Leading names from across the property sector including Jonathan Goldstein (Cain International), Keith Breslauer (Patron Capital) and Charlie Green (The Office Group) talk about their highs and lows of the past year and preview what will be big news in 2018.
Even more big names in property looked into their magic eight balls for 2018 for part 5 of our forecast including Peter Ferrari, Guy Nixon, Chris Taylor.
Managing director, Linkcity
There is increasing recognition within the sector that we can achieve more by working in partnership. I hope to see increased collaboration within the industry this year, both between property companies and between the private and public sector. Working together is vital to bringing more projects forward and providing the homes that the UK so desperately needs. In spite of all the ongoing uncertainty around Brexit, I expect continued strong demand for housing that is affordable and meets local market needs. I also anticipate a stronger focus on people: improved practices around community engagement and consultation should lead to local people feeling more involved in developments and understanding the benefits that they can bring. We also need a strong push from the government in order to restrain land banking, which is maintaining the scarcity of land and fuelling the speculation on values.
- Resolution – As an industry, our resolution should be to innovate. Great ideas of how we can build more quickly and more sustainably already exist but need to become more widespread. It would be great to see more innovative approaches to design and construction really taking hold over the next 12 months. Also, as developers, we need to continue being the long-term custodians of the places we create.
Chief executive, AshbyCapital
Whether we like it or not, 2018 will be all about Brexit. With 31 March 2019 looming ever closer, it is not just a hope but a necessity that the government makes significant progress on negotiating our future relationship with Europe. Our hope is for a two-year transition period rather than any cli – edge or no-deal scenario. Inflation causing weak consumer spending – plus sentiment around Brexit – will mean low economic growth. Nevertheless, prime core asset pricing will hold up as property offers attractive returns in a low-interest-rate environment. We expect to see secondary properties and development opportunities more realistically appraised.
Cities such as Birmingham and Manchester will continue to attract wider interest as investors recognise their prospects with new infrastructure and the push effect of London property prices. In London, well-located prime space remains in short supply so rents will hold up. It is worth noting that take-up in the City was at least 5% higher in 2017 than 2016 and above the 10-year average.
- · Resolution – With an economic backdrop more fragile than we have seen for some time, investing will require caution. Our resolution is to maintain our disciplined approach, ensuring that we cherry pick the best deals, evaluating them in terms of opportunity, quality, location and amenity. In short, to do what we do even better in 2018 and to keep having fun along the way.
Founder and chief executive, Go Native
I hope we see the government continue to support build-to-rent (BTR) as a means of addressing the housing crisis. We welcomed the BTR consultation in 2017 and now I hope we see supportive planning policy and guidance that accelerates the delivery of units where we need them.
The key challenge is delivering units that marry affordability and quality. I hope we see collaboration and pragmatism from both the private and public sectors. Increased density will be the key that unlocks viability, particularly in London. We see 2018 being the year that aparthotels come of age as an asset class. It will have taken 20 years to make that journey. Tourism is booming in the UK, helped by the depreciation of sterling, and the rise of Airbnb has popularised homestay living among both leisure and corporate travellers. As a result, demand for aparthotels has never been higher but there remains an undersupply in many UK cities. This is a compelling opportunity for investors and for our brand as we launch three major new aparthotels in 2018.
- Resolution – To trust my instincts and make those tough decisions. Also, to pause more and reflect on my good fortune to be doing something that I love.
Senior partner, Allsop
I would like to see a swift conclusion to the trade talks and some real progress on Brexit. It’s crucial for market stability that Theresa May stays in power and delivers us a good deal, providing clarity and reinstalling confidence. As an agent, I would like to build on the last 12 months. Last year, transaction volumes bounced back having suffered in the immediate aftermath of the EU referendum. The 2018 investment market will be all about income. Investors will be searching avidly for this. Yields are likely to level off and performance will be about rental growth where you can find it.
- · Resolution – First, to continue to grow the business while working with and seeing more great people in the industry. Second, to keep smiling and having fun
Chief executive, BizSpace
The flexible workspace market is a fast-growing asset class, with London and key regional markets across the UK seeing huge growth in the sector. My hope is that a more appropriate, clearer method of valuing this asset class will be adopted, which reflects the security and growth potential of the income that comes from having multiple customers, working in a broad spectrum of business sectors and such a growth market. Throughout 2017, the SME market showed impressive resilience. While London saw a small slowdown, the regions proved exceptionally strong. In 2018, we anticipate the continued growth of the SME sector, especially within the UK’s main regional cities, including Bristol, Manchester and Leeds. Our Brexit-related research of our 4,000- plus customers shows high levels of optimism for growth and we are well positioned to support it.
- Resolution – As the largest provider of flexible workspaces across the UK, our whole focus is on making life as flexible and simple as possible for micro and SME businesses. In 2018, we will be pursuing an ambitious growth plan, particularly increasing our footprint in the south of England and Midlands; we also have some major innovations to intrigue – watch this space.
Director, Hunter Real Estate Investment Managers
It is to be hoped that more macroeconomic certainty, particularly in relation to Brexit, emerges over the coming year. We anticipate that the inflationary pressure of weaker sterling will work its way out of the equation over 2018 and that the strong employment picture will deliver positive wage growth – something that will bene‑ t both retailers and the wider economy. The picture in terms of which high streets will thrive and which won’t under omni-channel retailing formats will become clearer. As is true every year, new retail trends will emerge and there will be the associated failures, although a background of improving retail spending will boost the market. With monetary or fiscal headwinds likely to have the opposite effect, the economy appears finely balanced, and we would expect continued caution from the Bank of England and the Treasury. That said, the trajectory for interest rates, gilt rates and prime property yields will be upward.
- · Resolution – Against a backdrop of rising yields, creating value through an understanding of occupier trends is more important than ever. We want to spend more time with retailers and investors to stay close to their concerns. We also intend to pay less attention to clickbait political chatter.
Partner, Tuffin Ferraby Taylor
It is probably the property industry’s equivalent of asking for world peace, but I hope the market continues to remain at the very least ‘cautiously optimistic’. I think that’s a realistic hope with improved economic outlook across Europe and wider political stability. I’d like to see continued calm in the markets that bolsters confidence as Brexit talks progress and that we all ‘carry on’. Yes, I appreciate it is a very British approach, but as we enter uncharted waters, there’s no point launching the lifeboats prematurely. Our industry is investing heavily in promoting diversity and inclusiveness. I have high hopes for our next generation of property professionals, so let’s make sure we leave it in good health for them. We encourage an environment of optimism at TFT.
We are there with our clients – every small transition and leap they make. We see the micro changes at brick-by-brick level that turn into macro global trends. Next year, we expect to see further urbanisation (to larger cities), densification (in cities and everywhere) and decentralisation and regionalisation (outside London/New York/Paris/ Frankfurt). This is all being driven by the consumer. We want to learn, live and work in connected communities, in dynamic and healthy spaces – we want to have experiences, not just exist. This has resulted in unused spaces re-envisioned as a variety of new offerings, from co-working clubs to competitive socialising venues such as Bounce and Swingers. The power of the mobile will continue to grow, with social media driving trends, e-tailing and increasingly ‘disruptive’ apps.
- Resolution – To embrace change – whether it’s a post-Brexit UK plc, proptech or innovation. We need to question everything and ask if it can be done more efficiently or service our clients better. On a personal note, to ‘celebrate’ my 50th birthday this year, I have signed up to do the Paris Marathon for LandAid, so my other resolution is to commit to my training, get over the finishing line and raise as much money as possible.
Head of private markets, Hermes Investment Management
I hope that 2018 will see us continue to deliver on sustainable places as a focus for deploying capital and move away from merely investing in ‘buildings’ in accordance with backward-looking industry benchmarks. This has already been made possible at King’s Cross and Paradise, Birmingham, where we have been able to deliver these positive externalities and a sense of civic pride and belonging by creating world-class placemaking in a socially inclusive manner, working in partnership with the public sector.
Global liquidity levels across real estate markets show no signs of abating as the craving for the yield premium still available from real assets offers investors relative value. Therefore, as a longterm responsible investor, we will adopt thematic investment strategies that not only anticipate the real estate cycle but also consider the impact on occupational demand arising from profound structural forces we observe; these include disruptive technologies, urbanisation, globalisation, sustainability and demographic lifestyle trends.
- Resolution – My hope is that whatever happens as a result of Brexit negotiations, the UK remains an attractive place for drawing in and retaining great talent, and that the government recognises the importance of long-term capital in creating great places. My personal resolution is to always look on the bright side of life.