Updated on: 14/04/2022

More than half of real estate companies in the UK expect to grow their business in 2022. However, with a number of other challenges, more than one-third anticipate that technological trends will impact their office portfolios, among other challenges.

As the UK emerges from the uncertainty of Covid-19, Crowe has taken stock of the country’s real estate market, to see what lies ahead for the industry. With the UK’s broader economy on the road to recovery, the study finds that long-term optimism within the sector is growing. However, there was so many trends for change prior to the pandemic which are still influencing the market, that many aspects of real estate portfolios are still being disrupted.

Caroline Fleet, Crowe’s UK National Head of Real Estate, said, “What is clear is that real estate businesses across all sectors have had to become far more innovative, flexible and adaptable over this time. While Covid-19 may have accelerated these changes, or in some cases, caused some of the constraints such as the rent moratorium, many of the factors affecting the market already existed before the pandemic and will continue to impact the sector in the post pandemic environment.”

Crowe spoke to a total of 99 respondents across all levels and all types of businesses related to the real estate industry. Overall, at the moment the real estate market seems positive on its outlook. While a majority of 55% professionals expected to grow their business, just 5% said they expected to decline in the coming year.

With that being said, opinions were more divided on challenges facing the wider market. As was the case with Crowe’s recent survey of the UK legal market, firms are more optimistic of their own prospects than of the broader market. For example, even though lockdown measures have been rolled back over the last year, their impact on consumer behaviour will have lasting impacts on real estate.

Calls for more hybrid working patterns pre-dating the pandemic have been accelerated by it. With Covid-19 extending the possibility of home working for more people even post-pandemic, demand for residential properties near key transport links may wane.

Meanwhile, beyond residential property, 37% of respondents said that they believed that offices are the most likely property to be affected by technological trends. These have also been accelerated by the pandemic, as work that was done in the office has been enabled for home working. With this technology now live, many companies are looking to scale back their office presences as a means of saving money. Meanwhile, with fewer commuters visiting stores to or from work, retail property is also likely to be impacted by this trend.

This can be seen already to an extent in the property portfolios which have been impacted at firms across the UK through 2021. London firms most noted an impact on their portfolios in office property, as firms scale back on collective spaces due to the previously mentioned trends. Meanwhile, regional firms saw that retail and residential property portfolios were most impacted – thanks in part to changed habits of commuters heading into London from surrounding cities and towns.

The researchers concluded, “While many businesses have weathered the storm of the pandemic and taken advantage of the government support available, there is now a steep hill to climb for those in real estate, particularly for those in the retail and commercial property sectors. There is opportunity for growth, but businesses will need to adapt quickly in order to thrive.”

Source: https://www.consultancy.uk/news/30270/uk-real-estate-market-hopes-for-growth-in-2022