Pick of the bunch: W/E 12th July 2024

Highlighting some of our latest opportunities across each of our disciplines, alongside global market insights for real estate professionals, weekly.

Residential Real Estate

In the UK, the housing market shows signs of recovery post-election. The Royal Institution of Chartered Surveyors ( RICS ) reports increased sales expectations and potential price rises due to anticipated interest rate cuts. The new Labour government has pledged to build 1.5 million homes in five years, addressing the long-standing housing crisis. However, challenges remain, with builders hesitant to increase output amid economic uncertainties.

The Greater Toronto Area (GTA) has seen a 16.4% decline in home sales year-over-year in June, despite a recent Bank of Canada rate cut. The average selling price fell slightly to CAD 1,162,167. Many buyers remain cautious, awaiting further rate reductions before re-entering the market. New listings have increased, but overall activity remains subdued.

In Boston, developers are pivoting from office spaces to residential units as the city grapples with increased office vacancies due to hybrid work trends. Richard Kershaw from CIM Group is converting the South End building at 95 Berkeley St. into nearly 100 housing units, part of a city initiative that includes tax breaks and state subsidies for such conversions. Boston's office vacancy rate has surged to 16.6%, prompting city officials to encourage transformations to address housing shortages and downtown vibrancy.

In the EU, house prices have experienced fluctuations, with a slight rise in the first quarter of 2024 after previous declines. Certain countries, like Poland and Bulgaria, have seen significant price increases, while Germany and France reported decreases. The overall market remains influenced by economic conditions, including inflation and housing supply constraints.

Contact: Michael Woda , Mitchell Dring

In partnership with Druce

Druce, a name synonymous with luxury real estate since 1822, aims to expand its presence across multiple territories London, partnering exclusively with GKR International - Real Estate Talent Specialists, to bring top-tier talent into the business. Read the full article here.

Email: [email protected]

Website: www.gkrinternational.com/druce-careers

Contact: Lee Riley , Grant Kaveney

Property Management

Urban Real Estate has reached a milestone of managing $1.3 billion in properties, thanks to its focus on growth corridors in New South Wales and the 'Paddock to PM' vision. Celebrating its 21st year, the company manages over 1700 properties with a team of 25. Head of Property Management Thuong Chamberlain credits their success to client trust, tailored services, and strategic processes. The rise of millennial landlords and the use of new technologies like SMS, live chat, and WhatsApp are notable trends. The company has seen an 8% increase in rent across its portfolio, highlighting its effective management strategies.

In Toronto, high rental costs are driving high expectations from tenants, according to Oren Turkienicz , CEO of Holt Meadow . The company differentiates itself through exceptional customer service and high-quality property management, emphasising communication, emergency support, and 24/7 assistance. Innovative approaches, such as online portals and QR technology for service requests, enhance the tenant experience. Holt Meadow 's involvement in intentional, purpose-built design from the early stages ensures high-quality living environments, crucial as rental development gains traction. As the rental market grows, landlords must prioritise liveability and unique amenities to stand out.

In the UK, Mark Lawrinson of Beresfords Group emphasised that landlords must collaborate with trusted lettings agents to navigate the upcoming rental reform programme under Labour. Labour aims to ensure the private rented sector provides affordable, safe, and secure homes, highlighting opportunities for landlords within a robust rental market. Lawrinson noted Labour's commitment to building 1.5 million new homes and streamlining planning processes, which could benefit developers. Policies supporting first-time buyers and affordable housing are expected to enhance the property market's appeal.

Contact: Emma Bradshaw , Rose Lock

Business Support

Australia has introduced several employment law changes effective July 1, 2024, impacting all workers and employers, including those in the property sector. The national minimum wage has increased by 3.75% to $24.10 per hour for regular employees and $30.13 per hour for casual employees, requiring employers to adjust pay rates accordingly. The high-income threshold is now $175,000, affecting eligibility for unfair dismissal claims, with the unfair dismissal compensation cap raised to $87,500. The superannuation guarantee rate has increased to 11.5%, with the maximum superannuation contribution base set at $65,070 per quarter, and the concessional superannuation cap raised to $30,000 annually. Paid parental leave has been extended from 20 to 22 weeks, with further increments planned until it reaches 26 weeks in 2026. Modern awards now include specific rights for workplace delegates, and union officials can apply for exemption certificates to enter workplaces without prior notice under certain conditions. Employers must update payroll systems, employment contracts, and workplace policies to ensure compliance with these new regulations.

Contact: Anuradha Deb , Michael Woda

Have you ever received/sent a thank you note after an interview? ??

1. ?? Yes, received (14%)
2. ?? Yes, sent (28%)
3. ? Both received and sent (28%)
4. ? Never (31%)

It’s interesting to see the breakdown of thank you notes after interviews! It looks like a good number of people both send and receive them, which is great for building connections. However, it’s also surprising that nearly a third of respondents have never sent or received one. A thank you note can really make a positive impression and show appreciation, so encouraging that practice could be beneficial for everyone involved!

Contact our team at GKR International - Real Estate Talent Specialists to learn top tips for the recruitment process!

Commercial Real Estate

The Twin Cities' industrial real estate sector is thriving, driven by high demand from office/warehouse users and bulk distribution companies like Sweet Harvest Foods in Lakeville, Minnesota. Despite strong demand, construction has slowed, and rents are rising rapidly, with vacancies around 4.5%. New projects, such as those by The Opus Group? , continue to meet demand, reflecting the sector's resilience. In contrast, office vacancies in the Twin Cities have reached 22%, with a shift towards more cost-effective, single-story industrial buildings incorporating "flex-tech" office space.

In the U.S., office real estate anticipates a peak vacancy rate of 21.6% by late 2025, with varied performance across market segments. 戴德梁行 predicts stabilisation in office space demand post-2025 and a slowdown in new office construction. The industrial sector, after a rapid buildout during the pandemic, is expected to see a peak vacancy rate of 6.7% in early 2025 before normalising. Retail vacancy rates remain low due to robust demand and a diversified tenant mix, though significant new supply isn't expected until 2027.

In Germany, commercial real estate is recovering, especially in industrial and logistics properties, while office space demand remains sluggish due to the shift towards remote work and investor hesitancy. 仲量联行 reports a 10% increase in deal volumes to 15.7 billion euros in the first half of 2024, driven by a nearly 60% rise in warehouse-property deals. However, office purchases have stagnated, reflecting broader trends in the market.

Contact: Anuradha Deb , Emma Bradshaw

Built Environment

HACT has launched the Built Environment Bank, a tool designed to measure social value in construction projects. This initiative aims to enhance the social impact of developments by providing comprehensive metrics across various themes, including employment and environmental improvements.

India’s built environment sector is poised for growth, driven by investments in housing and urban infrastructure. The Royal Institution of Chartered Surveyors ( RICS ) highlighted the career advancements of its graduates, reflecting high demand for skilled professionals in construction and real estate.

Following the UK elections, Starmer's manifesto includes ambitious plans for clean energy by 2030, a ￡6.6 billion investment in energy efficiency, and the construction of 1.5 million new homes by the next parliament. Industry leaders have reacted positively, highlighting the potential for transformative change in the built environment. RIBA President Muyiwa Oki PRIBA called it a "monumental moment" for tackling the housing crisis, while Gillian Charlesworth from BUILDING RESEARCH ESTABLISHMENT LIMITED emphasised the urgent need for decarbonisation. David Harris, CEO of Premier Modular Group, pointed out the challenges of aligning net-zero goals with the proposed infrastructure strategy, which includes carbon-intensive projects. There are calls for immediate action in the government’s first 100 days to support a greener built environment and address the skills shortage in the sector.

Contact: Anuradha Deb , Rose Lock

Investment, Finance & Accountancy

In European real estate, 第一太平戴维斯 projects investment volumes will reach approximately €44.5 billion in Q2 2024, marking an 18% increase from Q1. The report indicates stabilisation in average yields across sectors, with multifamily, hospitality, and logistics showing strong investor interest. REITs are gradually increasing activity, benefiting from attractive valuations, while institutional investors are cautiously re-entering the market as interest rates decline.

GRESB emphasises the importance of energy efficiency and renewable investments for decarbonising the property sector. A recent report highlights that real estate lenders can better estimate financed emissions by utilising asset-level data, which allows for more accurate evaluations of decarbonisation potential. The report suggests specific retrofitting actions, such as adding insulation or installing solar capacity, to enhance energy efficiency. It notes that improving high-energy assets can yield significantly greater carbon reductions compared to enhancing already efficient properties.

In the American South, there are rising concerns about a potential housing bubble due to a spike in new home construction amidst cooling demand. Nicholas Gerli of Reventure Consulting warns that inventory levels have reached historic highs, with home prices in states like Tennessee, Georgia, and Florida considered overvalued by 30%. While some experts anticipate a downturn, others, like First American's chief economist, believe a significant price decline is unlikely due to persistent supply-demand imbalances. Despite rising inventory and price cuts in certain areas, many markets remain near record highs, suggesting a complex situation rather than an outright collapse.

Contact: Anuradha Deb

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