March is a great time to look forward and a little bit back, setting out some predictions for what housing, commercial property and the built environment more generally can expect. The year so far has been volatile and rammed with activity.

The political situation has never been more volatile and housing particularly, as never been higher up the political agenda. Blackstock is at the centre of idea generation in many of these areas and, as ever, our views are wholly independent, both politically and of any company we advise.

1. Home ownership at all costs will continue to trump common sense

The government changes housing ministers more often than Boris makes a gaffe, with Dominic Raab the next man up, but one thing set not to change this year will be its focus on home ownership at all costs. Even the recent scandal over Jeff Fairburn’s huge bonus at Persimmon — paid for essentially out of taxpayer funded Help to Buy subsidies — doesn’t seem to have rocked the ill-conceived scheme off-course. Other developers who previously decried it are now mercilessly marketing flats to take advantage of cheap Help to Buy loans as interest from abroad has waned.

Despite the huge growth in renting — much of it driven by people wanting to rent from professional landlords — the political focus on ownership-at-all-costs is at odds with common sense and most people’s opposition to building anything anywhere near them. But, an institutional-level fingers in the ears mentality over spiraling consumer debt and the systemic risk it poses to the economy won’t end well.

Ironically, as we saw with the recent SDLT cut, while politicians of every stripe will be banging the drum for first-time buyers, few will support anything that actually helps them. Still, maybe the government will re-use this gem of a policy from 2011 back when Grant Shapps was in love with self-build.

2. Brexit will have less of an impact than people think

In our 17 for 17, we said Brexit would start to bite consumer confidence — and it has, with the fall in the pound leading to a spike in inflation. But, while more risk-averse investors may have stayed away, the fundamentals of the UK — a transparent legal system, convenient time-zone and its native tongue being the global lingua franca — remain sound. Britain continues to be a strong proposition regardless of shenanigans in Brussels or Westminster, which is why we’ve seen big deals like the Hammerson-Intu merger.

While the constant doom-and-gloom, back and forth is enough to make you avoid Radio 4 in the morning sometimes, the reality is that Brexit won’t be as bad for the property industry as people think. While the government has far greater priorities, the apocalyptic warnings of a house price crash and businesses fleeing the UK have not come to pass and nor will they. Posturing from the big banks is just that. And while banks are second guessing many deals, far more equity is swishing around the London market than during any recent time, as the Hong Kong consortium investment in 40 Leadenhall shows. The only question here is how much of this cash is levered up back home, creating potential problems down the line.

For now, despite the high drama surrounding the Brexit negotiations, the reality is, as with all EU deals, there’ll be a last minute fudge and compromise, with an agreed transition period and likely alignment between the UK and EU going forward.

3. Ab-fab modular construction will continue to go from strength to strength

In the rush for numbers, expect government funding to pour into offsite manufacturing thanks to its reduced build-time, massively reduced disruption and ability to create jobs hundreds of miles away from where the homes will land. Ultimately, you wouldn’t buy a car made in a field, so why buy a house made in one? Less time on-site means it will also become increasingly popular to build homes in factories as developers shake off the outdated perceptions of post-war housing. Modular — or offsite precision manufacturing (OPM), has to be a major part of our housing solution. Why? Because in a decade, we won’t have enough people to build stuff conventionally.

Build-to-rent investors see it as it means to collect rent quicker, which is why the world’s tallest modular tower is being built in London for rent.

Blackstock has worked tirelessly with our clients such as Vision, Assael and Essential Living to raise awareness about the full benefits of OPM. The Government’s Budget and Industrial Strategy has proposed realistic solutions to the housing crisis, and investment in modular construction is one of them. 2018 can be the year to finally go offsite. If some of the country’s dwindling former mining towns could be revived with new factories, then this may well be one housing development people do want in their backyard.

4. Developers will begin to focus on wellbeing. No, really.

With the rightful ascension into the public consciousness of mental health and the need for greater openness and support for invisible disabilities, developers are placing more emphasis on using the built environment to support personal wellbeing. Expect this to expressed both in terms of building design, seen in adherence to things like natural lighting and personal space, and also in how employees are cared for and managed.

Many trendy coworking providers have been at the forefront of this trend — chill-out zones and yoga sessions have become office essentials to drive happiness, productivity and retention. While build-to-rent developers like Moda and Grainger are already focusing heavily on wellness within their schemes, creating spaces for guiding meditation and the former — Moda — providing tailored wellness programmes for each of their residents.

Bringing the natural world indoors is a trend that is also gaining traction in light of its proven health benefits. In architectural circles, this is known as ‘biophilic design’ but for most of us, it simply means lots of indoor plants. Startups such as Patch are riding this horticultural wave, helping customers create their own urban jungles. If you’re looking for more lofty inspiration for your green fingers, look no further than Barratt London’s Westgate House in Barnett. Assael Architecture designed Europe’s largest living green wall, which is visible from the bustling M4, and filters not only the internal air, but exports cleaner, less polluted air into the environment.

For developers, this year will be less about the wow-factor and more about feng shui.

5. Seaside towns won’t get the attention they deserve

In the 20 years since Tony Blair sorted out England’s cities — improving schools and building loads of hospitals (admittedly using loads of pricey PFI loans brought in under John Major) — the country’s urban centres have seen a remarkable turnaround. Yet many believed that lots of the problems were simply shunted further out. Now people are now coming to understand the seriousness of social deprivation in seaside communities. The fact that towns like Blackpool are some of the most economically neglected parts of the UK and voted heavily for Brexit out of a sense of anger and desperation cannot be ignored.

Yet places like Margate are beginning to bounce back as a result of affordable, high quality housing stock and an emerging desire for fresh air and open space.

Central government and local authorities will be under increasing pressure to step in if widespread decline is to be avoided as the extension of cities continues. However, comprehensive coastal regeneration will require transport infrastructure to better connect these areas. Suburban railways aren’t as sexy as high-speed intercity rail links, but they’re just as vital. Schemes like this £1 billion film and TV studio complex in Purfleet, Essex are great examples of what the future could look like in these areas. But planning needs to embrace a regional, widescreen perspective.

The alternative is that we manage the decline of some seaside towns, ensuring that, where possible, new uses are found for buildings and lands.

6. Build-to-rent hits the mainstream

After years of development, 2018 looks set to be the year where build to rent (BTR) really hits its stride, with more and more purpose-built rental schemes launching and filling up.

While a lot of attention has been focused on the top end of the market, with investors picking prime locations, such as Moda’s Angel Gardens or Essential Living’s Vantage Point, to create a new class of rental pad, expect the mid-market to also receive a lot attention from investors. As more people either remain locked out of homeownership or give up on it altogether in favour of a service-driven lifestyle (something people often ignore), BTR will grow in popularity.

Once people start to experience the level of amenity and service being provided by BTR landlords, as I recently saw in Grainger’s new Argo Apartments in Canning Town, the hype about renting becoming a genuine lifestyle choice will start to become a reality. The fact you don’t have to save up for a massive deposit to live in a BTR home, or pay for the boiler to be fixed when it breaks down, will help too.

7. Music will make an inner-city comeback

Cities aren’t cities without live music, and the assault on venues over the last few years has taken its toll. We are starting to see stakeholders and policymakers taking the issue seriously — Fabric is back after all — and 2018 will continue the trend. Investors and developers are recognising that the cultural value of such sites — look at the relationship between Printworks and British Land in Canada Water, which has been a huge success. A number of high profile protest campaigns have demonstrated that sometimes redevelopment is not worth the hassle and negative attention it brings. People are taking note and more sensible

European hubs like Amsterdam, Paris and Zürich have had night czars for a while now, so London Mayor Sadiq Khan appointing his own was a welcome step forward, as is the night tube and overground. But thinking about design and the fabric of buildings is crucial.

In reality, the most cost-effective solution will be upgrading music venues as opposed to retrofitting every residential building nearby. Modern acoustic treatment and materials that increase the air space between buildings and speakers can take out much of the noise, while double or treble glazing, together with street wardens, can mitigate the majority of issues.

8. Housing associations might begin to stand up for themselves

Housing associations have been under an unrelenting assault from policy-makers that has seen their grants limited and ratings downgraded, while rising land prices have made it tougher for them to provide homes in the affordable and social housing. Despite potshots at some housing associations from sections of the media, we predict that 2018 will spark a rallying cry for housing associations. This is necessary! A Tory government will not support large scale public delivery and the private sector has been lethargic and monopolistic, revelling in the fact the housebuilders benefit financial from controlling supply.

Given the current government will do little to change this, housing associations need to speak up for themselves against the ridiculousness of Right to Buy and make their role in running society far clearer to those who want to effectively run them into the ground. The associations themselves do need to modernise. Far too many exist in a world of poor productivity and red tape, with leaders who have no commercial experience. This limits many groups’ ability to see the bigger picture which has, for many years, extended far beyond just housing.

9. Regions will continue to assert themselves

The year ahead will see regional cities draw more talent away from the capital, due to the ridiculous cost of living in London and the strong culture and social scene of Manchester, Leeds and Birmingham.

Continued devolution will accelerate this trend, as regional mayors like Andrew Street have made considerable progress in bringing housing projects forward and attracting inward investment. As large companies move operations out of London to save costs, the young will follow.

However, the Midlands Engine and the Northern Powerhouse will need more than just houses and offices to sustain them. This will require further devolution and TfL-like powers for the buses and trains in Birmingham, Manchester and Liverpool. Improving transport in the regional cities will unlock vast potential and, in our opinion, help address the UK’s sluggish productivity. The lack of a tram system in Leeds, for example, is a massive barrier to investment and what we need is an end to political sloganeering and a bit of innovation in how we attract the masses of institutional capital that needs to match liabilities and get it plugged into infrastructure.

10. The #proptech revolution will gather pace

Even with millions riding the great bitcoin rollercoaster this year, people are still lining up to invest in the next big tech innovations. Just as companies in the late nineties doubled their values overnight by adding “dot com” to their names, so it is that many current businesses are convincing investors to part with millions of pounds upon promises of using big data and, most recently, blockchain technology to revolutionise the world. A small number of these companies will go on to do very well. But many will lose substantial sums in the current gold rush.

Take Long Island Iced Tea Corp. Its shares rose by 289 percent last month after the unprofitable New York-based company changed its name to Long Blockchain Corp, as reported by Bloomberg. Many companies do not stop to question the actual problem being solved by technology, which sees them forking out without really understanding what they’re buying. The biggest and best example of this on a global scale is Snapchat, whose shares are down 20 percent on its original IPO.

The reality is that while proptech is a lovely slogan for law firms and events managers, many companies in this space know very little about property nor have much hope of turning a profit. There are some fundamental problems out there to be solved, and some great businesses like Big Ticket and Converge that we’ve come across.

We’d expect slightly duller technology trends — such as the buse of business information modelling (BIM) — to become more popular as investors double-down on lifecycle costs and step away from the conflicted practice of using a single agent to appraise, model and sell a company a scheme. As more investors pile into income-producing assets, knowing up front how they’ll perform will be crucial

At the same time though, expect some really cool all encompassing new tech that mimics Tom Cruise’s classic 2002 movie, Minority Report. As voice-enabled technology and sensors become cheaper and better, this will create more frictionless work and living environments that could have a profound impact on everything from interior design to health insurance premiums driven up by your fridge seeing how much rubbish you eat. Trust no one!

11. Infrastructure will continue to be neglected by the government

Governments — even ones with stable cabinets and stable majorities — have neglected infrastructure for decades. Much of what has been promised should have been done years ago and will likely be out-of-date by the time it’s finished knowing our sclerotic planning system and indecisive politicians. Expect most of what has been outlined in the Budget to still be on the drawing board in the next Parliament.

12. The Left is becoming just as Nimby-ist as the Right

As countless estate regenerations and council by-elections have shown, the hard-left is getting organised, and housing is high on their agenda. But rather than getting more homes built, their rise is likely to have the opposite effect. So London and the South East will be squeezed by Tory Nimbyism in the Shires, and a new left-wing Nimbyism in the capital, which opposes anything other than council housing. While local authorities should get back involved in house-building (and many are through arms-length development companies), they will need private sector support and expertise to succeed.

13. The high street will take on a new form…

Lots of commentators have been predicting the death of the high street for a long time. Without heading into Elon Musk territory, why spend ages outside in crowded cities, when you can have a drone drop it into your hands from the comfort of your sofa.

However, while internet shopping is having an impact on the British high street, we have also seen a growth in experiential marketing moving into this space. This has been used for a number of cool pop-ups to drum up media attention — ranging from Heinz Beans cafes, Porsche living experiences and real life Mario Kart events (obviously).

Although the high street is under pressure, recent failures are often the result of bad business. House of Fraser had numerous 90+ year leases, increasing every 30 years. Whoever signed up to such ridiculous deals was signing the company’s death warrant years ago. This, together with expected rent cuts in the future from New Look and probably M&S, will impact landlords. But just as WeWork is turning old department stores into shared offices in NYC, so too could we find new ways to recycle space.

14. We like big boxes and we cannot lie

Other income returns are dry.

A lack of speculative development since the financial crash while e-commerce has continued to soar means there is a serious mismatch between supply and demand. You only have to look at the share price growth of SEGRO and Tritax Big Box REIT to see the opportunity for investors there.

But these big boxes aren’t like the warehouses of old. Many are high tech engineering hubs and distribution centres built around incredibly sophisticated systems. And many of the workers too are highly educated engineering grads, brought it to design the complex processes that keep your parcels arriving inside a day. Just as the rental market is seeing an amenity revolution through build-to-rent, so is the sheds market, with air hockey tables, break-out spaces and much more being provided on-site to keep staff on the top of their game.

15. Climate risks will start to bite

2017 saw a number of extreme weather events undeniably exacerbated by human activity. As these risks continue to rise, and the costs continue to mount, look out for not only innovative solutions, but also future legislation to ensure we are able to adequately mitigate against and adapt to the changing climate.

An interesting angle on this for the real estate sector will come in the form of an update to the European Energy Performance of Buildings directive. More broadly, further developments on how the UK navigates its climate policy separately from the EU also poses a lot of question marks for the future.

With the costs of renewables continuing to plunge, and innovations in storage and mini-grids taking off, the new energy landscape of 2018 may well present as many rewards as it does risks.

16. Developers looking to re-think office space

Office construction was down 9% over 2017 compared with 2016. However, with demolition levels remaining fairly steady, there seems to be a desire for development to continue. 2018 will likely be a fairly resilient year in terms of demand for space, but it seems that we are looking at a rise in vacancy rates, especially in areas like the West End.

Expect ‘northshoring’ to continue as the Northern Powerhouse goes from strength to strength and firms see attractive options outside of London in terms of lower costs. Also look out for an increased focus on the ‘grey market ‘- where developers invest in refurbishing old assets — as they seek to maximise returns without committing to new-build development.

One thing to be aware of is the potential backlash against the open plan office. While it shouldn’t derail the coworking movement, expect to see a reevaluation of how office spaces are designed as employers (and the government) look for ways to boost productivity.

17. Cyber risks are growing, and firms need to be ready

The NHS, Uber and Equifax were just three of the high profile hacking events last year. Questions continue to be raised about the role of foreign hackers in elections and IP theft, although the reputational damage thus far to companies who have lost data seems to be minimal. However, things could get far worse — particularly if security systems or critical infrastructure gets hijacked. Many companies have woefully inadequate systems. Few real estate firms have a chief technology officer or someone with overarching responsibility for cyber risk. With so many sub-contractors often connected through asset management or construction projects, having an overarching view of risk can be challenging. And with the the incoming General Data Protection Regulation (GDPR) changes — tough EU roles around how data can be stored or shared — there’s further potential for significant exposure to legal as well as operational risk.

Blackstock advises numerous businesses on discrete crisis management strategies, and we are seeing increasing demand from companies wishing to create contingency plans. Firms without crisis communications plans are often those most exposed when problems arise. Customers and investors will forgive unavoidable incidents but have far less sympathy if the victim is ill-prepared or unable to respond clearly and promptly.

18. England will disappoint at the World Cup

Because some things never change.