WHY INVEST IN UK REAL ESTATE IN 2022

February 25, 2022

MANAGING DIRECTOR TIM BRADFORD BSC (HONS) MRICS EXPLAINS WHY IT IS A SOUND DECISION TO CHOOSE COMMERCIAL REAL ESTATE INVESTMENT IN 2022.

Rebounding UK economy - grew by 7.5% in 2021
Big consumer cash savings - reduced consumer spending last 2 years
Higher yields for Real Estate - comparative to other asset classes
Government capital support for UK businesses and infrastructure (Levelling up Policy) - underpins the needs for bricks and mortar
Investors' appetite remains strong - "wall of cash" seeking opportunities

Supply chain problems - delayed deliveries and backlogs
Labour force shortage - demand for staff over double of 2015
Significant rise in construction costs - YOY 70% steel price increase September 2021
Rising interest rates - many have not experienced significant increase in cost of borrowing
Major increase in energy costs - impact on consumer spending and real cost to industry

Covid-19 variants - not even scientists can predict when or what
China and Russia geo-political volatility - UK depends on global markets
Brexit - changes in protocol and process - has Covid-19 delayed the true impact?
Bond yields are high - and rising further - points to uncertainty in financial markets
Rising inflation - reduces real value of capital - has negative impact on economy
Tenant failure - impact of the withdrawal of Covid-19 business support measures

Continued growth - in logistics, trade, and industrial sectors
High Street bounce-back - signals of counter-cycle in retail
Welcome Environmental, Social, Governance agenda (ESG) with open arms - reap long term benefits
Re-purposing of real estate assets - push for diversity in major centres
Identifying undervalued real estate asset classes - shopping centres, for example
Re-educate investors to consider attractive "recession proof" assets - such as healthcare and education

2021 not that bad! £57bn invested in CRE - 6% above 5 year average
Hedge against inflation
Long term security - bricks and mortar stand the test of time
Commercial property lease terms - provide protection again market volatility
Higher average yields - real estate provides higher yields compared to other asset classes
Tenant demand - sustained in logistics and industrial sector, re-emerging in food and beverage and retail
High construction costs - new development pressure reduces supply, creating opportunities in second hand market
It is a 'real' asset - brings wider benefit to communities, as well as investor return

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