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The pace of urbanisation in the UK will accelerate over the next few years.


In five years’ time, some 2.5m additional people will be living in our urban areas, increasing demand for housing, retail, leisure, logistics and office space. The drivers are straightforward: new jobs are likely to be focused on sectors such as tech and services, which are overwhelmingly concentrated in our largest and most successful cities. Meanwhile, graduate talent is increasingly congregating in those same locations for employment and lifestyle reasons.


Greater investment in public transport, particularly in the North of England, will only accelerate this – as will the evident skew of residential development, particularly build-to-rent in cities such as Manchester, Birmingham, Bristol and Edinburgh. Despite affordability pressures, London will continue to benefit the most from these pressures, given its existing skills base, the (final) arrival of Crossrail and the sheer quality and variety of choice for occupiers. Of course, this will continue to be a social and political challenge – for those places left behind and a Government that has drawn on them for its mandate.


Air quality will become a major factor in location decisions.


With increased awareness of the impact of pollution on health and concentration levels, workers, occupiers and investors will become more sensitive to local air quality when making decisions. As monitoring becomes more accessible and mobile, this trend will intensify, and spread from the office market into industrial and logistics and beyond. It is also becoming a major issue in residential: according to a recent National Landlord Association survey, 1 in 2 people now consider local air quality when deciding where to live. This will be a particular factor in the growth of private rented, large-scale communities, given that many are targeting health-aware graduates or vulnerable older people.


Local authorities will continue to use innovative funding mechanisms to regenerate their areas.


The income strip deal will become an increasingly common way for local authorities or universities to kickstart development, particularly in locations where rents are not currently high enough to justify speculative development. These will often be focused around specific sectoral themes – for example innovation districts focussed around specialisms, perhaps in conjunction with universities. For investors, these deals offer hard-to-find long-term fixed income, which they need to match their future liabilities. Many funds and REITs are looking to move away from a geographically diversified portfolio and focus on critical mass locations. This will allow them to develop close relationships with communities, with an eye on social sustainability.


UK Property Predictions 2020


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