Established in 1999 and operating across 43 countries, CMS is a leading international law firm with a future facing attitude. For the past 10 years, it has been running a Real Estate thought leadership series which has covered a wide range of topics, from the rise of build-to-rent properties to the growth of emerging technology in the industry.
In the company’s latest report, Repurposing Real Estate: The future of the world’s towns and cities, it takes a close look at the changes happening in our urban centres, particularly in response to the UK government’s Levelling Up and Regeneration Bill. Data in the report has been based on a survey audience of more than 300 property professionals and almost 15,000 global consumers.
Below, we have compiled some of the key findings of the report and the implications these have on the UK property market.
Real estate is ‘Levelling Up’
The Levelling Up and Regeneration Bill prioritises the future of the UK’s towns and cities, and this is something that comes across strongly in the CMS report. It found that more than three quarters of real estate professionals welcome the policy, but only 44% think it will succeed. This indicates a lack of industry faith in the government initiative. Furthermore, Nigel Hugill, Chief Executive of Urban&Civic acknowledged that it “requires sustained co-operation and mutual support”, which will be key to Levelling Up success.
Another finding of the report is that there is “an industry-wide opinion that levelling up is necessary if we are to build a sustainable future for towns and cities.” This identifies the importance of the green agenda in this initiative, especially as the government has ambitions of net zero by 2030. The number of companies already reaching net zero has doubled since 2021, and “61% of respondents believe that the real estate industry will meet the UK government’s target by 2050 if not before”. This is promising as it shows that while the government’s timeline might not be achieved, the industry is heading in the right direction.
Emerging post-pandemic trends
The CMS report corroborates what we have previously reported about the changing trends to the way we live following the Covid-19 pandemic. The most prominent factors that consumers considered as making areas more appealing were open spaces and places to sit (92%), pedestrianised areas (91%), leisure facilities (90%), improved accessibility (89%) and more transport links (88%).
If the sector responds to these priorities, there will be a significant change in the built environment, but one of the key issues identified affecting the property sector is “getting the balance right between what consumers desire, how the industry can generate appropriate returns and how the industry can tackle climate change” which suggests that achieving this will be a balancing act of different factors.
Residential assets on the rise
The survey results found that 28% of property assets in the UK are being repurposed, with this figure rising to 31% in the next five years, which shows that the industry is already responding to these changing consumer priorities. Not only that, residential is the most popular asset class for change of use, with 32% of respondents planning to repurpose retail to housing and 24% converting offices to housing. This is encouraging for those considering investing in residential property, particularly as it is considered to be the asset class with the biggest returns.
The balance of supply and demand in terms of housing continues to be a popular topic of industry discussion, and the report acknowledges that “providing more homes will address a real need that is apparent across the UK, but consumers are more likely to make use of a town or city centre that provides space for leisure facilities and access for all.” This shows the importance of housing supply being in the right place to suit consumer demands. The Centre for Cities supports this as it revealed that “the UK doesn’t have a national housing crisis, but there is a housing crisis in our most unaffordable cities.”
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