UK Property Post Pandemic

Post pandemic and despite value warning I do not see a decline in UK residential values. Since 2014 we have already witnessed up to a 30% decline in values and I believe enough is enough. Of course some developers and owners greedily inflated asking prices and those stubborn or no need to sell owners still hold out to ridiculous pricing. Those in this category can expect to remain indoors.

Short supply, low interest rates and increasing replacement construct costs all add to the market support. It is however likely that we will continue to see inactivity in the markets especially as the transfer costs involved stamp duty, removal, legal, survey costs are prohibitive. The Government I believe will need to suspend Stamp Duty or lower the high percentage to give the market boost and I think this should be awarded to UK passport holder buyers.

Meantime where there will be value decline with some Commercial and in my opinion up to 30% with shops and office investments. Those offices out of town or famously ring the M25 will die a slow death and the inner cities will see replacement use of many buildings. As for the shopping centres I see a dark prospect and the Councils buying their centres is not a wise policy to pursue unless they are presented with a bargain. Value is a multiple of rent, if the rents are not being collected or unlikely to grow then that is reflected in the multiple. During Covid19 approximately half of commercial rents due to Plc landlords have been collected. Meantime Warehouse space remains at a premium and Companies like Segro Plc are going to do even better during the fourth industrial revolution.

The liquidity issue that property wears around its neck and inability to get quickly into cash will dampen the attraction of Investment in the Property Funds whose drawbridge to withdraw funds remains raised at this time. Good news quietly appeared during Covid19 when Keswick ( Jardine ) bought 21 acres of Shanghai for over $4 billion and yesterday when Intu Plc completed the sale of a €400m shopping centre in Spain. Expect major deals of consolidation in the UK in the months ahead, the reorganisation of companies and the employee bearing Corporate overhead cost as those Companies are seen to still flourish with their main workforce indoors. It’s a new and exciting era for property and those with efficient flexibility and innovation will survive.