What are the implications of VAT, the snow, and online shopping?
Over the last 80 years, property in the UK has been a good investment. A study for the Long Finance Foundation (www.zyen.com/long–finance.html ) suggested that investment in UK property from 1930 to 2010 had beaten all other forms of investment.
Is this likely to persist? – Currently London is seeing increases in utilisation of office space after the downturn, and house prices are steady or increasing. Much of the growth in London has been as a result of the enormous expansion in Financial Services, in Higher Education and in media companies. The perception of London as a safe place with a good quality of life has led to the arrival of high net worth individuals. While London continues to exercise its pull as a global hub, the pressure on London will continue, and London property is a safe option.
What about the rest of the UK? – Net immigration to the UK and the rising population from increased birth rates mean that the population of the UK is expected to increase to 66 million by 2018 and 72 million by 2033. This is equivalent to a new city larger than London. Where are the geographic growth areas? The Centre for Cities’ recent report (www.centreforcities.org) suggested that Aberdeen, Bristol, Leeds, Milton Keynes and Reading will be centres for growth.
Will the demand for commercial property rise in line with the rise in population? How will increased use of working and shopping from home play out? How much of the current housing stock is viable as energy prices rise? Will they be refurbished or demolished? A particular concern is the property around and in towns and city centres. Will city centres atrophy as retail, office and industrial parks grow? Is the city centre destined to be a place for entertainment rather than shopping or working?
A recent study for the Construction Skills Sector Council (www.cskills.org) identified that the new build is likely to use new technologies and methods to meet energy efficiency demands, and that much of the current estate will be refurbished rather than demolished.
Meanwhile, the December returns on UK retail indicate that online shopping and the growth of retail parks – for shopping and collection of online orders – seem likely to continue to threaten town centres. So, looking at the long term trends and ignoring the current travails of the house builders and the housing market, while residential property, particularly in growth areas, will continue to be in short supply, commercial property will see major disconnects between property supporting the growth markets and that in more static areas.
Written by Gill Ringland, CEO of SAMI Consulting