By Richard Pickering, Head of Futures Strategy
Ups and downs Presenting to the Treasury Committee yesterday, Mark Carney explained away the poor Q1 growth figures on ‘idiosyncratic factors’ (e.g. the weather). On that basis, his forecast for the full year is more optimistic. Nevertheless, Carney took the opportunity to compare our present economy with the economy that was forecast immediately prior to the referendum. The differential is c.1% of GDP, or otherwise put, real incomes are down £900 per household relative to expectations. This is in spite of the post referendum stimulus applied to the economy, and in spite of global growth which has performed above expectation. Adjusting for these would put the differential nearer to 2.0%. Hindsight is a strange thing and forecasts can change quickly. At C&W we analysed 34 forecasts for 2017 real GDP growth made in the month after the referendum. The range was from -1.0% to 2.7%. The mean was 0.65%. In the final event, 2017 growth was 1.8% (almost three times the mean prediction). The weather might in fact be more predictable.
Booking space In what was no doubt a well-intentioned marketing initiative, online restaurant reservation agency OpenTable has teamed up with Westminster City Council to offer 45min picnic spot reservations this Friday in Soho Square. Despite not charging for the privilege, a social media backlash has erupted over the ‘privatisation’ of public space. The land is held leasehold and operated by the local authority, which can presumably deal with the park as it sees fit. Nevertheless, commercial incursions onto ‘public space’ are attracting increasing indignation. London is pulling away from its regional counterparts in population density terms (c.25% denser than Manchester), and the biggest contributor to this density is greater height. Whilst less obvious than concreting over public space, height increases insidiously reduce the ratio of people to public space. Managing the space that we do have, through for instance time-slots as proposed by OpenTable, is unlikely to curry favour. The better option is to deliver more space; however, with finite ground floor area available, the option might increasingly be found at upper floors (e.g. the Sky Garden @ 20 Fenchurch Street or The High Line, New York.)
Personalised service An online store can be a fairly lonely place. Aside from the footprints of other people’s patronage, left in the form of product reviews, you won’t bump into other customers. The flipside of being the only customer in the store is that the retailer can treat you as such and provide a completely personalised experience. For example, eBay is set to launch a new feature that suggests products to you based on your user profile and browsing history. Can bricks and mortar provide similar personalisation? A report by Accenture suggests that customers are 75% more likely to buy from a retailer that knows them by name – good news for the village shop, but what about the shopping centre? The solution could lie in the kind of technology showcased in the film, Minority Report. Participating smartphone users can already receive targeted promotions as they pass stores. The same technology could be used to alert sales assistants to your identity and shopping history as you walk through their door, allowing for a personal greeting, better tailored product suggestions and potentially better tailored clothing based on your measurements. For an example of this see: http://sprucebot.com/
PRS purge? A survey by the National Landlords Association released last week reveals that PRS landlords are intending to sell 380,000 properties (19% of stock) within the next 12 months in response to taxation changes. The significant majority of these are single units; either flats (45%) or terraced homes (33%). For those waiting to get on the ladder, this represents a significant new supply, which brings both opportunities to purchase and also downward pricing pressure in the event that a large number of sales are brought on stream at the same time. For those looking for a solution to the housing crisis, this is not it. In the short term shifting tenures is likely to create flux and churn in the rental market, whilst in the longer term it will reduce the amount of stock available for rent. With house price to income ratios sitting above mortgage availability (particularly in the South East), the impact of making more stock available to those that have been able to accrue significant deposits is likely to exacerbate the wealth gap. It will however be interesting to see whether this results in a longer-term rebalancing of the ratio of owner-occupied to rented property, particularly as institutions step into the gap left by retail investors.
Upskilling LinkedIn has published its list of the 25 most in-demand skills in the UK job market, and guess what? Measuring and inspecting buildings aren’t on it. 80% of the in-demand skills are grounded in tech or data of some nature. However, that doesn’t mean that they aren’t relevant to our profession. In the same way that banks have upscaled their tech workforce in recent years, we stand on the cusp of a significant shift in the role of the real estate professional and one which will require new skills to be brought into the industry. This doesn’t just mean tech, but more likely augmenting and shifting the core skills of being a chartered surveyor. A central challenge will be how quickly we can achieve this. At a graduate intake level, if it takes a year to redesign a university course, three years for that course to play through and then two years of professional accreditation, there’s a six-year lag from the point of identifying new skills to bringing them into the junior tier of the industry. That’s one option. Another, is likely to be a greater and (dare I say it, genuine) focus on lifelong learning and CPD, beyond ticking boxes.
Laurel and Yanny Not a comedy double act, but new proof that Millennials and Baby Boomers are indeed speaking (and hearing) different languages. Listen to this. If you are one of the 49% that heard the word ‘Laurel’ then chances are that you are over the hill; whereas if you heard the entirely different word ‘Yanny’ (51%) then you might be somewhat younger. The science comes in the fact that younger people can discern higher frequency sounds, which subtly but fundamentally alter the nature of the word. This latest phenomenon follows a similar internet sensation three years ago, (#TheDress) which led to a heated debate over whether the dress in question was gold and white (skewed towards older women), or black and blue (younger men). With such basic differentials in perception it is a wonder how we as a nation can agree on anything…oh, wait… Thankfully the sequential nature of the Royal Wedding and FA Cup Final last weekend minimised the prospect for further conflict in the Pickering household.