Let’s put this year behind us and look forward to 2017. Will it be any less certain than 2016? Perhaps not. But that’s no reason not to hope, plan and prepare.
To the lawyer who suggested to me recently that we kick off next year with a 9 January 2016 cover date and pretend this past 12 months never happened, I’m afraid that’s not an option.
For the nine shocks that hit property in 2016 see here. For the nine (plus two) that will reverberate in 2017 read on.
1) We should not be so shockable in 2017. Come on, haven’t we learnt anything from this year?
2) Flat will be the new growth.
3) Property will start to take tech seriously. Fresh from its merger with fellow proptech disruptor VTS, HighTower founder Brandon Weber flew in from the US for EG’s proptech conference this week. His was a rock star performance and, with the expanded leasing and asset management business now managing 5.2bn sq ft, his core message came across loud and clear. “We intend to transform commercial property,” he told the 200-strong audience. It was hard not to believe him and some of his peers.
4) Ready yourself for Trumpenomics. Tax cuts and infrastructure spending will be reflationary domestically. And if the president elect pursues his expected protectionist policies, global investors may cool on the US. China’s Citic talked this week of accelerating property investment into the UK and Japan. Yes, Citic also said it would target the US, but will others be so keen if the new president resists capital inflows?
5) Devolution had a good run in 2016. Westminster will come under pressure to go further and faster in 2017. There will be new mayors for Greater Manchester, the Liverpool and Sheffield city regions and for the atrociously named West Midlands Combined Authority. The needs of these urban centres will require their new mayors to take development seriously. Couple that with an economy that may continue to surprise on the upside, and regional real estate markets have grounds for some optimism in 2017. Each mayor will push for devo max too. As will Sadiq Kahn in London. It’s right politically and it’s right for property.
6) PRS investors have so far only deployed a fraction of the capital they have raised. If January’s much-anticipated government housing white paper does provide a supportive framework, expect construction and pipelines to move forward at pace. Meanwhile, modular will lose negative associations with the prefabs of old and come to be seen as a way of cutting delivery times for housing, hotels and even industrial.
7) Elections in Holland and France in the spring, Germany in the autumn and, almost certainly, in Italy at some point will deliver further uncertainty and may well put the very foundations of the European Union under pressure. And with expected capital controls in China, the UK’s safe haven reputation may recover lost ground.
8) Don’t expect the triggering of Article 50 by March to usher in a brave new world of clarity and certainty. It won’t.
9) Inter-agency M&A and poaching will, unlikely as it sounds, grow even more prevalent. Just ask LSH.
10) The lines between the public and private sectors will blur further. More local authorities will compete with investors to acquire income-generating assets as they move to a self-financing future. The suppliers of patient capital will move deeper into creating real assets in areas where once the state was dominant – from healthcare to education to housing.
11) Occupier demand at the headline level has held up so far: US tech giants’ enthusiasm for the UK is undimmed. But elsewhere requirements are being scaled back. On top of this, others will undoubtedly follow the lead of Lloyd’s of London in establishing an EU base in preparing for life after Brexit. But how many will do so and how much UK space will be put at risk? As ever, the occupier question will be 2017’s determining factor.
