Kevan Carrick co-founder and partner in JK Property Consultants, provides insights on some of the key aspects of the market forecast for 2023
The Office of National Statistic report on Consumer Price Inflation, December 2023, shows a small fall of 0.2% to 10.5%, still high and causing small businesses to struggle further. It is unlikely to prevent a further increase in interest rates at the next review date, with a consequent fall in demand for housing and delayed development decisions.
The government’s policy to bring inflation under control and manage the economy is not likely to have much impact on the property market other than to expect a year of limited capital or revenue growth.
Its claim that reforms to Solvency II will unlock tens of billions of pounds for investment from UK insurers in long-term productive assets, has yet to see any spill over into the real estate sector.
The government’s plan is to invest and accelerate delivery of £600+ billion over the next five years in high quality infrastructure to boost economic growth and productivity. Getting to, from and moving around our towns and cities, is essential to the demand for real estate.
Sadly, the proposed Investment Zones programme was not implemented and the expected growth in areas needing regeneration will not have a fiscal accelerator to encourage faster growth. But there is progress with the announcement of funding in the region for The Sage International Conference Centre, the UK’s newest International Conference and Exhibition Centre and Arena Venue – Opening 2024 and The Northern Film and TV Studios, at Hartlepool, both of which will have a significant economic growth impact in the wider region.
The announcement of the Masterplans for the town centres of both Hartlepool and Middlesbrough for delivery through the new Development Corporation for each town will gather impetus. I was delighted to be part of the Arup team that formulated the plans and contributed to the property and delivery advice.
In the north of the region the decision finally to establish a combined authority and mayoral devolution deal is excellent news and long overdue. Hopefully, we will see a more focused and determined delivery for growth.
The cost of energy has hit hard, both people and business. It has forced businesses to think more about costs of occupation and in the longerterm sustainability. There is a lot of anecdotal commentary of the ‘flight to quality’ and the use of office space. There is a clear drive by businesses implementing clear value statements through ESG, including achieving zero net carbon by a realistic date.
The government is in discussion with the Mayors Combined Authorities to devolve powers to deliver levelling up in areas such as skills, transport and housing, including through consolidating funding. These ‘trailblazer’ deals will act as a blueprint for other areas to follow, which hopefully means the local authorities in the North East of England, where the government announced it will shortly be agreeing an expanded mayoral deal. The implication is that, for those who survive, there will be greater support to leverage economic growth and job creation.
Nevertheless, these are likely to be more medium to long-term delivery mechanisms. Smaller businesses need to survive over the next few months. If those who would otherwise be successful fail the regional economy will be that much weaker. That is why JK has joined with the Open North Foundation, the North East Business Innovation Centre and the North East Initiative on Business Ethics to offer support, where there is a need, to small businesses.
Having survived five recessions, my advice is prepare now for the future.
