The UK property market was showing positivity and resilience in the face of the back-to-back crises of the Covid pandemic and the Ukraine conflict, a business lunch was told on Wednesday (March 9).
Industry entrepreneurs and professionals from the real estate world attended the seventh of the law firm Axiom DWFM’s highly-successful online lunches – held during the pandemic – which was hosted by its Chairman Jonathan Metliss.
Guest speakers and internal specialists were addressing the topic “The Real Estate Industry. Prospects for 2022”.
Setting the economic scene, Alex Brummer, Daily Mail City Editor, said that the Russian invasion of Ukraine had totally changed the prospects for the UK economy in what would have been the “Bounceback Year”.
The picture had looked promising as Britain recovered from Covid with a 4% growth forecast. This figure would now be cut by half. At the Spring Budget, the Chancellor would be wrestling with pressure from huge cost-of-living increases and demands for higher defence spending.
While the international tension would create uncertainty for the UK property sector, there were two positive factors: mortgage rates would not likely rise and the huge influx of former Hong Kong residents would possibly replacing Russian money, particularly in London.
On the political front, Jonathan Horsman of Centaurus Communications, said that the Ukraine war was the lastest “game-changer” international event to hit the UK. Boris Johnson had benefitted from this – in contrast to Sir Keir Starmer – by the crisis overtaking “Partygate” in the headlines and his being seen to act as a leading actor on the international stage.
The UK playing a key role in the West’s response, with its freedom to act swiftly and separately on sanctions, formed part of the PM’s narrative of navigating Britain’s passage in a post-Brexit world. Although energy security and its cost would test the Government’s commitment to a Net Zero policy.
Vahideh Hojatoleslami, of Axiom DWFM’s commercial property team, reported that inflation and the unstable geopolitical scene had made real estate an increasingly attractive tangible asset. Investor clients were turning to commercial rentals, while the industrial and warehousing sector continued to grow with the rise in online businesses.
Two further themes were: maintained interest in office space and landlords adjusting their portfolios to reflect the new work patterns.
On residential property, Khaled Ellatif said that real estate continued to be a resilient sector, with house prices 13% higher than pre-COVID. The firm had seen its busiest ever time, experiencing a 15% rise in instructions following the pandemic.
Estate agents and brokers remained positive as demand for new homes soared and the rental market became increasingly attractive to Far East investors.
Claudine Lawrence, head of Corporate and Finance Dept, said that Axiom DWFM, which acted for both borrowers and lenders, was seeing a recovery in the lending market. Although banks and other lenders were keen to encourage borrowing, they still required security. The firm had been appointed to the India State Bank lending panel.
On property litigation, Mira Arezina, reported a huge courts backlog leading to it taking six months for landlords to repossess properties. The Government was encouraging landlords and tenants to negotiate the settlement of debts outstanding from the pandemic ahead of a new compulsory arbitration process due to come into force on March 25.
Elizabeth Johnson, who leads the firm’s Employment team, pointed to three areas it was dealing with: a huge recruitment drive – involving new roles and retention of existing talent, the restructuring of companies and mergers, and advising employers on the Government’s “Living with Covid” policy. Firms were being encouraged to have their own Covid plans to deal with work safety issues, crucially mental health well-being.
Concluding, Will Clough, of auctioneers Allsop LLP, reported that its online commercial auctions in 2021 had seen a 35% volume increase in sales, totalling around £600m. One feature of that had been increased comfort with buying of bigger assets. Other notable themes of the business growth were: renewed buyer confidence in the retail sector – particularly when well located, many tenants acquiring their freeholds, and an increase in sales from funds and institutions in addition to asset managers on behalf of private equity.
Chairman Jonathan Metliss added that the next Real Estate Lunch would be held in person in central London.
Pragnesh Modhwadia, Axiom DWFM’s Managing Partner, offered a vote of thanks to all those taking part and to those attending.
