Property is famously full of relentless optimists. Having written about the sector for years, it has even rubbed off on me.
How often have I remarked that for every seemingly insurmountable challenge faced, there is an opportunity to be seized? Or noted that while one part of the market is struggling, another is going great guns? Or marvelled at the sheer inventiveness of property folk when their backs are up against the wall?
Not for me the glass half empty, dark clouds overhead or wearing of black on the outside because black is how I feel on the inside (I wear black because I like it). These days, if dark clouds gather, I always see the silver lining. If there is a tunnel, I spot the light at the end. I have even deluded myself that parts of the sector at least will be able to steer clear of the Brexit multi-vehicle pile-up.
Well, dear reader, I am not sure I can delude myself any longer. As we report this week, the number of businesses in significant financial distress leapt in the fourth quarter of 2018 – and real estate firms came off worst. Yes, you read right: real estate.
Almost 47,000 property companies are now classified as in significant financial distress – up 9% year on year, according to the latest Red Flag Alert research from Begbies Traynor. The sector even did worse than retail: poor, worn out, trampled-upon retail.
While some parts of the industry are clearly not doing as badly as others, the sector as a whole is facing tougher times than many perhaps realised. As the Brexit machinations continue to play out ever closer to the cliff edge, maybe it is time to face up to reality.
Maybe it is time to stop looking on the bright side of life. Then again, maybe, just maybe, it is time that anyone who thinks like that finds a career better suited to their delicate dispositions.
Yes, things are tough and going to get tougher. Yes, there are going to be casualties. But this is no repeat of the global financial crisis when property – more specifically the US sub prime mortgage crisis – was at the heart of the problem. This time, the problems are mostly not of the industry’s making.
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The fundamentals remain largely sound – better than sound in some instances. Take student accommodation and build-to-rent. Cassidy Group is not waiting for the Brexit storm to pass. It is feeling bullish enough to market £700m of forward-funding opportunities in the sectors.
Meanwhile, leisure operators are not standing idly by as retail space is vacated. They are moving in. Indeed, such is the demand from overseas operators that specialist leisure agency Shelley Sandzer is launching a new international division to cater to their needs.
Cassidy and Shelley Sandzer are not alone. Plenty of others are galloping into Dodge as others get the hell out. They are not deluded optimists; they are dedicated opportunists.
I am grateful that some of their positivity has rubbed off on me and applaud them for keeping their heads when all about them are losing theirs. We will need more of their kind in the coming weeks and months.