Throughout 2021 we saw investors of industrial assets experience some fantastic returns in a near-zero interest rate environment, meanwhile the office market experienced ups and downs as COVID came in waves, and retail languished amid a continued rise in e-commerce.
But what can we expect from 2022 as interest rates rise, and how can investors make the most of the property market this year? Investment agency and LPA Receivership expert Russell Miller, explores:
As we embark on 2022, it will be interesting to see just how far the industrial boom can go. The question on everyone’s lips, particularly those of investors, is can this sector get any hotter?
Investment prices have become eyewatering, but as interest rates rise, we could see this asset class plateau in 2022, as the gap between yields and property risk narrows, with rising interest rates.
The emergence of the Omicron variant at the end of 2021 had an adverse impact on the office market, as the Government once again encouraged people to work from home.
Whilst this has knocked office confidence, we expect this to rebound as 2022 progresses.
We know from what we are seeing on the ground, that businesses continue to want to create a high-quality office environment for their people, rich in amenities and founded on flexibility, as the war for talent becomes the single biggest challenge that companies face.
To help address this, particularly in light of the ‘great resignation’ which will see almost one in four UK workers plan a job change according to recent figures from Randstad businesses will continue to demand more creative, high-quality offices in 2022, to attract and inspire their people.
This will drive office rents up in 2022, and with increasing rents comes more appetite to invest in the office market, as investment returns improve – something which we haven’t seen in this market for some time.