As we move into July, a month which usually sees people taking time off, sunning themselves and looking back on what was hopefully a successful first half of the year. However we find ourselves in a very different and unusual position.
I have spent the last week interviewing a number of property professionals to gain a greater understanding of how they see the market, thank you to Matthew Potter (Head of Direct Investment Portfolio at U&I), Thomas Storey (Director of Horton & Storey) and Dominic Martin (Lettings Director at Kinleigh Folkard & Hayward).
The general consensus seems to be one of caution and yet optimism. There have been inevitable redundancies and although Furlough has helped many people, it is a short-term solution to what is going to be a long term problem and unemployment is only going to get worse as we head into autumn and winter. We have seen across the country, in all sectors, residential, commercial, industrial and particularly retail have been hit hard by the lack of new opportunities and the ability to deliver new schemes. Some investors are being cautious where cash buyers are making the most of a deal where they can.
“The first weeks of lockdown were incredibly challenging for many people and businesses. The occupational market, particularly retail and leisure, was worst hit with the majority of business unable to trade.
Consequently, many landlords rental collection was significantly impacted. With the reopening of stories, it is hoped that both landlords and tenants will be able to see the first signs of a recovery”
The residential market has seen a big influx of sales with a Help to Buy speeding up the process for first time buyers, who are nervous that they will need a bigger deposit and then they won’t be able to afford the interest if they wait too long. This along with the lack of viewings for a number of months has seen a spike in sales over the last 6-8 weeks but Estate Agents and Developers are still cautious of future sales and not moving forward with as many new plots, before finishing the schemes they have on site.
"The reopening of the market has seen a large backlog of transactions being processed within a short time period placing pressure on agencies. People are motivated to move due a number of factors ranging from frustrations with current living/work arrangements to future economic stability. A large proportion of movers possess a renewed urgency having delayed moving due to BREXIT and now the COVID-19 pandemic. Towards the end of the year the market may become cautious about moving due to economic conditions and we predict a drop in transactions as a result."
Most companies are taking this time to change how they communicate and work with their employees, changing processes that may have taken longer than necessary and with the amount of Zoom, Teams and other virtual meetings taking place, employers are finding new ways to streamline their approach to business.
BTR developers have been looking at what they need to do to attract young professionals, who will inevitably spend more time working from home and will want a space to rest, work and play with more outside or green space. A desk in their bedroom, won’t cut it.
"Central London has seen a huge surge in long term rentals coming to the market, international restrictions combined with tenants vacating flats early pre lockdown has seen stock rise by up to 30% in Prime Central. Naturally we have seen achievable rents decrease by 10 -15% for most landlords. Unusually for Central London transactions have been predominantly domestic, young professionals and families are taking advantage of the current market either to upsize, facilitating working from home or gain outside space. Pent up demand has seen us surpass our agreed tenancies for June 2019 but number of factors will determine if we bounce back in the second half of the year. Q3 is predominantly driven by international students and global firms relocating staff, when international restrictions are eased the lettings market will recover quickly."
In summary, it has been a tough start to the year and one that no one could have predicted but I am hopeful that 2021 will see everyone up their game and become better in their field. The majority of business leaders that I speak to are putting on a brave face but aren’t so blinded that they don’t think there will be casualties.
I am very interested to hear your thoughts. How are you finding the new world, how is it affecting your business and employees? What are you doing to change and ensure that you are successful?
