This year promises a crisis in global markets to echo 2008, says George Soros. George Osborne warns of a “dangerous cocktail of new threats”. Other soothsayers, not all of them Georges, are more optimistic.
Here are 10 challenges to consider:
Oil. Qatar is expected to base its state budget for 2015/16 on an average oil price of $45 per barrel. That’s down from 2014/15’s $65 but still higher than this week’s sub-$35. Whether that drives expansion or contraction in outbound investment by oil-rich states remains to be seen. Initial signs are mixed: this week Dubai’s SRG Holding bought a nine-building Holborn estate from US private equity giant Blackstone for over £135m. Yet the Qatar Investment Authority is rethinking its global real estate investment strategy.
Tech. Will 2016 be the year that property gets tech? No, don’t switch off. It may be a question posed most Januarys, but over the next 12 months tech has the potential to move from the periphery to the heart of this industry. Virtual reality headsets, co-opting tech to make great places, digital-first attitudes will – or should – be embraced.
Housing. In every respect residential will dominate 2016. Will high-end resi dip dramatically around the world? Will government be able to turn impatience into action? Will radical thinking – enabling small housebuilders to make a meaningful contribution, allowing the private sector to process planning applications – work? No sector faces more change and challenges than residential.
Infrastructure. From flood defences to airport capacity, Crossrail 2 to HS2 and HS3, 2016 will be a year that requires major infrastructure investment decisions. All recent governments have had an appalling track record on taking responsibility. Let’s hope 2016 sees no repeat of such monumental political cowardice.
Devolution. If 2015 was the year that Devo Manc became Devo Just About Bloody Everywhere (to quote our video round up of 2015, www.estatesgazette.com/videos), 2016 has to be about making it meaningful. That requires bureaucratic solutions and demonstrable success. The latter requires more meaningful partnerships with the private sector. Planning changes are mooted in the Housing Bill, while local authorities such as Wandsworth and Haringey are seeking development partners. More of the same please to accelerate delivery.
Political intervention. Consultation on proposed changes to national planning policy is live. March’s Budget is likely to increase stamp duty land tax on second homes and buy-to-lets. With detail still unresolved, those at least are known unknowns. But with Osborne’s talk of a cocktail of threats, what are the unknown unknowns?
M&A. 2015 may have felt like every week brought news of agent consolidation but activity in this sector was but a speck in the wider world. Globally almost £3tn of deals were struck last year – three $10bn-plus deals a fortnight. Bankers expect another bumper year, spelling opportunities and losses. In this sector Colliers and Hatton Real Estate are the first out of the blocks. Who’s next?
Alternatives. The best performing property stock in 2015 was Safestore. Self-storage will continue to shine next year and grow to a £250m sector. In 2016, healthcare may get the attention it deserves. The build-to-rent sector will also outperform more traditionally focused peers.
Mayors. London will have a new mayor in less than four months. Neither leading candidate favours Heathrow expansion. Both are prioritising housing. It will be a close and perhaps vicious battle. Don’t forget too that 5 May also sees elections for the Scottish parliament, Northern Ireland Assembly and National Assembly for Wales as well as mayoral elections in Liverpool, Salford and Bristol.
Europe and the US. The potential for Brexit and destabilising influences on the European Union will ensure challenges facing Europe are in no way reduced, even if short-term economic threats have eased. The UK may have a radical leader of the opposition but could a more radical president of the US emerge on 8 November? Let’s hope not.
