Recovery mode

This all adds up to a sharp rise in confidence across real estate, with 71% of those polled expecting the market to recover to pre-COVID-19 levels by 2023 or earlier, and 37% expecting a recovery to these levels by next year at the latest.

This is a staggering improvement in sentiment compared with summer 2020, when the sector was bracing itself for a difficult downturn.

By what year do you expect the property market to recover to the pre COVID-19 level? (Real Estate Sector)

Almost two-thirds of those polled now describe themselves as optimistic which is a steep rise on 2020 among a traditionally bullish cohort. It is also, interestingly, significantly more optimistic than 2017, 2018 and 2019 when Brexit and the feeling that a long upswing was coming to an end weighed on sentiment.

As many people have said about COVID-19, the pandemic has accelerated trends, in this case shattering sentiment in spring 2020 before allowing for a reset (through tech) and a rebound now.

Perhaps this shouldn’t be a surprise, given that the 2000s bull run was also brought to a shuddering halt in September and October 2008, eventually leading to a 44% fall in values before the recovery began in spring 2009.

With prices having fallen in a lot of cases, it is no surprise that a London market seen as overvalued by 70% of respondents in 2017 and 2018 is now seen as overvalued by only 47% – the lowest figure in almost a decade of our annual research.

Given the global impact of COVID-19 this may still be seen as high, but development sites that can now accommodate the new breed of tech-enabled and ESG-compliant offices of the future are commanding a big premium, with long lists of developers circling them.

In every part of the real estate sector, from retail to logistics, and residential to offices, it is new development that fits into the tech and high-performing ESG bracket that has the brightest future, particularly against the backdrop of the ambitious net zero plans announced by an increasing number of governments.

How optimistic or pessimistic do you feel about the UK real estate market in the short term? (Real estate sector)

What is your current view of the London real estate market? (Real estate sector)