The UK real estate market recovery could be long if the industry does not adapt fast enough is the warning coming from industry insiders.
The last 12 months have been some of the most challenging on record, especially for the commercial real estate market. With much of the country shut down, and businesses moving to work-from-home models, commercial property owners struggled to rent empty space or keep tenants in their current spaces.
Residential real estate agents also had a tough time. During the first national lockdown in 2020, estate agents were unable to show properties to potential buyers or tenants.
The UK Stamp Duty Holiday helped the residential sector in the second half of 2020. Yet, with the scheme due to end this June, the industry is facing a cliff-edge moment. Sales are expected to dramatically reduce as the economic impact of the pandemic is felt in real terms on people’s income.
Learning lessons from the 2008 Global Financial Crisis, that was in part caused by bad real estate investments, the industry now has strategies in place to deal with recession and long-term plans to buffer the sector.
To that end, the UK real estate market is hoping to bounce back relatively quickly. Industry analysts are seeing potential opportunities for both the residential and commercial sectors.
During hard economic times, high-net-worth individuals look to safeguard their fortunes. Typically, the residential and commercial real estate markets offer a safe place to invest. Analysts at global consultants RSM said:
“Private investors tend to work a lot with their capital in a distressed real estate-market, looking for opportunities.”
The UK market could capitalise on private investment in 2021 and beyond as the real estate market starts to depress.
Separately, real estate analysts from across the sectors have also concluded there will be a lot of pent-up capital in the bank accounts of investors after the pandemic. Many of the world’s wealthiest people have made huge economic gains during the pandemic and could turn to real estate opportunities once international lockdowns are lifted.
Many will look to Europe as they hope to extend their professional property portfolios. With the UK now outside the EU bloc, many eyes will be on the UK government’s future legislation and how this might benefit business.
If the UK focusses its efforts to attract international business to its shores, it could have a very positive impact for both commercial and residential real estate. Calls for the Stamp Duty Holiday to be made permanent could also benefit the residential market, as well as first-time buyers.
Although the recovery looks long for the UK real estate market, if industry leaders make the right steps now, they could maximise their opportunities and get the market back on its feet.