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Over a year has passed since the UK, along with much of the world, went into lockdown in a bid to prevent the spread of coronavirus. Restrictions are now easing in the UK, and individuals and businesses alike are tentatively looking forward to a brighter future. It cannot be denied, however, that this future will take place in a drastically altered landscape. Particularly, the property market has witnessed significant changes, as new ways of living and working have impacted residential and commercial property decisions.
Globally, prime residential property performed better than expected during the pandemic, with 66 of the 100 markets featured in Knight Frank’s Prime International Residential Index (PIRI) seeing price growth of 2% on average. Looking ahead, Seoul is predicted to be the Index’s highest performer in 2021 with 7% price growth, while Shanghai and Cape Town share second place with a forecast rise of 5%. After a difficult 2020 in which London prime property prices shrank by 4%, the capital is expected to bounce back in 2021 with growth of 3%, with the Stamp Duty holiday extension, an end to Brexit-induced uncertainty and the relaxation of international travel restrictions all hoped to encourage prospective buyers to purchase once more.
London’s loss was the countryside’s gain, however, as wealthy city-dwellers exchanged the capital for a new life in the country. As home working became the norm, those usually tied to the commuter belt were able to branch out into less-well-connected rural areas. Indeed, demand for a rural lifestyle fuelled record price growth in the regional prime market in the first quarter of 2021, with average prices soaring by 2.8%, following a 1.7% rise in Q4 2020.
Eschewing central London penthouses, the world’s wealthiest buyers instead looked to country estates and prime coastal properties in which to while away lockdown. A Savills report shows that a £2m UK country property added £111,000 to its value in 2020, with the South West, the Cotswolds and Scotland enjoying the most active markets. Meanwhile, demand for seaside properties pushed prices up by 5.6%, as wealthy buyers flocked to Devon, Cornwall, Dorset and Norfolk.
This pattern was reflected globally, with luxury markets in second home hotspots such as Provence, Tuscany and the South of France experiencing bursts of activity each time lockdown eased in France. Meanwhile, the British Virgin Islands experienced 5% growth, driven by high-end sales in St Barts and Mustique as ultra-high-net-worth buyers sought a slice of remote idyll.
The switch to home working also profoundly affected the commercial property market – and particularly the office. As offices emptied and rents plummeted, the pandemic led many business leaders to a realisation that had been previously unthinkable: their business could function in a remote setting. Recently, HSBC announced it would be reducing its office space across the globe by 40%, while a BBC survey of 50 of the UK’s largest employers revealed that 43 would be adopting a ‘hybrid’ model with some level of remote work. The World Economic Forum recently commented that work-from-home policies have the potential to disrupt the commercial real estate market and potentially threaten broader financial stability.
However, many companies are seeing these new trends as an impetus to revolutionise their office spaces – not get rid of them altogether. With many studies documenting employees’ reluctance to return to stuffy, uninspiring offices after a year of freedom in their home workspaces, the offices of the future are set to be designed to impress and retain top talent. They will be seen as creative, social and collaborative hubs, with state-of-the-art facilities to attract skilled employees and attractive meeting spaces to host clients. Indeed, the lack of opportunities to socialise and network has been consistently highlighted as an issue throughout the pandemic, with barristers – and in particular pupil barristers – citing a dearth of networking opportunities as their biggest problem during lockdown.
So, it is clear that offices and collaborative workspaces will still have their place in the post-pandemic world – but their role will be much altered. Allocated desks and a 9-5 workday are likely to become things of the past; instead, the watchword going forwards is ‘flexibility’, with serviced office spaces, flexible working hours and hot-desking likely to become the norm for forward-thinking businesses.
Even with offices still occupying a role in the future world of work, a significant reduction in the space required by many businesses is likely to leave a great deal of prime commercial real estate standing vacant worldwide. In the UK, revised planning laws are presenting developers and investors with opportunities to make use of that space. In June 2020, the government expanded Permitted Development Rights to enable developers to convert unused office and industrial space to residential properties without full planning permission; in Spring 2021, these rules were further expanded to allow the conversion of other commercial spaces, such as vacant shops and cafés, into residences.
Much of the London Bar has inhabited its chambers for centuries, often in listed buildings whose wood-panelled interiors have long characterised the profession. And yet barristers have been no exception to the economic difficulty that has affected the wider economy, with court closures disrupting income and forcing many sets to rethink their needs. Just as businesses are decreasing their office space in the ‘new normal’, the pandemic has forced some sets to consider whether their chambers are fit for purpose in a much-changed world. On the other hand, and as mentioned previously in this article, working together with other barristers in chambers has long been considered vital to social interaction and networking, and an important source of career development for junior barristers. Going forwards into 2021, chambers will need to find a balance between what is almost certainly a permanent shift towards remote working and the ongoing need for shared learning, collaboration and social connections between members.
Julian Morgan is founder and Managing Director of Fleet Street Wealth. His association with the Bar goes back over 25 years. Julian and his team look after barristers and members of the Judiciary within most of the London sets. For more information tel: 020 7353 6373; email: barristers@fswealth.co.uk; visit: www.fswealth.co.uk
Over a year has passed since the UK, along with much of the world, went into lockdown in a bid to prevent the spread of coronavirus. Restrictions are now easing in the UK, and individuals and businesses alike are tentatively looking forward to a brighter future. It cannot be denied, however, that this future will take place in a drastically altered landscape. Particularly, the property market has witnessed significant changes, as new ways of living and working have impacted residential and commercial property decisions.
Globally, prime residential property performed better than expected during the pandemic, with 66 of the 100 markets featured in Knight Frank’s Prime International Residential Index (PIRI) seeing price growth of 2% on average. Looking ahead, Seoul is predicted to be the Index’s highest performer in 2021 with 7% price growth, while Shanghai and Cape Town share second place with a forecast rise of 5%. After a difficult 2020 in which London prime property prices shrank by 4%, the capital is expected to bounce back in 2021 with growth of 3%, with the Stamp Duty holiday extension, an end to Brexit-induced uncertainty and the relaxation of international travel restrictions all hoped to encourage prospective buyers to purchase once more.
London’s loss was the countryside’s gain, however, as wealthy city-dwellers exchanged the capital for a new life in the country. As home working became the norm, those usually tied to the commuter belt were able to branch out into less-well-connected rural areas. Indeed, demand for a rural lifestyle fuelled record price growth in the regional prime market in the first quarter of 2021, with average prices soaring by 2.8%, following a 1.7% rise in Q4 2020.
Eschewing central London penthouses, the world’s wealthiest buyers instead looked to country estates and prime coastal properties in which to while away lockdown. A Savills report shows that a £2m UK country property added £111,000 to its value in 2020, with the South West, the Cotswolds and Scotland enjoying the most active markets. Meanwhile, demand for seaside properties pushed prices up by 5.6%, as wealthy buyers flocked to Devon, Cornwall, Dorset and Norfolk.
This pattern was reflected globally, with luxury markets in second home hotspots such as Provence, Tuscany and the South of France experiencing bursts of activity each time lockdown eased in France. Meanwhile, the British Virgin Islands experienced 5% growth, driven by high-end sales in St Barts and Mustique as ultra-high-net-worth buyers sought a slice of remote idyll.
The switch to home working also profoundly affected the commercial property market – and particularly the office. As offices emptied and rents plummeted, the pandemic led many business leaders to a realisation that had been previously unthinkable: their business could function in a remote setting. Recently, HSBC announced it would be reducing its office space across the globe by 40%, while a BBC survey of 50 of the UK’s largest employers revealed that 43 would be adopting a ‘hybrid’ model with some level of remote work. The World Economic Forum recently commented that work-from-home policies have the potential to disrupt the commercial real estate market and potentially threaten broader financial stability.
However, many companies are seeing these new trends as an impetus to revolutionise their office spaces – not get rid of them altogether. With many studies documenting employees’ reluctance to return to stuffy, uninspiring offices after a year of freedom in their home workspaces, the offices of the future are set to be designed to impress and retain top talent. They will be seen as creative, social and collaborative hubs, with state-of-the-art facilities to attract skilled employees and attractive meeting spaces to host clients. Indeed, the lack of opportunities to socialise and network has been consistently highlighted as an issue throughout the pandemic, with barristers – and in particular pupil barristers – citing a dearth of networking opportunities as their biggest problem during lockdown.
So, it is clear that offices and collaborative workspaces will still have their place in the post-pandemic world – but their role will be much altered. Allocated desks and a 9-5 workday are likely to become things of the past; instead, the watchword going forwards is ‘flexibility’, with serviced office spaces, flexible working hours and hot-desking likely to become the norm for forward-thinking businesses.
Even with offices still occupying a role in the future world of work, a significant reduction in the space required by many businesses is likely to leave a great deal of prime commercial real estate standing vacant worldwide. In the UK, revised planning laws are presenting developers and investors with opportunities to make use of that space. In June 2020, the government expanded Permitted Development Rights to enable developers to convert unused office and industrial space to residential properties without full planning permission; in Spring 2021, these rules were further expanded to allow the conversion of other commercial spaces, such as vacant shops and cafés, into residences.
Much of the London Bar has inhabited its chambers for centuries, often in listed buildings whose wood-panelled interiors have long characterised the profession. And yet barristers have been no exception to the economic difficulty that has affected the wider economy, with court closures disrupting income and forcing many sets to rethink their needs. Just as businesses are decreasing their office space in the ‘new normal’, the pandemic has forced some sets to consider whether their chambers are fit for purpose in a much-changed world. On the other hand, and as mentioned previously in this article, working together with other barristers in chambers has long been considered vital to social interaction and networking, and an important source of career development for junior barristers. Going forwards into 2021, chambers will need to find a balance between what is almost certainly a permanent shift towards remote working and the ongoing need for shared learning, collaboration and social connections between members.
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