You want to know what the market will do for 2018, we all want to know. Let's dig in and find what the industry research is saying, what I think, and what you can learn from it all.
Being involved in the Real Estate business for the last decade has taught me one thing, you can not predict the market 100%. However, you can have an excellent prediction if you pull together enough data, with enough understanding of what that data means, and we like to know as much as possible about what the market will do.
A summary of what the industry research is saying:
Growth forecasts for UK & London for 2018 in the residential markets.
- CBRE: UK 1.5%
- JLL: UK 1% London 0%
- Knight Frank: UK 1% London -0.5%
- Savills: UK 1% London -2%
As we can see above predictions for the UK are all very similar with expectations for around 1% Growth. In London however, opinions are more mixed, I feel this is due to several factors, most importantly to what the core markets are the companies deal with as well as their market sentiment.
I still feel that overall averages can give some indication. However, it is not the best metric to gauge how a particular property, project or area will do. Location, infrastructure, regeneration of an area and localised demands play a massive role in affecting growth in specific areas. Look at the local data and the local changes; those will determine how a property, project or area will perform in relation to the broader market.
The broader market conditions are going to make it tough for the average property to do well, it will also have an impact on people, projects and areas that base future returns on performance figures from a few years ago. These are likely to have already had their competitive advantage priced out of them.
New and existing properties and projects will have to be carefully analysed to ensure that the offering is most suitable for the current market or what is to be expected from that market at the time of completion to provide maximised returns.
What is the takeaway?
The market as a whole is likely not to have a solid year. However, several projects will have the teams and information behind them to ensure far better returns than the market average.
In coming posts, I will explore more about how you and your teams can ensure that your projects exceed market averages. You can do better than the market.
Economic forecasts to provide some perspective:
Forecasts from Oxford Economics for 2018:
GDP Growth: 1.5%
CPI Inflation: 1.5%
Bank of England Base Rate: Stable at 0.5%
Exchange Rate: GBP £ - US $ 1.38
Bank of England, Oxford Economics, CBRE, JLL, Knight Frank, Savills