There are clearly fundamental technical reasons for the behaviour of the marketplace, with demand and supply led by clearer drivers such as weight of money and tenant demand. The mood of the property market can also be gleaned from the trends in the employment market.
We are seeing some clear themes emerging, the property industry has experienced some significant contraction of workers through large scale redundancy programmes in addition to corporate failures. The associated industries surrounding real estate, such as the legal, accounting and finance sectors have also felt the fallout in full force. Whilst the corporate failures will regrettably continue for some time, we may have reached the low point in the cycle for real estate related unemployment. Of course it could be a temporary hiatus before we see new rounds of redundancies, however many in the market feel that organisations are now fit for purpose with their immediate workload.
We are seeing more examples of investment transactions in the UK market to suggest that there may be more cause for optimism and this is feeding through to my marketplace, the demand for property professionals. The UK was the first of the European markets to feel the full force of the downturn and may be the first to come back. The combination of revalued property and a weak pound have given some the confidence to come back to the market. We are not seeing high volumes, but activity nonetheless. The mainstream European market is still very much adjusting to the downturn and we are not seeing any signs of change there.
With the international authorities and governments working hard to bring liquidity back into banking markets and to kick start those economies that are at risk, in addition to adding stimulus through interest rates, there is some more optimism on the horizon. Whilst the banks are still not showing their hands in terms of how they might deal with their real estate exposures there again signs that the industry is ‘fessing up’ to the situation.
Whilst the re-invigoration in the transaction market is good news for the investment and agency community, the real day to day activities of property ownership are continuing undiminished. We are still seeing demand for management, asset management, valuation and insolvency professionals.
The mood out there is turning, whether it is based on fundamentals or a collective mood based on a temporary hiatus remains to be seen.
By Timothy Rowe