It may be August – for some the busiest they can remember, for others still unreadable post-Brexit – but already signs are emerging of how markets may perform after September.
This week the “R” word reared its ugly head. After July’s IPD UK Monthly Property Index revealed the biggest monthly fall in values since the mid-point of the global financial crisis in March 2009, MSCI vice-president Colm Lauder said: “The value of UK commercial real estate declined by 2.8% in July. The July decline, coupled with the decline of 0.3% in June, indicates that the market is formally in recession post-Brexit referendum.”
That will give pause for thought.
Nevertheless, there are more encouraging signs elsewhere. Here are this week’s top five.
1) Many commentators are bearish on domestic property’s short-term prospects, but bullish on the medium and long term. Ratings agency Fitch is more optimistic in the near-term: “The UK vote to leave the EU could translate into longer-term negative sentiment for the UK property sector but is unlikely to directly lead to near-term rating downgrades.” If Fitch’s short view is right, and others’ longer outlook correct, the bumps in the road will not be too troublesome.
2) The debt markets are in decent shape. As CBRE Capital Advisors managing director Richard Dakin writes this week: “Banks and investors are generally in a healthier position than 2008. With lower levels of debt, there will not be large numbers of forced sales.
3) There are encouraging signs in resi. Data house LonRes has crunched the numbers on the change of the cost of buying in prime central London in world currencies. Over the past 12 months it has become 16% cheaper to buy in Aussie dollars, 13% cheaper in Malaysian ringgit, 17% cheaper in euros, and 18% cheaper in US, Singaporean and Hong Kong dollars. All is not lost for domestic residential buyers either. Jennet Siebrits, head of residential research at CBRE, said this week: “Despite the outcome of the EU referendum, our current forecasts remain broadly unchanged and we expect UK house prices to grow by an average of 3% this year.”
4) There are other post-Brexit opportunities out there too, as evidenced by our new series on alternative investments.
5) Never underestimate the continuing appeal of logistics and industrial property. Demand for space and investment volumes both declined in the first half, according to Knight Frank, but with a lack of stock and the continued growth of online sales, there is every reason to suspect demand will strengthen.
It won’t be many weeks until the picture is an awful lot clearer.
• Many thanks to tailor Roberto Revilla for spending a couple of mornings with Allsop’s Gary Murphy, Google’s Joe Borrett and I measuring, fitting and supplying bespoke shirts which reveal much about their characters, their client bases and perhaps a little about the state of the property market too.
You will have to wait for next week’s Estates Gazette for the big reveal, but the experience confirms something I have long suspected: some retail experiences are too enjoyable, too personal and perhaps too pleasurable to transact online. And it reveals a likely direction of travel in property attire. In short: we smarten up in tougher times.
But there was also an uncomfortable aside to the experience. Revilla tailors for men, as do many of his peers. And while there are tailors who dress women, few – very few – supply bespoke shirts. Indeed, despite considerable efforts we could not find one who could contribute to our coverage.
What does it reveal? Well, some may see it as reflective of sexism in the workplace, a cloth ceiling if you like. Others will see it as simply a consequence of (perhaps historical) supply and demand. I’ll pass no judgment, but given the rebalancing that is taking place at the top of this industry and many others, surely there is a gap in the market? Is it too late to retrain, I wonder?
• To send feedback, e-mail damian.wild@estatesgazette.com or tweet @DamianWild or @estatesgazette
