2021 Review – A Remarkable Year

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2021 Review – A Remarkable Year

Who would have thought it? We’re reluctantly finishing 2021 the way the year started – talking about the Covid-19 pandemic, and the impact it’s having on the real estate sector – real assets and proposed. All while we’re trying to get festive.

It was a roller coaster year for real estate, and none more so than for the retail sector. Although there were numerous distressed sales – Hammerson’s disposals being just one example – and the value of many retail assets slumping significantly, the direst predictions made at the start of the year never came to fruition, and many calling the bottom of the market. In fact, as the year wore on the sector showed some signs of a bounce back – at least prior to the emergence of the Omicron variant and the UK’s Plan B.

At the beginning of the year, experts warned that at some stage the demand for industrial and logistics assets would also slow, but as we enter 2022 demand has continued to outstrip supply, with take-up and investment hitting new records – our client Ardent being one leading from the front. A report released by property week at the end of Q3 showed that the levels of capital deployed into the market had surpassed £10.8bn GBP, beating the £10.2bn spent in the whole of 2020 – demand certainly shows no signs of slowing.

Back in June, once the restrictions allowed, the Innesco team moved out of its conventional office lease in Holborn to our new offices at Television Centre, White City in West London. Throughout 2021 we have all had to adapt to new ways of working, whether that be working from home, the office, or even abroad! From our perspective, we can certainly understand the appeal of co-working spaces like Soho Works – the space has afforded the team a valuable sense of flexibility, as well as the area’s remarkable shopping and transport links – it will be interesting to see whether this trend continues into 2022.

Autumn news was dominated by COP26, as almost every country gathered in Glasgow in an effort to tackle climate change. As outlined by the UN’s Intergovernmental Panel on Climate Change in August, the built environment accounts for almost 40% of carbon emissions, making real estate key to reaching net zero goals and driving economic and social equality. The direction of travel is clear: zero carbon real estate will become a necessity, rather than an aspiration. ESG is rising up the agenda for many significant CRE teams. Since COP26, huge sums have been set aside to adapt, modernise and decarbonise commercial, domestic, and public sector real estate – however, experts worry that without clear regulation and enforced carbon reductions, the built environment will continue to tread the path of least resistance until it’s simply too late.

2021 also witnessed the welcome return of in-person industry events. A few weeks ago, the Innesco team masked up and travelled to Cannes for the last major event in real estate’s 2021 calendar– MAPIC. Although attendance was down on the 7,000 or so anticipated, travel rules didn’t deter over 4,000 industry professionals from attending – reflecting the determination of the real estate industry to continue meeting in-person regardless of convenience. As delegates gathered for the first MAPIC since 2019, there was a recognition that the retail industry has changed and adapted, with over 50% of delegates hailing from the leisure sector. For the first time in its history, the event incorporated LeisurUp and The Happetite, whilst focusing on the importance of building a new business model to accelerate location-based attractions into lifestyle destinations. In an increasingly connected and digital world, creating places where people can enjoy vibrant experiences has become a real game-changer for local policymakers and property developers.

Bringing us right back to this week, the Bank of England raised interest rates from 0.1% to 0.25% in the face of surging inflation. The gesture is the first time that rates have risen in around three years, and although the rise may not be significant, it is a clear statement of intent. The rise has been a long time coming, and with inflation now at decade-high levels, there isn’t really an alternative. The announcement has been met with a mixed response from the property industry – any increase in interest rates will always concern homeowners who will understandably be worried about the knock-on effect it may have on their mortgage repayments. However, even with the rise, rates remain incredibly low, so there is no need for widespread concern just yet.

After such a remarkable year, it’s important to take stock of everything that has unfolded. This month, I took part in a round table event, organised by Urban Ovation, to do exactly that. During the discussion, over 25 real estate experts concluded that the industry is desperately in need of a rebrand. 2021 has continued to challenge Real Estate’s operating model relentlessly and despite the constant difficulties and expense the industry should embrace further change the year has brought – whether this be new technologies, concepts or working habits.

This is the most exciting time to be working in real estate. The rulebook is being re-written, there is no such thing as a bad idea, and nothing is off the table. As we enter the new year, Innesco will continue to embrace this new rulebook as we seek to be pragmatic in whatever 2022 brings!

Season’s Greetings and Happy Holidays one and all!

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