There’s plenty to get excited about in 2015. That’s if politicians stay sensible, talented colleagues stay put and the public can be persuaded this industry is a force for good. Here’s what to expect over the next 12 months.
1. Political distraction will intensify. There’s a general election looming, you won’t have failed to notice. And its outcome is harder to call than any in recent memory. Oxford Economics sees it as “a referendum on what the UK population wants from its public sector. A vote in favour of the current plan would suggest support for a very small state, which provides little outside of the NHS and education. But even if the verdict favours an alternative, it is clear that with the costs of an ageing population to contend with, the model of the UK state will have to change, with an acceptance of higher rates of taxation, a smaller role for the state in certain areas, or a combination of the two.” So taxes will rise. And while people and companies are mobile, real estate is not. Whatever the colour of the next government, further taxation of property will be on its radar.
2. It’s hard to see investment matching the giddy heights of last year: yields may compress a little further but they “will gradually retreat again as we move through a normalised interest rate cycle”, according to Hermes Real Estate chief executive Chris Taylor (p38).
3. There is a stronger story for rent rises, however, especially in the regions.
4. London has priced out many, especially domestic, investors. First-tier regional cities such as Manchester are looking pricey too. 2015 might be the year that second-tier cities recover lost ground (p44).
5. The dearth of development finance needs to change. Banks (and others) are lending again, as the latest De Montfort survey before Christmas makes clear. But they are lending to fuel trading, not fund development.
6. The retail revolution will accelerate, driven by online and consumer rejection of old certainties. EG’s new columnist Clem Constantine, former head of property at Marks & Spencer, asks an interesting question (p40): “Landlords will need to evolve their approach to rents. Should they ask for a share from web sales?”
7. A backlash against iconic architecture could be on the cards (p78).
8. The war for talent will intensify, as attracting experienced staff and retaining key team members grows harder and harder (p33). More than one in three UK workers hope to leave their current job in 2015, nearly twice the number this time last year and three times that of 2013, according to the Institute of Leadership and Management.
9. Devolution demands will accelerate. Manchester has secured a £1bn deal in return for delivering an elected mayor. Control of corporation tax has been won by Northern Ireland. And a draft new “Scotland Act” is to be published by Burns Night (25 January). England, Wales, Yorkshire, London and others all want a piece of the action. Well managed, the reforms should provide a fillip to regeneration.
10. The property backlash will continue. It was most visible at MIPIM UK when protestors gathered outside London Olympia. Comedian Russell Brand (who, it’s worth noting, has 8.9m Twitter followers) took up the baton in November when he joined protestors against rent rises at the New Era Estate in Hoxton, N1. “As you know, property developers – in partnership with corrupt, inept or lazy politicians – have created a housing crisis for ordinary people all over the world,” he said on his website. In London listings magazine Time Out this week, journalist Giles Coren joined in. Suggesting a new year’s resolution London itself should make, he profferred: “I will redevelop my dilapidated inner urban wastelands and not spread into the green belt (as is being seriously proposed) just to keep some evil property developer in coke and prostitutes.” That, unfortunately, is how much of the rest of the world sees the property industry. Finding a way of successfully explaining it is a contributor to society and not a detractor is a challenge that urgently needs to be addressed.
