Headlines Mask UK Property Market Optimism
Real estate managers would be forgiven for thinking their career opportunities are becoming limited, with the amount of negativity in the media – particularly surrounding the dreaded ‘B’ word. We refer to Brexit, of course. Take these recent headlines as examples:
"Number of property leaders planning to increase development drops 34%" (Showhouse, Jan 31st, 2019)
"UK construction growth at 10-month low" (FT, Feb 5th 2019)
It certainly sounds like the bottom is dropping out of the market, doesn’t it? That is, until you analyse the numbers a little deeper in the news and the research that such news articles are commenting on. Here’s what the real news is; the real context and what it means for the outlook for real estate manager jobs.
4 in 10 Property Leaders To Increase Activity
The BPF survey polled 107 of the largest property investors, developers, owners and advisors in the UK. It found that 41% plan to increase property development activity in 2019. Though this is down from the 2018 number, this is not a disastrous number. A good proportion of those not expecting to increase activity will be holding steady, especially as…
6 in 10 Property Leaders Think Brexit Will Improve UK Economy
Yes, you read that right. 60% of those surveyed believe Brexit will make no difference to the UK economy or improve it over the next 10 to 20 years. That’s something you haven’t read in other media headlines. Of course, Brexit uncertainty could dampen short-term prospects…
9 in 10 property leaders expect Brexit to slow UK economic growth for 12 months. The survey also highlighted that most respondents expect that leaving the EU will be worse for the UK economy in the short term, with slower growth for the next 12 months.
- Short-term uncertainty is likely to dampen the property market for a few months
- The property market should pick up as the wider economy begins to improve
And in the longer term, the economy could even be better than it would have been by remaining in the EU
Construction Growth Higher than Last Year
Is the FT headline misleading? Well, no, but it doesn’t tell the whole truth, either. Construction growth may be slower than it was 10 months ago, but, at 50.6, it is higher than it was this time last year. Digging a little deeper:
- The construction Markit PMI is still in growth territory
- Housing growth is higher than it was 10 months ago
- Civil engineering growth is higher than it was 10 months ago
- Commercial growth is the biggest dampener on PMI growth
Construction or Builders’ expectations currently stand at 62.1. Though this is a fall from December 2018, the sector is still very much expecting growth (any number above 50 is a sign of expected growth).
Construction Is Booming - Crane Survey
Buried in the FT article is research from Deloitte Real Estate. It found that regional cities – especially Birmingham, Leeds, Manchester and Belfast – are experiencing a boom in building and construction. The Rider Levett Bucknall Crane Index shows that Manchester, for example, has 14,000 new homes currently under construction (many for the private rented sector). This makes it busier than any city in the United States. Simon Bedford, Regional Head at Deloitte Real Estate, also pointed to an increase in office construction levels. He told the Financial Times that this is “reflective of the continued draw to all these regional cities for major businesses,” and that “investor confidence is thriving”.
What History Teaches Us
In January last year, the UK construction PMI fell to 50.2. At that time, headlines spoke of a construction sector in trouble and “Teetering off the edge of contraction”. Sounds very similar to today, doesn’t it? And we all know that 2018 turned out much better than most believed it would.
Real Estate Manager Opportunities
This year is likely to be different to last year. We have the hurdle of Brexit to get over. We’re sure that we will clear that hurdle, as are most of our clients. Most property leaders feel the same, and many believe that Brexit will be good for the economy in the long term.
Forgetting the sensationalist headlines and delving deeper into the data, analysis and research, there is some great news for real estate managers who are in the industry for the longer term. Meanwhile, any short-term pause in activity is likely to work its way out of the system in the months following Brexit.
New Opportunities, Challenges, Career Growth
The latest research mirrors what employers are telling us: Quality real estate agents are in demand in both the residential and commercial sectors. Some hesitancy of hiring is to be expected in the next month or so, but the best talent will always be hired. Moving forward, demand for real estate managers is likely to increase as the economy puts Brexit behind it. For Real Estate Managers looking for their next career move, now is the time to connect with a recruitment specialist who keeps in touch with what is really going on, understands how to decipher the market, and has the industry contacts to connect the best talent with the best opportunities. To benefit from a confidential discussion about the opportunities to shape your future as a real estate manager, contact Macdonald & Company today and connect with us on LinkedIn.