The property investment and development marketplace has undoubtedly faced challenges owing to Covid-19, but as the government make plans to reignite the UK economy, Managing Director at Estate Office, Chaim Aziz, is better placed than most to examine the current and future outlook for developers. With almost 25 years’ experience in the market to his name, Chaim was invited to speak at an online conference on 17th June by a trusted client, giving his views on how the market has changed in recent months and what we might expect going forward.
Noting that transactions in March froze, Chaim commented that buyers have been looking to renegotiate over the last few months. At the time of speaking, the eight weeks prior had shown demand from developers seeking to acquire sites with planning where competition in the market is perceived to be lower. If purchased in the next 90 days, sites like this will be ready to sell in around two years’ time.
Based on first hand experience, Chaim remarked that the market is currently sector specific, with operational—student, hostel and hotel assets—proving to be more challenging. Retail, which is traditionally valued upon rental values, has become difficult to value owing to uncertainty surrounding rental values. However, demand for residential remains high and enquiries are coming through, demonstrating there is positivity within the marketplace. Notably he suggested ‘pricing for residential may be similar to pre-coronavirus if the location, product and pricing are correct’.
Chaim then went on to discuss the nature of assets themselves, discerning product and pricing as sensitive, where developers with a brand may be getting premium for their stock and where location is a crucial selling point. A key example being developers Ballymore Group who are building a development on a 3 acre site . In excess of 40 parties have actively bid, with several rounds of bidding likely to take place. In Wembley, 200 apartments have recently been purchased at £700 per sq ft, further demonstrating the strength of the market.
Chaim observes that demand is high in London, but supply is yet to catch up and a pause in the market may put pressure on pricing of sales and lettings in the following 12 to 18 month period. Despite this, and negating hearsay from the press, deals have continued.