
Predictions for the year ahead were understandably gloomy, but expectations for the next five years were decidedly upbeat. Most expect the cycle to take a turn for the better beyond this year.
Precisely none of the 105 British property company leaders interviewed felt ‘very confident’ about the prospects of the UK’s real estate industry in 2023, but 21% nonetheless felt very confident about the next half-decade. Only 15% were ‘fairly confident’ about 2023, but 77% felt very or fairly confident in their five-year view.
That is quite a big upswing. Short-term pessimism is understandable, given recent events, but the tangible source of five-year optimism is harder to fathom, beyond a belief in cycles.
When asked about the biggest strategic risks faced over the next five years, a wide range of different hurdles came up. Economic uncertainty (42% of participants) followed by political uncertainty (33%) – the next five years will undoubtedly see at least one general election – followed by a roster of other issues including skills shortages (29%), climate change (28%), inflation (27%) and the availability and cost of debt (24%). Naturally, the sense of optimism is not coming from that list.
So, perhaps the five-year outlook seems good due to perceived opportunities, and the intent to climb them on the snakes-and-ladders board that lies ahead.
Asked which property sectors would perform best over the next 12 months, almost half chose life sciences (47%), with student accommodation (42%), rental residential (41%) and warehousing/logistics (28%) making up the top four. In the five-year view, those same four sectors took the lead in expectations about increased investment (although not in quite the same order).
It doesn’t take a doctorate to see that life sciences provision is an opportunity. Data published in October by Cushman & Wakefield found the UK had about 7m sq ft of market lab space, mostly around Cambridge, but also in Oxford and London. This makes the UK about the same scale in life sciences as Seattle in the US.
Given that the UK is home to four of the world’s top 10 universities for life sciences, we perhaps ought to be doing better than Seattle in terms of lab space.
Stood against that opportunity is one of those aforementioned barriers – political uncertainty. The best place for lab space is within the golden triangle formed by Oxford, Cambridge and London. But that is by no means the place where politicians want to be seen to put big incentives or inducements to locate. Bringing highly skilled jobs to the triangle would not exactly square with levelling up.
Can optimism triumph in this conundrum? Are we at the start of a big cycle of growth in life sciences?
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