Landscaping Real Estate

I wanted to share with you some of my thoughts on the UK Real Estate landscape.

No one could have predicted that the legacy of the pandemic would leave in its wake the high level of unoccupied office space despite employers encouraging workers back to work. The retail sector continues its decline in the face of inflationary pressures, which has had a knock on effect for large online retailers who have halted the acquisition of sites to build “large sheds”.

From a landlord’s perspsective, legislative and tax reforms have made it less attractive for investors to retain commercial or private rented accommodation, especially with the move to a zero carbon world, resulting in Energy Performance Certificates (“EPC”) bands continually moving up. This will inevitably lead to the repricing of properties where work is going to be required to upgrade EPC ratings. The smart money in commercial property has moved to properties with strong green credentials.

There is a correlation between the cost of borrowing and the sharp decline in the demand for commercial loans, but this has not translated to a fall in values of commercial property as yet. Maybe this is because landlords are increasing incentive packages to tempt prospective tenants.

Prudent landlords are checking their insurance policies to make sure that they are not unintentionally underinsuring because of the inflationary world we are living in is leading to higher costs of repair. These landlords also have seen the unpredictable weather trends and have made sure their insurance cover extends to fire, flooding and subsidence. This is because weather related losses due to fire are one of the key threats for commercial property, as is flooding for residential property in certain areas.

Notwithstanding the uncertainty in the year ahead, there will always winners and losers, but I suspect forced sales will still be limited unless the types of properties are located in an unattractive part of the high streets or large office space and older industrial buildings which cannot be repurposed. If you want to read more about this, go to https://chambers.com/law-firm/hawkins-hatton-corporate-lawyers-ltd-uk-1:71360

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