John Slade: Black swans coming to a real estate market near you

COMMENT It’s time to reflect on the “black swans” we are already familiar with and that will continue to come our way in the future. First is Covid, and the subsequent heightened awareness of health and wellbeing. Then come geopolitical events. And finally there is political populism, including anti-establishment sentiment and a lack of trust in those in power. Given recent events, it’s even more clear that black swans are here to stay – sorry folks! Out in the market It’s worth revisiting Covid. Never before have the workplace and working patterns changed so radically in such a short amount of time. Every dinosaur in the property industry was persuaded practically overnight that people can work from anywhere when really needed. Don’t get me wrong. I still believe in the overriding benefits of being physically together: Company culture, ways and plans need passing on, grads need to learn from people around them. But if people can work in the way that suits them best and perform better, than who is to say that 9-5 in the office is “the right answer”? I personally always wanted to see my agents out in the market and meeting clients. I saw some of the most efficient and best work done by part-time workers who had a smaller window to produce valuable advice and work but had razor-sharp focus and delivered accordingly. This doesn’t mean the office is dead, but it does mean more focus is placed on better offices, in better locations with a different, more flexible and, dare I say it, bigger layout. This topic is well trodden and I’m not an architect, but it’s a simple fact that better workplaces will attract better people, even if it’s only for half a week. And, as we observe how people interact with the office when they are in, they will no doubt evolve again, which is why they need flexibility. As with all property, those that have adapted to a change in wants and needs, win. Goldman Sachs, Google and even Kroll are calling their staff back. The office is very much alive – investors please note! Simply put, there will always be offices, there will always be more flexible working. Perceived challenges Geopolitical events? There have been a few. Brexit was a long time coming but its effects are plain to see in the supply chain, the cost of materials, the amount of talent, down to the ability to do business generally with European countries due to perceived challenges. Then there’s international conflict – although less dominant in the media these days, war in Ukraine rages on and tensions continue to rise elsewhere as a result. Not only is the human and real estate aspect in Ukraine a very real consideration in addition to political allegiances and tensions elsewhere, business confidence will always be shaken by conflict, particularly in the modern world where warfare is as much fought in cyberspace and with the constant threat of nuclear weapons. Then we have Israel/Palestine/Lebanon/Iran – the list goes on – which have polarised international alliances and communities in each city around the world on top of the barbaric suffering. Politician versus party Political popularism is as much about the individual as party politics. From Trump to Macron, Johnson to Truss, Sunak to Sir Keir and all other personal brands in between, people are these days more interested in the individual and what they say than what they represent. We are in an era of voting anti-establishment no matter the politics of the governing party. Generally in developed economies there is more freedom in casting/choosing those votes; this has led to change for change’s sake or anti-establishment results, often leaving inexperienced leaders or flawed policies.   This means huge uncertainty for capital markets and hence real estate all over the world. What do these people stand for, is it beneficial, will it change? And with each character comes polarisation and heightened sensation over what they stand for and if it’s right or wrong. The policy itself is largely missing in lieu of grand statements and catchphrases. There are few genuine manifestos and, as such, no real mandates. And “The Donald” is back… how? No wonder planning and property policy is lacking in detail and guidance. For example, we currently have a huge amount of change promised for real estate by our new government in the UK, but time will tell if their plans are deliverable at all given how much has been holding back property for decades. Luckily there’s an industry full of professionals who will no doubt be asked to guide how it can be done, right? John Slade is a director at SladesCo