The devastating impact Covid-19 has had on business in all sectors and has ultimately been unavoidable, but it is important to note that many of the issues being experienced are not necessarily a direct result of Covid-19.
We’ve experienced vastly accelerated market impacts that were beyond prediction, but the decline, in particular, across the high street retail, leisure and office sectors were evident before the pandemic struck with it simply hastening the demise of these sectors and creating a ‘survival of the fittest’ scenario.
The biggest question at the moment is how long this ‘impact’ will last and how many of these struggling sectors will have changed structurally within that time. As property is essentially a factor of production, it will react differently in different sectors.
‘Is it really possible to dodge a once-in-a-century pandemic bullet without any adverse consequences for the real economy’ – Richard Barkham, CBRE, Global Chief Economist
It is perhaps worth noting this is not a recession, rather a partial closure of the economy. Until the virus is under control, we cannot begin to repair the economy, we are simply undertaking a ‘damage control’ approach. It is highly probable that there will be a ‘boom’ when lockdowns lessen and stop, something we noticed in micro-climates after the first lockdown was lifted.
One thing we can be confident about is that we are heading towards a period of further uncertainty and the property valuation profession will face more unprecedented challenges as markets change rapidly due to the catalyst of COVID-19 and other changes in legislation.
The UK (and world) property markets are going through an evolution exacerbated by the changes in consumer behaviour brought on by the COVID-19 pandemic. Indeed, it is worth noting that this is especially prevalent within the industrial market, which has seen an increasing number of retailers vacating the traditional high street and relocating to warehouse premises whereby their outgoings, i.e. rent, rates, etc, are generally less. For how long this buoyant market continues however is anybody’s guess.
The recovery, or perhaps not, will much depend upon how businesses can trade with the ongoing operating restrictions, coupled with a nervous customer base. Having said this, we may look back in 12 months or so and see 2020 as merely having been a ‘speed bump’ in wider economic and property times, caused by a dramatic and deep, yet swift, downturn or alternatively it may have a far wider and deep rooted impact across a wide range of sectors.
Whilst this may sound quite doom and gloom, it really isn’t. This is a period of active management and redevelopment, which in turn creates opportunities for the property profession.