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Emerging Trends in Real Estate 2022

Domus — Thu, 05 May 2022 08:31:26 +0000

After a seismic shock, surprising resilience

The real estate sector roars back to life

From the beginning, the COVID-19 pandemic has defied almost every economic prediction. In March 2020, stores, restaurants and offices emptied out with astonishing swiftness. The stock market tanked and jobs quickly disappeared. But what many Americans feared would be a long and devastating economic downturn didn’t happen. The economy—along with the real estate sector—bounced back in record time. Output’s already above pre-COVID-19 levels and jobs could recover to previous levels by early 2022.

To many, the property sector may look remarkably the same as it was before the pandemic. It isn’t. Some markets and sectors may have changed forever. Some buildings and other assets are obsolete, and property managers now have to imagine how they can be repurposed. Other economic hurdles include supply chain bottlenecks that slow or halt production. Labor and product shortages also bring fears of inflation, a major economic risk.

What to expect now? The virus will have a major say in that. In spring 2021, the Delta variant took hold and COVID-19 infections spiked. Many jettisoned travel plans and hesitated to eat inside a restaurant or go to a movie unmasked. Employers delayed return-to-office plans. One certainty: Companies must build flexibility and the capacity to adapt quickly to market changes.

limate change hits the property sector

The spring and summer of 2021 may be remembered as the time much of the world finally began to take climate change seriously. The theoretical turned terrifyingly real for millions around the globe. Devastating wildfires, record heat and drought plagued the US West. Massive flooding inundated New York City, Louisiana and elsewhere around the globe, including China and parts of Europe. A United Nations climate change report concluded that nations must act now to save the planet from even worse weather disasters.

What does that mean to the property sector? A lot. The sector is the largest contributor to greenhouse gasses and global warming. Buildings account for upwards of 40% of global energy use and carbon emissions. Sector leaders and investors are ideally positioned to play a leading role in muting climate change’s worst effects. But many aren’t convinced. Executives and investors often talk up environmental, social and governance (ESG) values, but many executives remain skeptical that ESG pays off in enhanced returns.

Read the full article – pwc

UK housing market expected to stabilise in 2022 after bumper year

Domus — Thu, 21 Apr 2022 11:34:51 +0000

by – PA Media for The Guardian

Price rises predicted to ease, but increases in 2021 still may make it difficult for first-time buyers.

The year ahead could bring more stability to the UK housing market after a bumper year in 2021 when frenzied homebuyer activity pushed prices to record highs.

A stamp duty holiday that ended in 2021 helped to fuel about 1.5m house purchases across the UK last year, the highest number since before the global financial crisis.

Huge flexible working changes also prompted many people to relocate.

According to trade association UK Finance, 2021 was the strongest year for mortgage lending since 2007. It estimates that £316bn of home loans were given, the highest figure since the £357bnrecorded 14 years ago.

James Tatch, the head of data and research at UK Finance, said: “We’re seeing a return to a stable path for new lending” for 2022 onwards.

He said a little bit more remortgaging activity was expected to take place in 2022 and that this could accelerate further in 2023.

In two years’ time, a rump of five-year fixed-rate mortgage deals will end, and borrowers will be looking to refinance these loans.

“That will provide a boost to remortgage numbers,” Tatch said.

The trend of people moving out of cities as a result of more flexible working conditions could persist. “It seems like it hasn’t run out of steam yet,” he said.

With house prices reaching record levels in 2021, housing affordability for first-time buyers may continue to be stretched.

UK house prices rose by an average of nearly £24,000 in 2021, to a record high of £254,822

Higher outgoings generally from inflation, which hit 5.1% in November, could mean some people have less income to spend on their mortgage.

Tatch said: “We’re seeing a slightly more challenging environment for first-time buyers compared to pre-Covid because of these house price rises.”

According to the property professionals’ body Propertymark, there were just 20 homes available on average per estate agency branch by November 2021, the lowest figure in records going back two decades.

Read the full article – The Guardian

CEMEX Ventures says new technology makes net zero concrete viable.

Domus — Thu, 24 Mar 2022 15:05:26 +0000

by – PropCast

On the popular BossCast series, Gonzalo Galindo, Head of the Corporate Venture Capital arm of CEMEX, argued that investing in green technology is key to reducing the environmental impact of one of the world’s most polluting industries: cement manufacturing.

Hear the podcast here – PropCast

COP26, property & climate change – everything you need to know.

Domus — Thu, 27 Jan 2022 12:09:17 +0000

by – Knight Frank

This year’s UN Climate Change Conference, better known as COP26, meets this week in Glasgow, bringing together almost every country on earth in an effort to tackle climate change. Our expert research teams analyse how the world of real estate is adapting and how the property market will look in the future.The average London home will cost £626,000 by the end of 2026 as office workers revert to prioritising proximity to the office and amenities, with demand highest to live in London’s leafy urban villages. This price inflation out-paces national house price growth of 20 per cent over the same period to £324,000, according to a new forecast.

Environmental Social and Governance issues are influencing the built environment, as well as investors, who are increasingly considering these non-financial factors as part of their business strategy.

We get market-leading insight from the research team into these factors influencing change in the property market and examine how the world of real estate is responding.

Global economic

“Scrutiny over ESG investments and assets will increase, therefore metrics and transparency on assessment will be more crucial to decisions.”

The E in Environmental, Social & Governance will continue to drive policy, regulation, and investment, but now with greater urgency given the stark warnings by the UN’s Intergovernmental Panel on Climate Change in August. According to the UN, more than 130 countries have now set or are considering a target of reducing emissions to net zero by mid-century with some increasing the urgency. In the wider context, 7,000 corporate signatories representing more than US$120 trillion in assets have signed up to the Principles for Responsible Investment. The commitment from corporations will continue to grow.

Efforts to measure and monitor these initiatives still have a long way to go to ensure resources are directed to the right places. Progress has been made by the Task Force for Climate-Related Financial Disclosures (TCFD) and almost 5,000 companies have signed up to these. The UK government made TCFD aligned disclosures mandatory for most prominent listed commercial companies in December 2020 and the Financial Conduct Authority (FCA) has just closed a consultation on extending the requirement to FCA- regulated asset managers and other asset owners – at entity and product level. We expect more governments to mandate this type of reporting.

Inflows into ESG funds grew sevenfold to US$15 billion between 2019 and 2020. However, “greenwashing” is increasingly concerning with the America’s Securities and Exchange Commission, among other regulators, cracking down on ESG-labelled products.

The European market for sustainable investments contracted by US$2 trillion between 2018 and 2020 following the introduction of anti-greenwashing rules. This risk and how much ‘good’ they are doing has been recently highlighted in articles by Tariq Fancy and The Economist, to name a few. Scrutiny over ESG investments and assets will increase, therefore metrics and transparency on assessment will be more crucial to decisions.

Read the Full article – Knight Frank

House prices ‘to rise 25% by 2026’ as London bounces back from pandemic peak.

Domus — Mon, 10 Jan 2022 11:20:47 +0000

by – Evening Standard

Here’s what the house price forecasters are saying now — and what it all really means.

House prices across London are set to rise 24.5 per cent over the next five years as capital’s housing market “bounces back” from the peak of the pandemic.

The average London home will cost £626,000 by the end of 2026 as office workers revert to prioritising proximity to the office and amenities, with demand highest to live in London’s leafy urban villages. This price inflation out-paces national house price growth of 20 per cent over the same period to £324,000, according to a new forecast.

A study from the property group JLL reveals that increased demand to live to the capital after the height of the pandemic, combined with the return of the overseas buyer, will boost the London housing market over the next half decade.

“There is a bounce back in urban demand in London as people once again reset priorities around where they live and opt to stay and move within the city, rather than leaving,” says Nick Whitten, head of residential research for JLL. “In particular we are seeing people buy in those neighbourhoods which have a village feel as they balance convenience and transport with space and greenery,” he explains.

Read the Full article – Evening Standard

UK Property Predictions: How The Housing Market Will Change in 2022

Domus — Mon, 13 Dec 2021 10:40:31 +0000

by – PROPERTY NOTIFY

With the pandemic rolling on in many guises, the Brexit transition hitting turbulence, and the run-up to COP26 influencing housing policy, 2021 has been full of hurdles for the industry.

However, the sector has overcome these and has also been “turbocharged” by the Stamp Duty holiday.

With this as the backdrop, it looks set to harness pent-up demand and grow more consistently next year.

To try and make sense of the property market in the year ahead, we’ve put together our predictions for 2022.

2022 property predictions

Rent and house prices will increase

In terms of rent, there has already been a bounce back to pre-COVID levels in cities.

But we’ll likely see a rise in rent prices primarily because of a supply gap, with some landlords choosing to sell their property in a very good sales market.

We predict that there will be a 3% rise in rent across the country and that could even reach up to 5-10% in some high-growth areas.

The landscape will be much the same for house prices, with buyer demand pushing prices to a record high.

Next year we expect to see a price growth of around 3% for house sales.

Areas for growth

The Northwest, Midlands, East Anglia, and Essex are likely to see higher than average growth for rent and house prices in 2022.

This is in areas where movers get more bang for their buck and where they can fulfil their desire to have more space following the lockdown-inspired surge to suburbs.

Likewise, investors purchasing in the Midlands and North are benefiting from preferable mortgage deals with better loan to value ratios, improving yield and monthly cash returns on investment.

It’s because of this (despite historically strong equity growth in the south), buy to let activity has been more prominent in the Northern towns in 2021 and we expect this to continue in 2022.

Despite businesses starting to return to offices, many employers are still working to hybrid models, and this opens more buying options outside of traditional high employment areas such as major cities and commuter towns.

Build to rent set to expand

We recently covered the explosive rise of build to rent – building more housing designed for long term renters.

At the moment, this is predominately for multifamily properties, such as apartments or flats, but we predict this will soon diversify into the single-family or individual house market.

This is set to expand next year with real estate heavy hitters, such as Lloyd’s and John Lewis & Partners, diversifying some of their portfolios from commercial property into build to rent residential property, sending a signal to landlords that there is strength in the sector.

But the market needs a far larger supply of units in the build cycle to keep up with demand and this is a strong time to invest in build to rent.

The pandemic has shown residential property as a strong, resilient asset class and buy to let continues to show excellent return, with strong HPI and RPI projections, so it’s an opportunity for individual investors to expand their portfolio.

At LRG we’ve been working with several hedge funds and institutional investors that are readily investing in build to rent for residential property and can help larger private developers get into this space.

Read the Full article – Property Notify

UK loses 83% of department stores since BHS collapsed

Domus — Mon, 11 Oct 2021 09:27:58 +0000

by – Emma Simpson

The figure highlights the extent of the upheaval in the High Street as the Covid pandemic sped up changes in shopping habits.

The data, compiled by commercial property information firm CoStar Group, also reveals that more than two-thirds of these shops remain unoccupied.

Some 237 big stores have yet to be taken over by a new business.

“The data undoubtedly highlights the acceleration of change in the retail sector in recent years, which the pandemic has only exacerbated,” said CoStar Group’s head of analytics, Mark Stansfield.

CoStar tracked the UK’s largest chains, from BHS and Beales to Debenhams and House of Fraser, from 2016 to the present day.

Five years ago, they had 467 stores between them. Now, however, only 79 are left.

CoStar Group also examined what had happened to the 388 that had closed.

Although 237 are currently sitting empty, 52 already have either firm plans in place or early planning approval for a change of use or repurposing. The research was done in July.

Read the Full article – BBC

Government poised to water down ‘radical and necessary’ overhaul of England’s planning system, report suggests

Domus — Mon, 11 Oct 2021 09:19:56 +0000

by By Andy Gregory

Robert Jenrick had argued reforms would ‘bridge the generational divide and create an ownership society’

The government is poised to abandon key elements of its “radical and necessary” overhaul of England’s planning laws – which ministers argued would “help us build the homes our country desperately needs” – following a backlash from Tory MPs and voters in the south, according to a report.

More than a year ago, the housing secretary Robert Jenrick announced his intention to replace the planning system in use since just after the Second World War with reforms which would “provide secure housing for the vulnerable, bridge the generational divide and recreate an ownership society”.

With a target of building 300,000 new homes a year in England, the government had intended in its Planning Bill – first mooted in the Queen’s speech this year – to scrap the planning application process and replace it with a zonal system, denoting land either “for growth, for renewal or for protection”.

But The Times reports that the government is now likely to drop proposals for a zonal system, which would have left homeowners unable to object to new developments in person, and plans to introduce mandatory housebuilding targets for councils.

Read the Full article – Independent

How is coronavirus affecting house prices?

Domus — Tue, 21 Sep 2021 14:24:10 +0000

by By Stephen Maunder

Discover what the pandemic means for buyers, sellers and homeowners

The UK property market has enjoyed a boom of late, with house prices rising by 8% year-on-year – but there are signs that the market may have peaked. A temporary cut to stamp duty rates resulted in soaring prices, but the latest data from July shows that month-to-month price growth fell 3.7% since the 30 June tax break deadline. Here, Which? explains what’s happening to house prices and provides advice on making an offer on a property in these uncertain times.

What’s happening to the property market? The property market is open and active throughout the UK, with estate agents conducting in-person house viewings and buyers able to move home. Since last July, the UK property market has been on the rise, led by the government temporarily cutting stamp duty. The biggest savings of up to £15,000 ended on 30 June, but buyers in England and Northern Ireland can still save up to £2,500 if they buy a home before the end of September.

Transaction numbers fall as tax break ends The number of houses being sold rose significantly during the tax holiday, but sales have dropped since the tax relief ended. Provisional data from HM Revenue and Customs (HMRC) shows that 98,300 sales went through in August, up 32% on July’s figure, but less than half of the number recorded in June.

Read the Full article – which.co.uk

Data centres have come of age

Domus — Fri, 16 Jul 2021 08:22:47 +0000

by By Andy Gulliford

In March, as the pandemic began to spread, people who work in data centres were added to the government’s list of key workers. It shows how far data centres have come that a once specialist and obscure real estate sub-sector has become one of the most sought-after, as use of technology rocketed during lockdown.

Already growing demand has soared, fuelled by a surge in digital data to facilitate connections for businesses in a home-working environment, for video streaming, increased social media activity and downloaded content for home entertainment.

Couple this with the fast-growing trend for businesses to move their IT functions into the cloud, and estimates that the data centre market could grow by 15% a year between now and 2024 don’t sound unrealistic.

They say it would leave his flagship levelling up ambition in tatters.

The letter states it would be a ‘massive missed opportunity to create hundreds of thousands of jobs, attract major investment and stimulate huge economic growth to create a more balanced, fairer economy’.

usiness leaders spoke out after the National Infrastructure Commission published the ‘Rail Needs Assessment’ which said the focus of investment should be on linking cities in the North and Midlands first.

It was fed into the Integrated Rail Plan, which set to be published this month.

The government has said it will outline how projects, including HS2 and Northern Powerhouse Rail, can work together to deliver ‘reliable train services that passengers need and deserve, as quickly as possible.’

Remarkably, the number of devices connected to IP networks will be more than three times the global population by 2023, with machine-to-machine or Internet of Things connections forecast to grow to 50% of global connected devices.

The elephant in the room is the lack of sustainability, with the sheer quantum of power data centres consume, but efforts are being made to address this. Google estimates that its data centres are seven times more energy-efficient than in 2015.

Read the Full article – Property Week