It’s that time of year, when Business Link Magazine invites the region’s business leaders to offer up their predictions for the year ahead.
It has become something of a tradition, given that we’ve been doing this now for over 30 years.
Here we speak to Paul Morris, development director at St James Securities.
With the Omicron variant now hopefully largely under control and the booster campaign picking up speed, there are finally signs we will be able to return to some sort of normality in the coming months.
Unfortunately, though, 2022 is set to be another challenging year for the economy, with a cost of living crisis and record levels of inflation. Inflation hit the 30-year high of 5.4% in December and is likely to hit the 7% mark in April. It should then start to fall back and by the end of 2022, it shouldn’t be far off the government’s 2% target again.
The modest increase in bank interest rates from the historic low of 0.1% to 0.25% is likely to be followed by another this year, probably stabilising at 0.5%, which should help bring inflation down.
I am confident the property market will improve this year; Omicron hasn’t had the devastating effect that many predicted, and we must now find a way of living with Covid-19.
I expect to see a continued increase in confidence in a number of sectors, particularly ‘beds’ and ‘sheds.’ The Buy to Rent and student accommodation markets remain strong, and I think we will see this sector continue to grow even stronger over the next few years.
The ‘sheds’ distribution market is still very busy with demand and rents continuing to climb; however yields are the sharpest they’ve ever been and are likely to plateau.
I think the retail sector will start to improve during the course of this year in good locations, particularly areas where an integrated approach by Councils, BIDs and landlords are working together to create ambitious masterplans and public realm improvements.
This doesn’t mean we won’t see further casualties, although I believe these are more likely to be in the hospitality sector, which has suffered massively as a result of lockdowns and restrictions.
In the corporate market it is good to see businesses consulting properly with staff to adopt an effective back to the office strategy, with working from home evolving and becoming part of the fabric of the workplace.
Going forwards employers will need to make it attractive for employees to come back to the office and they will need to be best in class and offer a great working environment in order to attract the best calibre of staff. More importantly, businesses will need to look seriously at their long term carbon footprint and green credentials.
Government has confirmed that by 2030 non-domestic rented buildings will need to meet EPC Band B, which is a substantial raising of the bar and will, I hope, result in an overall improvement in the overall quality of accommodation.
