By Joe Carbonaro, global head of consulting, GetGround
We’re one month into the new year. Politics is in turmoil, everyone’s in face masks, and the housing market is in red hot mode. Plus ça change…
But in property investment, things don’t stay the same for long. Januaries are always a good time for planning, but they also offer an opportunity we just don’t get over the rest of the year to reflect on what’s just been and see how trends and changes that started to emerge the year before might shape the year ahead.
Here are five standout trends that we, at GetGround, will watch closely this year.
The great ‘reverse exodus’
Fed up with being confined to their homes for months on end, ONS data shows that in the first six months of 2020, more than half a million town and city dwellers in England and Wales took to the countryside, tempted by the larger gardens, cleaner air, and an often slower, calmer pace of life.
But it seems that for many, the appeal of the country idyll waned. Whether driven by jobs, schooling or social life, by the end of 2021 press reports emerged of people abandoning the good life for a return to urban life.
In this scenario, opportunities abound for urban property investors. Rental demand is widely anticipated to be high from those returning to cities having sold low and bought high in the ‘rural rush’ and now in a hurry to get back to urban living. While prime central London will continue to have a huge appeal, access to land remains minimal in these areas, so developers will head to the outer London zones. That fits the assumption that many city ‘returnees’ now favour a suburban lifestyle that is close to city centres but allows them the fresh air and gardens that are hard to give up.
London developments reemerge after pandemic pause
At the beginning of the pandemic, global cities ground to a halt in a way that no-one has ever seen before. Sites under development lay practically empty for weeks as
builders and contractors worked out how to operate them safely. Projects fell behind schedule and other developments were paused indefinitely before they had even launched.
In recent months, London construction is regaining pre-pandemic levels, leading to expectations that a number of developments that paused launches and completions over the last 12-18 months will come to market during 2022.
That’s good news for investors, adding more quality stock to the London market at a range of price points. Add to this, the continual demand and growth for property in key regional markets around the country, London may appear to look unconventionally good value in the second half of 2022.
Regional capitals claim new territory
Whether it’s HS2, the North’s great ‘leveling up’ agenda, or the rising popularity of life beyond London, regional cities are getting better at attracting business investment – that means more offices, more retail, more homes.
We expect regional capitals – notably Manchester and Birmingham that vie for the title of the UK’s ‘second city’ – will likely see the largest price rises across 2022 given the rapid regeneration and redevelopment of these areas.
Take just Manchester, for instance. In recent years, Sky, Deloitte and Hewlett Packard were among many multinational organisations that established large offices in the city, attracting thousands of new workers (and their families) to make their homes locally. Add to that the continued impact of Media City in Salford that drives culture and the arts to and around the region, and the Greater Manchester area looks particularly attractive. It’s unsurprising that in the last two years, one in four companies created on the GetGround platform have been formed to invest in properties in and around the so-called capital of the North.
Limited company investing makes its comeback
In the past five years, the number of properties purchased through registered UK company structures has trebled nationwide. For decades, the preference among landlords and investors was to buy in their personal names, but as accessibility, transparency and efficiency have become more important to our ever-professionalising community of investors, the tide is turning.
Most of us will have no living memory of a time when property investment through company structures was the norm. Personal ownership took precedence over companies over the course of decades as the latter became perceived to be too challenging to manage. But now, technology innovation has stripped back the complexity, equipping investors with transparent mechanisms and strategies to mitigate risk, maximise returns and achieve comprehensive visibility over their investments in one single place.
Events of the last two years applied pressure to almost everyone’s finances in some way, shape or form. It’s no surprise then that the proportion of limited companies formed to invest in property is increasing year-on-year. Financial and tax benefits of company investments are well understood; less so is the ease with which company-owned properties can be monitored and assessed. Data about the performance of each company in a portfolio can be tallied, assessed, matched and compared. Quality, accessible data equips investors with better decision making power. Investors can make informed investment decisions to fit their changing life circumstances, or in anticipation of issues, not in response.
The rise of the multi-landlord
Today half of all companies created and managed by GetGround have two or more shareholders. This is a trend we’re excited to see develop in the year ahead. It points towards an alternative route to asset appreciation for people – often younger or on lower incomes – for whom the pandemic has put home ownership even further beyond reach as interest rates, inflation and property prices rise. For them, a share in an investment property becomes something more attainable. We’re seeing more enquiries and action from groups of friends or business partners to co-own rental properties, allowing them a piece of the property appreciation pie as they accrue their deposits for their first homes.