Last year, the Blackstock team put forward some predictions for how 2018 would play out. Let’s see if we were right:
- Home ownership at all costs will continue to trump common sense – Not entirely true
Despite the Conservative government remaining the party of homeownership there nevertheless emerged a tacit acceptance that the housing crisis can only be solved by building more homes of all types and tenures. At the National Housing Federation conference Theresa May pledged an extra £2bn for social housing while the Budget saw the government finally commit to winding down Help to Buy, which had been accused of pushing up prices.
- Brexit will have less of an impact than people think – Surprisingly true
Despite Brexit dominating the front pages of national papers and broadcasters, its effect on the property market has not been as devastating as predictions have forecasted – which unfortunately has fed into further criticism of “Project Fear”. However, we are still some way from agreeing a deal and the risk of crashing out the EU grows day by day.
- Ab-fab modular construction will continue to go from strength to strength – True
The “Who’s Doing What?” report from NHBC and Cast showed 30% of housebuilders are developing their own housing manufacturing facilities while 62% are investing in research and development. With government and Homes England also backing it, and fears over labour market shortages – it’s only going to get bigger.
- Developers will begin to focus on wellbeing. No, really – True
From BTR developer Moda Living announcing a tie-up with digital wellness start-up hero to Ben Channon of Assael Architecture making waves with his book on mindfulness and design, 2018 was undeniably the year the property industry started to take wellbeing – both physical and mental – seriously.
- Seaside towns won’t get the attention they deserve – True
There were token gestures in the budget but the underinvestment continues. However, in some respects they did not need it, as the falling value of the Pound and a scorching summer meant more Brits stayed at home and went to the beach.
- Build-to-rent hits the mainstream – True
This was the year that BTR became everyone’s favourite sector, as billions of pounds were pumped into new and existing partnerships, thousands of units were announced and even the big REITs like British Land and LandSec started to show an interest. The number of BTR homes under construction grew by 40% in the year, according to the latest BPF and Savills research, while the number of completed homes jumped by 29%. Crucially, the number of completed homes in regions is on a par with the capital, showing BTR isn’t just a London thing.
- Music will make an inner-city comeback – Mixed
A mixed bag for music as 2017’s saving of Fabric and the increase of the Electric Ballroom’s capacity was overshadowed by Hackney Council’s curfews in July, strangling the heart of London. The Night Czar’s weak response doesn’t hold well for future decisions on the night-time economy, as it’s clear the power rests with local boroughs.
- Housing Associations will begin to stand up for themselves – True
New financing initiatives, more private sale and BTR development as well as some truly enormous mergers have helped to put the sector back on track after the limitations imposed by the Cameron/Osborne government. State funding and grant is still non-existent, but increased liberalisation and innovation in the sector means HA’s can and are doing it themselves.
- Regions will continue to assert themselves – True
Metro mayors, new infrastructure and London’s growing costs means more and more people are looking to the regions. Birmingham, Manchester, Bristol and Leeds are all feeling the benefit as jobs and confidence grows, and the commercial property markets boom. From Caddicks’s £300m SOYO regeneration in Leeds being approved, to Grainger launching the first phase of Clipper’s Quay in Greater Manchester, one of the largest BTR schemes outside of London, the regions are genuinely challenging the dominance of London. Watch this space.
- The #proptech revolution will gather pace – True
Whether it’s the likes of JLL buying ValuD or new innovations around drones, driverless cars and augmented reality, there is a huge amount of new technology emerging, all there to make the sector and better and life, technically, easier. However, so too is the backlash beginning, with justifiable scepticism demanding that this new tech demonstrate its usefulness and profitability,
- Infrastructure will continue to be neglected by the government – True (sadly)
At least in 2018 Network Rail did not have to give evidence to parliament for why it couldn’t cope with the number of users like in 2015, but headline grabbing delays to Crossrail and HS2 along with the shambolic introduction of the May 2018 timetable did not spell a successful year. Lip service from government around investment has still not turned materialised into successful projects.
- The Left is becoming just as Nimby-ist as the Right – True
A new leftwing Nimbyism is gripping London with hard-left Momentum supporters opposing any projects except social housing and the more moderate GLA toes a difficult line trying to appease residents while still building new homes, which just goes to show it’s not just the Tories for Not In My Back Yard.
- The high street will take on a new form… – True
The long slow death of retail has continued for another year as big beasts like House of Fraser and Debenhams have hit the ropes. But now there are more novel ideas for saving the high street, from online sales taxes to redeveloping shopping centres for rent or elderly living. Blackstock’s own solution to help rescue troubled retailers has focused on preventing the debilitating effect that high business rates can have on the high street. Ultimately, high streets will continue to die if communities do not have money to spend on them, and there’s more than just lip-service changes which are brewing.
- We like big boxes and we cannot lie… other income returns are dry – True
Industrials outperformed all other traditional real estate asset classes once again this year with a 15.5% total returns growth, and remain a firm favourite for investors as yields have been on a downward trajectory since 2009. Whether this continues in 2019 is another question.
- Climate risks will start to bite – True
Last spring’s ‘Beast from the East’ and then the summer heatwave helped raise awareness of the dangerous and erratic weather that climate change will bring. Resilience is becoming a more prominent trend in urban design, while more and more buildings are finally improving their sustainability credentials.
Sadly, it’s something that is only going to become more important, but this also gives architects opportunities to get stuck in and produce sector-leading research on sustainable and resilient design. After all, who is better poised to comment on physical spaces, than the people who design them?
- Developers looking to re-think office space – True
Brexit-fuelled uncertainty means more companies are playing it safe and refurbishing and repositioning their existing office spaces, rather than building anew. While WeWork may be taking a lot of space, office owners are avoiding the big decisions until they can get a handle on what tenants really want.
- Cyber risks are growing, and firms need to be ready – Half–true
After the various ransomware shocks in 2017, 2018 saw BA and the National Lottery become the most high profile victims in the UK. However, the number of businesses affected seemed fewer than in the previous 12 months.
Don’t believe though that this is because companies are more prepared. With large corporates experiencing up to 1,000 hacking attempts a month, it’s not a question of if, but when we have another non-Petya wide style disruption.
- England will disappoint at the World Cup – Wrong
And a good one to be wrong for. To put it mildly, we were pleasantly surprised.
Watch out for our 19 predictions for 19, coming soon…