Property trends 2018/2019
John Reeves, Chairman, Helmsley Group discusses technology, retail experiences and the B word
2018 has been a year of hysterical reporting, self destructive action from politicians and selfish jostling for position from MPs who should know better.
That said, Brexit isn’t the end of the world, despite what many would have us believe.
Brits are still a nation of entrepreneurs (a nation of shopkeepers if you will, albeit some online!). We see this continuing, as long as our government can continue to support businesses.
This too shall pass
We certainly have interesting times ahead to say the least.
Property professionals and clients alike can probably empathise with how the Prime Minister has performed in such unstable circumstances.
It’s bad enough negotiating to buy a property in private; God knows how you pull off what she’s doing!
Everything is relative
In my 40 years of working, I’ve witnessed taxes at 90%, a forced exit from the ERM, interest rates going from 5% to 17% in just a few hours and a three day week with enforced power cuts.
Ask someone working in the far or middle east, India or Russia what political risk is and they’ll probably laugh at our Brexit threat in comparison.
We must remember that Brexit won’t fundamentally affect the fact that people always need to create income and still need homes to live in.
As a nation we’ll survive, but our housing shortfall is still woeful: An estimated 240-300,000 new homes are needed per year in England according to the Government’s latest whitepaper.
Investing in progress through uncertainly
None of us can predict the full implications of Brexit on the property market, but we believe that the South will feel it far more than the North, simply because of the massive, unsustainable uplifts they’ve had in property. That said, we are still being very discerning on what and where we choose to buy our investments.
At Helmsley Group we don’t borrow; all our properties are secured against land or property, which will make our life easier for us and our investor clients if difficult times do arrive next year.
Quality locations still key for strong yields
Any problem properties we’ve had are always in traditional working class towns and cities that have never recovered from the credit crunch. In our view, these will continue to deteriorate.
The better quality and more elite the town, the better the property has performed. This is a sign of things to come, as wealth becomes even more disproportionately distributed throughout the UK.
It’s our job as property professionals to try to second guess where we think the market is going. We’ve made some very attractive purchases recently, including leisure, retail, commercial and residential investments.
New investment opportunities
To keep decent returns coming in for our stakeholders and investors though, we believe there’s a need to think outside the box and allow new types of opportunities to come to life.
For example the national planning framework’s change of office to residential has enabled us to build award winning schemes for first time buyers at Halo on Clifton Moor, York.
We also believe that niche sectors of the market will perform best. We’re also creating luxury family homes and city apartments at The Old Fire Station, Newington Place and now at Connaught Court in York.
We continue to strive towards creating homes and property investments that fill a gap in the market, which we believe will allow our business to prosper through the uncertainty ahead.
High street retail and online
I think we all understand the nature of how online shopping is impacting the high street.
It’s too late to turn the tide and retailers will have to learn to adapt to this ongoing trend. Consumers will always want a leisure retail experience and its up to the next generation of retailers, towns and cities to offer that.
Creating experiences will be key to retail growth both on and off the high street.
We foresee tourist cities performing well, as they attract both local and foreign investment from shoppers. Cities and towns must invest in different ways to give people the experience of a day out, so visitors are tempted to part with their cash.
Today it’s not just about the retailer, but the entire experience, so marketing and place making strategies must change.
There are still bargains to be had for retail property in the right locations. We’re working hard to identify these opportunities.
The effect of AI and automation on jobs in the next ten years is very difficult to predict. Many job roles will disappear, for example if driverless cars come into being.
What happens to people losing their jobs? Is the world going to give them a living or a basic wage; how will they buy homes or even rent homes?
These are questions I find very difficult to answer and probably lie outside of my timeframe. I suspect it may change our society and it’s up to us all to create more community and connection to smooth the way through these changing times.
I’m no economist, yet I fully understand that you must only spend what you earn.
There are commentators who say we could have a short-lived boom delivered on the back of huge spending, borrowing and investment.
Our high net worth investors and property professionals alike will pay for any excessive spending of a change in government.
I personally believe the majority of wealth creators want their staff to thrive -both personally and professionally. They don’t need to be told by Government how to do this. Our British skills as entrepreneurs – a nation of shopkeepers – need to be supported and nurtured so we can continue to prosper in business.
We’re looking forward to seeing Brexit through and to helping our clients further develop their wealth in 2019.
John Reeves is Chairman of Helmsley Group, an award winning property developer based at Monk’s Cross, York. Now in its 36th year of business, Helmsley Group also provides clients and investors with a range of investment opportunities that are debt free and always secured against land or property. The company manages a residential and commercial property portfolio in excess of £130M.
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