Where is the residential property market heading?

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Following the decline of the Covid pandemic, people across the UK have rediscovered their passions, the significance of taking care of oneself and the importance of spending time with loved ones. More and more people see the significance of having the right home, and that goes beyond just the location.

Internal space and how well it flows is now a key ingredient that renters will expect from landlords before they choose a new home. As fewer people than expected return to the corporate environment, the pressure is growing on developers to deliver living spaces that meet renters needs in 2023.

Many businesses have found that office and remote work are equally productive for those who can do so. It just doesn't matter as much anymore for companies to warrant investing millions of poundss in commercial property, when their staff are best motivated by a better work/life balance.

In a piece for Wired, written by Chris Stokel-Walker, he outlines the key changes made by flagship conglomerates Twitter and Facebook. They have both discussed plans to massively scale back their commercial property portfolios, whilst reducing their commitments to office expansions in the wake of remote working.

Stokel-Walker notes “Twitter isn’t the first to cut down its office space. In early June, Yahoo was rumoured to be getting rid of its 650,000 square foot San Jose campus, which was only completed at the end of 2021. Later that month, Yelp announced it was edging closer to being fully remote, and closing 450,000 square feet of office space across the US. A week later, Netflix followed suit, who said it plans to sublease around 180,000 square feet of property in California as part of a broader company downsizing. That echoed Salesforce, which put up half of its eponymous San Francisco tower block for sublease in mid-July.”

Additionally, it looks that this is gaining traction in the UK. Many of the local tech start-ups are keeping an eye on what the major corporations are doing across the pond.

What might this entail for houses as investments?

In essence, it appears to be the start of a significant shift away from commercial property and towards residential.

Large office buildings and previously used commercial structures could be converted into apartments and homes in the city centre quite fast. This is good news for investors who wish to diversify their portfolios and increase their exposure to some of the leading cities in the UK, such as Liverpool and Manchester.

As fewer people are able to climb the property ladder, they are forced into the private rental market, which increases demand. The market's trend towards residential investment property is unquestionably advantageous for both consumers looking for rental housing and buy-to-let investors.

For more on this topic, speak to a member of the IPG team today.