14 Nov Brexit – Examining Potential Impacts on the Property Industry
Brexit and its Potential Impacts:
Here at Avamore, we know no discussion about the future of the property industry is complete without considering the potential impacts of Brexit. To most, prospects look relatively gloomy and as a result, much conversation has sparked. Conversational topics vary from: opportunities that could arise because of innovation and creativity and perception vs. reality.
Brexit from a Developer Prospectives:
The ‘cost of material are a concern’ to many developers along with availability of labour. With no clear definition of what Brexit really means, most developers are preparing for the worst. This means considering alternative measures which they may need to implement. The pound has already fallen in comparison to other currencies which has driven up the cost of imports and as prices rise, it will be important for developers to re-consider the profitability of their projects. Combined with the slowing sales cycle in the market, times are tense, which is encouraging more developers to ‘stay with the relative safe haven of the help to buy scheme’. In addition, there are already signs of productivity dropping because of a reduced workforce.
For new developers, this will be particularly challenging with contractors generally ‘sitting with repeat business’ to ensure their own financial security. As a direct impact of this, developers are ‘desperate to keep their workforces busy’ to reduce the opportunity of moving elsewhere.
From an Outsider’s Perspective:
From an external perspective, the UK is still seen as the ‘golden goose’ to many international investors. There is a possibility that capital will be employed across the UK manufacturing sector. This would act as a stop gap for the constricting material supply and resources will be eventually be produced locally. Other options include bulk buying materials at wholesale prices and storing them. On the other hand, finding the space to do so includes financial cost and effects profitability.
Additionally, much concern stems from a lack of clarity around what exactly Brexit is. Subsequently, many developers are thinking ahead. However, it may be advantageous to wait on confirmed criteria before acting. This was compared to the independent vote in Scotland and so, ‘until it became clear what exactly it meant’, there was a window of opportunity to put contingency plans in place. Before any Brexit related changes, there is likely to be a time buffer.
Looking to the Future:
In terms of moving forwards, some parts of the market are remaining strong. ‘Bristol doesn’t appear to have felt the impact’ just yet and, if the effects of Brexit are as significant as predicted, there was talk that it could present an opportunity to innovate. The property industry has been one of the ‘last to embrace technology’ and so, Brexit might give the sector the push it needs to become more efficient and ‘plug the gap’. Evidence of this already happening is with developers becoming increasingly interested in modular builds.
The opportunity to produce the ‘actual unit offsite’ could mean that processes become quicker, more streamlined and appeal to a different type of workforce, potentially in areas of low employment. This will inevitably kick start the local economy and provide new construction methods, new material sources and have the added benefit of ‘improved quality control’. Generally, despite Brexit presenting the opportunity to innovate and drive the industry forwards, most developers are looking to ‘de-risk projects as far as possible’ before adopting new technology and methods sustainably.
 Daniel Hillman, Managing Director, Hillnic