Property predictions: Optimism despite tough market

WITH construction still in recession and Chancellor George Osborne extending austerity until 2018, the region’s property figures could be forgiven for being rather dour at present.

There are concerns over rental growth and the lack of finance, and much of the activity is still being driven by the public sector, but many are suprisingly upbeat about 2013.

Simon Bedford, partner and head of Drivers Jonas Deloitte in the North

“While development in the region has been muted during 2012, there is much to be hopeful about in 2013. A number of schemes should start on site – particularly in Manchester where both Ask’s First Street North and Deansgate projects should commence.

“The ongoing development of the Etihad Campus will gather pace and we should see significant progress in the Airport Enterprise Zone. In Liverpool, the Strategic Investment Framework should pave the way for further development on the Waterfront (the new exhibition centre) and around the University as the Knowledge Quarter takes shape.

“Hopefully we will also witness a revival in our town centres as Stockport’s Grand Central project moves forward, Bury’s Chamberhall scheme finds some new occupiers and the radical plans for Oldham Town Centre  benefit from the arrival of Metrolink. All in all much to look forward to in 2013.”

Warwick Smither, partner at retail property agent Cheetham & Mortimer

“2013 will undoubtedly be another tough year in the retail sector, much the same as the last five. Retailers will have to wrestle with reduced turnovercoupled with increased costs which, for many, may be “a bridge too far” and the already lengthy list of casualties, JJB, Clintons, Habitat, etc. will certainly grow.
 
“The budget/value retailers will carry on thriving with Poundland, B&M Bargains, 99p Stores all continuing to trade well. However, in the face of stiff competition even some in this sector will begin to feel the pinch. Wilkinsons, an operator who has been at the forefront of value retailing longer than most, is seeing their market share eroded by the new kids on the block.
 
“In Manchester, the leisure sector will continue to buck the trend withmany new entrants to the city and established occupiers from the city’s leisure sector taking the opportunity to acquire new premises and expand their existing offers. Roger Ward, Steve Pilling and the Living Ventures team continue to push the quantum of space they occupy in the city’s heart as they recognise that there is opportunity for all to thrive, particularly as the city improves its offer and creates an overall better leisure experience.”

Mark Rawstron, senior director at GVA Manchester

“2012 in property terms was year five of the downward spiral when the world fell off a cliff at the end of 2007. With property cycles following economic cycles, sense would say we are still two years away from meaningful recovery. Whilst 2012 was hard there were growing signs of at least a greater degree of confidence returning with some notable deals on the investment side, always the precursor to wider sector recovery.

“In 2013, we predict to see: a growing general optimism; more London and internationally-based property investors coming to the region; Manchester office supply will diminish to create ingredients for rental growth; more bank disposals of property at value levels the market can absorb, which will kick start the secondary sector; businesses will start planning for the future rather than remain in the bunker feeding through to property decisions and growth of corporate activity; and, the Euro-crash will be avoided, however, will still exert a cautionary pull on major economic improvement.”

Georgina Livesey, director of Manchester residential developer, The PJ Livesey Group
 
“While I believe 2013 will pose similar challenges from the banks with the liquidity of cash not forthcoming and mortgage lending still tough, especially for first time buyers, there are the stirrings of optimism in the residential market and deals to be done for developers like us.

“But as a business with cash we are now seeing more opportunities to acquire good sites at the right price with fewer competitors fighting for the same scheme. PJL sees 2013 as the year of opportunity, with interesting schemes that can deliver strong margins being cherry picked just as we did in 2012 with St Anne’s Hospital in Bowdon and Stone House Hospital in Dartford.

“The focus for us will be to continue to restore historic buildings to deliver an unrivaled product, at the right price in great locations, and we strongly believe that there are enough willing buyers in the market place to indicate the past few years of austerity are coming to an end.”

Matthew Duckworth, office agency associate at Knight Frank Manchester

“2013 will undoubtedly be the year of design and build due to the continued lack of existing Grade A accommodation both in and out-of-town, with requirements from the likes of Your Housing Group, Balfour Beatty, Costain, Serco and Montgomery Watson all highlighting the shortage of supply. Next year companies will explore design and build deals which will drive the market, as large occupiers continue to find solutions by merging and consolidating their business activity under one roof.
 
“What attracts people most is other people and we envisage accommodation that offers companies, and their staff, a community or bustle of people, coupled with excellent transport links, will continue to be popular and in demand. This year we have already seen Your Housing Group and Serco move to Birchwood Park, Phonak go to Warrington Centre Park and The Diocese of Chester choose Daresbury Park for these very reasons.”
 
Stuart Hicks, managing director of agent Dunlop Heywood

“There have been no material changes to the outlook for the UK economy recently. With the double dip in capital values now evident, the outlook remains weak. Some expect all property capital values to drop by about 6% but this broad brush assessment translates into a much more diverse range depending upon, town, region, property type and market sector.

“Most expect GDP to have contracted by about 0.5% in 2012, with a rise of only 0.5% likely in 2013. In the current environment and against a backdrop of high vacancy rates in most markets, our view is that overall capital values will fall in 2013. That said, the lack of new development activity in recent years may limit the scale and/or duration of rental falls, but will not prevent them. There are pockets of growth in our region and any period of change generates opportunity for those able to move decisively.”

David Smith-Milne, founder and managing director of Manchester-based specialist empty homes developer PlaceFirst

“2013 will be another bumper year for the private rented residential sector after a year of stellar growth in 2012.  Changing patterns of household formation, a sluggish pipeline of affordable housing starts and continued difficulties in accessing mortgage finance have combined over the past 12 months to create near perfect market conditions for growth.

“This growth provides a potential lease of life for stalled housing regeneration projects in the North West, where high quality, well designed and well managed properties can be delivered at affordable rents through innovative refurbishment and development programmes. “