UK house price growth in 2019: what are experts’ predictions?
In what has been a turbulent week, not to mention year, for British politics, recent reports show that UK house price growth grew at the slowest rate in almost six years in November, and much speculation has been made regarding predictions for the property market in 2019. Property firm Strutt & Parker has forecasted UK growth to stand at 2.5 per cent for 2019 – with the 5-year forecast from 2018 to 2022 standing at 18 per cent. According to the report shared on Mansion Global, transaction levels continue to be low due to a lack of supply in the market, all fuelled by Brexit uncertainty. Some would-be sellers are holding on to stock and opting instead to lease their properties until the market shifts once again.
In a poll on the Innesco Twitter page earlier this week, we asked our followers for their opinion on whether the residential market would go up or down in 2019. Out of some 350 respondents, a majority of 53 per cent believe that the market will go down. While 21 per cent anticipate for the market to stay at the same level it is now, only about a quarter – 26 per cent – thinks it will go up. In conclusion, the outlook for the coming year isn’t looking too bright.
There may however be a reason to, in true British fashion, keep calm and carry on – at least when it comes to prime assets. In an article in Property Week this week, property finance provider CapitalRise argues that the clamour around the declining residential market is exaggerated and that prime central London (PCL) property is still amongst the best-performing and property classes in the UK, with a proven track record of resilience. Looking back at previous crashes – the 1989 recession and 2007 financial crisis – PCL bounced back to pre-downturn levels nearly three years faster than the rest of London and the UK as a whole. This is largely because buyers in this segment are looking to invest on a different basis from buyers in other parts of the UK – often drawn to the opportunity to invest at a lower-than-average price. Furthermore, London’s status as an iconic financial and cultural centre will always guarantee a demand for prime assets in prime locations.
As far as Brexit goes, things are very much up in the air – with this week seeing Theresa May postponing the Commons vote on her Brexit deal, to which the EU responded that there is “no room whatsoever” for renegotiations, and the Prime Minister herself narrowly winning a vote of confidence amongst her own MPs by a mere 63 per cent. For the foreseeable future, the potential of a no-deal Brexit or a new referendum will still be because of consumer caution – and any predictions about the housing market will be dependent on what happens on 29 March.
Why tax online retail?
The idea that online retail is gaining ground and slowly adding to the decay of physical retail is gathering momentum across Europe and in the US. Even though each market has its own way of dealing with what is now widely considered a threat to physical retail, the urge recently expressed by several countries to control the negative impact of online retail is rather compelling.
Last June, bricks-and-mortar retailers secured a big win over online counterparts as the US Supreme Court invalidated a ruling that had enabled online retailers to avoid collecting sales tax from customers. Closer to us, the EU is actively discussing the possibility of a wide-ranging digital tax on tech companies. And in the UK, Mike Ashley, head of @SportsDirectUK and new owner of @houseoffraser, confronted MPs in a rather punchy select committee appearance earlier this week, advocating that “the internet is killing the high street” and that we need “20pc tax levied on online sales” to save physical stores.
Despite the fact that the US, the UK, and to a certain extent the EU, are famous for their liberal view on business regulations, one can only question why they are willing to enter this battle. Only one answer comes to mind: fear. Fear that physical retail will slowly die and draw in its wake the rest of the economy. But perhaps the death of the high street is less inevitable than it first appears: physical stores remain, by far, people’s preferred way of shopping.
A piece of research recently conducted by the @ICSC adds to this proposition by concluding that bricks and mortar impacts click, which impact sales. As an example, the opening of a new physical store results in an average 37% increase in overall online traffic to a retailer’s website. Still more online and less physical retail you might say – but if you look closely, what this study shows is that online retail cannot sustain its growth without the help of bricks-and-mortar. One supports the other, or to say it differently: the performance of retailers in the digital world is very much linked to the presence of their physical stores. If you need further proof that physical stores are still valuable, @amazon has recently reported $8.6 billion in revenues from physical stores through the first six months of 2018.
There are undoubtedly issues to address, for example, the UK’s dysfunctional property tax system – business rates – which is too inflexible to adjust to the swift changes we are seeing, and currently favours online retailers to the detriment of physical stores. But these are not insurmountable, and the decline of the high street is not inevitable. It will take some imaginative thinking from retailers and policymakers – such as that seen from Mike Ashley this week – but the solutions are there. The high street’s decline doesn’t need to be terminal.More
Ahead of 2019, real estate giants augment their offerings
Commercial property group JLL this week announced that it has created a new practice that focuses on supply chain consultancy and commercial real estate decisions to match the evolving needs of its clients. The new consultancy will officially launch in January 2019. The move has been reported in Property Week as being in response to the growth of e-commerce and “shifting consumption patterns”, which the global real estate company said required supply chains to “continually evolve”. It’s the latest in a long line of real estate service firms responding to the market by diversifying their offer, with firms such as CBRE, and Savills all launching new divisions and sectors within their organisations.
This year has been shaped by such announcements from real estate giants including CBRE, set to launch ‘Hana’ in 2019 – a subsidiary of CBRE that will provide flexible office space and co-working memberships under management agreements with landlords. Hana will operate three key functions – Hana Team; providing customised private office suites for corporate teams or organizations of 15 – 300+ employees; Hana Meet; meeting rooms and event space bookable by the hour or the day, both by existing clients as well as external bookings, and Hana Share; classic co-working environment with shared desks and monthly subscriptions for freelancers and small teams.
In a bid to respond to client needs to establish the critical component of ‘place’. Savills also revealed this month that it is launching a specialist ‘place-shaping & place-marketing’ division. The 60-strong Savills Place Shaping & Marketing team aims will help clients “create distinctive, engaging and enduring places with a focus on user experience”. It merges their CMS and POP Marketing functions to create a 60-strong team. The two functions both specialise in the consumer experience: CMS transforms town and city centres and POP Marketing provides events, PR, social media and marketing services.
With all of this change happening in a matter of months, we can expect to see much more to come as agents seek to respond to shifting trends and consumer needs. It is likely that agencies will soon become completely full service across the market and then the drive to recruit clients will intensify.More
Our take on the Black Friday debate
There is no shortage of question marks over just how valuable Black Friday is to retailers, especially in the UK where the sector is still working out the exact impact of what remains a relatively new initiative. Many retailers resent having to sacrifice margin at a time of year that was traditionally their most profitable period, but feel they don’t have a choice but to take part, for fear of losing yet more income to the web giants. Independent retailers, who lack the scale to offer deep discounts, can be forgiven for wanting to sit the whole thing out.
With this in mind, for those bricks-and-mortar retailers electing to persist with Black Friday, the question must become ‘how can we make this annual shopping frenzy less of an insufferable scrummage for customers?’ Look to the USA, where it all began, and there that you will find the answer.
A study by @EngageCustomer found that 74% of shoppers believe the use of technology such as smartphones, touch-screen kiosks and contactless payment terminals will make shopping on Black Friday a better experience by providing information and discounts along with a quicker and more personalised service.
With this in mind, US-supermarket chain, Walmart, which has invested significantly in creating a cohesive hybrid of online and offline since acquiring Jet.com about two years ago, is shaping their in-store Black Friday experience in 2018 with a new mobile app feature, ‘Check Out with Me’. Using the app, customers with just one or two items will be able to check out with the help of an associate on the floor running special software on a smartphone. ‘Check-out with Me’ will be supplemented by Walmart’s item finder, which presents customers with an easy-to-see app-based map, pinning the location of Black Friday products in physical stores. Both are innovative solutions to Black Friday fatigue that hope to increase footfall by cutting-down queues and time spent shopping.
Black Friday is all about competing on price, but in that race to the bottom it is Amazon that will always win. If bricks-and-mortar retailers are to benefit from Black Friday, they need to focus on experience as well as prices. Discount deeply to drive footfall, but make sure the infrastructure and tech is in place to cope with the influx. We’ve all seen the videos of fights over selected products – a staple of social media at this time of year – but such scrums are unlikely to encourage many customers to make the trip to a physical store. Retailers need to step back, look beyond the price tags and towards the customers themselves.More
Innesco at MAPIC
This week, the Innesco team was delighted to be working with some inspirational clients at @MAPICWorld 2018, which delved deep into the most inspirational trends contributing to the transformation of the retail sector.
Our primary aim was to elevate the international reputation of major industry players including Intu Spain, ECE, @Brkfldproprtl, @reemmallauh, @BispevikaLife and Via Outlets – companies at the forefront of change, leading retail into a new era of innovation and convergence with the digital world.
We had the opportunity to present the Innesco team at our very own stand in MAPIC’s inaugural UK Pavilion – which saw significant traffic.
Our MD and Founder, @DanInnes moderated a key panel on Day Two – ‘Creating Physical Experiences & Emotions in a Digital World’, inviting insight from the best and brightest in modern retail and digital communication. Check out our social feed – @Inn_Tweets– for a closer look at the session.
It was an electric 3 days, which came to a delicious end with our iconic Survivor’s Lunch at Astoux et Brun restaurant. Great seafood, friends and a real sense of accomplishment – who could ask for more?
To Cannes, we bid adieu. Until next year.More
A Budget fit for the future of real estate?
Delivering a slick speech on the Budget last Monday, the Chancellor stated that “the hard work of the British people is paying off” and that “austerity is coming to an end.” But is it indeed? This year’s budget was advertised as one ensuring that Britain is ‘fit for the future’. The real estate industry in particular has been calling for reforms on business rates, which have been accused of hobbling traditional ‘bricks-and-mortar’ retailers. Despite the announcement of two key measures to help the industry face the headwinds, there remains an element of doubt as to whether it will make a difference and help drive the country’s retail economic powerhouse.
Chancellor Philip Hammond has made his plans to spend £1.5 billion on the UK’s high streets an exercice de style. The new package is aimed at helping small high street retailers. It includes a business rates discount for shops with a rateable value of less than £51,000 and the creation of a £675 million “future high streets fund” that councils could use to redevelop their high streets. Since that announcement, several industry players and experts have questioned how much difference the rates measures will make – as almost half of the premises highlighted by the Treasury already qualify for small business rates relief – or sought clarity about how much of the new fund will actually be allocated to small towns.
It is all good sport, but there is an elephant in the room. The truth is that despite a meaningful statement of support, no announcement to help larger retailers has been made. Larger retailers employ the most people, occupy the most property and feature most frequently in people’s retirement pots. It is only fair to think that helping larger retailers could be a win-win, as well as a critical action to implement in pre-Brexit Britain.
This felt like a ‘solid’ Budget, designed not to rock the boat; as things stand, the Chancellor has made it clear that a no-deal departure would mean a whole new Budget in the spring, so we can only wait and see just how turbulent those waters will be.
Noemie Mourot, Account Director, InnescoMore
Innesco partners with Maybe* for world’s largest social listening project for #MAPIC
MAPIC is fast approaching on 14thNovember 2018 and an exciting new addition to this year’s event is that Innesco is teaming up with Maybe* to deliver a social listening project – the largest of its kind ever undertaken in the commercial real estate sector.
MAPIC is the major international retail and real estate event for key property players connecting retailers, developers, cities and investors over three days in France with around 8,600 participants, 2,100 retailers and 2,500+ developers. This year’s theme is “Transforming reality – Physical in the age of Digital”.
The social listening project centres around the question – “What is the future for retail and entertainment in our towns and cities?” – and will then collect views from consumers all around Europe for the two weeks before the event, and then ask the same questions to delegates in Cannes each day. Using a combination of social listening, AI and chatbot technology in the Maybe* platform, the project will listen to and reach 1 million people across the world.
The purpose of the project is to demonstrate and reveal the variety of lifestyle experiences consumers now have and expect alongside retail rather than independently of it. It will also assess the importance of stores being active participants in those conversations to drive their footfall. Reports will be shown on Innesco’s screens, shared on Innesco and Maybe*’s social media and blogged about during the event.
Maybe* is a conversational commerce platform that enables businesses, towns and cities to listen to, learn from, and react to the digital conversations happening around them, making it the perfect listening partner to undertake this project. It incorporates the latest AI, chatbot, benchmarking, and location-aware technology into its platform.
Dan Innes, MD of Innesco says: “We are proud to be carrying out this pioneering type of research with Maybe* and as an innovative specialist marketing communications agency in the retail and real estate space, Innesco is a natural fit for the project. We place great importance in our team’s expertise, research, intelligence and observation capabilities, and use empirical evidence at the heart of strategies to help identify the optimum “route to audience”. We then use this evidence to drive strategy and inform our tactical creative, digital and media teams to provide winning campaigns that give our clients a competitive advantage. This social listening project is the first of its kind and the largest ever undertaken in any sector – just another example showcasing how Innesco uses technology, data and other innovations to conduct research and deliver its findings in effective ways. It will be fascinating to see how consumer views match up against that of professionals working inside the sector.”
Polly Barnfield OBE, CEO of Maybe* adds: “Consumers have a global choice in their pocket, 24/7/365 days a year. To predict the future of retail you need to understand the needs and expectations of consumers, all of which are reflected in conversations that are happening today. While online shopping seems to get the most attention, the dynamic that is frequently overlooked, is the significant degree to which most consumers’ shopping journeys start via a digital channel, regardless of where the ultimate transaction is rung.
Understanding the customer conversation that surrounds this journey and the associated experience is vital for retail success and future plans. We are delighted to be working with Innesco on this important piece of research”.
Look out for Innesco in partnership with Maybe* at stand R8.A 3 (The UK Pavilion), Riviera 8, UK Pavilion at #MAPIC2018. Follow them on Twitter @INN_Tweets.
More information about Maybe* can be found at https://www.maybetech.com/More
Coal Drops Yard: a first class retail project in London
Today, London’s latest and highly-anticipated shopping and restaurant district in London’s King Cross, Coal Drops Yard, opens its doors to the public for the first time. Originally established in 1850 to handle the 8 million tonnes of coal delivered to London each year and repurposed in the early 90s as the location of nightclubs Bagley’s and The Cross, we witness today a new era in its placemaking journey as it becomes a hotspot for 50 one-of-a-kind concept stores. It’s not the only new London-based project to bring consumers a range of ‘firsts’ though, as the O2’s ICON Outlet also opened to the public last Saturday, another important landmark which now plays host to a series of retailers making their outlet debuts, including Aspinal of London.
It has been well publicised that the pressure is mounting on retailers and landlords as they are struck by rising costs, dips in consumer spending and online competition. However, the age-old trick of ‘build it and they will come’ still applies in the fight to remedy this. We’re all told that the ‘it’ lies within offering consumers a unique experience – be that those ‘firsts’, a unique location, or a fusion between online and physical store – and they are right, however, it’s not the only option available for those who don’t have the luxury of the above.
A good marketing campaign can also assist in driving footfall to a flagging store or centre, and I’m not just talking about a complete rebrand. For instance, we have seen successful initiatives such as a variation of carpool karaoke, the popular segment from TV host James Corden, be launched within a shopping centre as a means of recording a song on video that could then be shared on social media – raising awareness of the centre and driving further traffic to the site. Another managing agent launched a competition for a new online-only brand to win a unit with a rent-free period within their centre, this was met with their online customer base being carried over to the physical, and adding an ‘it’ brand to their offer. From the retailer perspective, more can always be done to make your store more interesting, including introducing more lounge areas or pop-up collaborations to increase dwell time, or being innovative with visual merchandising to capture the customers’ attention as they pass by. The possibilities are endless here, you just have to get creative, and Innesco can help. Speak to one of our team to discuss your marketing campaign or project needs.More
How LinkedIn’s new updates help small businesses
As the use of social media for all industries continues to rise, it becomes vital for businesses to stay up to date about the platforms. While recent weeks have been abuzz with news about Facebook’s attempts to win its users’ trust again with new functions and programs, LinkedIn has been quietly adding new helpful features to improve its product. This week, the network has tweaked its algorithm to generate more engagements on users’ posts after it found that people were posting fewer updates as they saw fewer interactions.
How does it impact businesses? Well, with 567m users every day, LinkedIn is the first channel that brands use to distribute B2B content. Across all social media platforms, the network proves to be more efficient in the content marketing mix – 80% of B2B leads come straight from LinkedIn according to stats. Its expansive reach can make B2B content visible to a large targeted audience, however, with the old feed model, viral posts were taking over feeds and drowning out posts from closer connections. This posed a problem as getting feedback is a motivational boost for marketers to continue posting their content.
Now, the smarter feed model ensures equality among all members of the network. Does this make the platform more attractive for content distribution? Absolutely. This change could help small companies’ updates to appear at the top of a member’s feed.
LinkedIn has taken another initiative this week that could also help boost exposure on the platform with the option to display a ‘Follow’ button, as opposed to the current ‘Connect’ on the profile page. This particular update is easy to miss since it is only available on the mobile app (for now) where it has to be triggered by the user. It can be found via the privacy tab in the settings – look for the ‘who can follow you’ option.
Regardless of your business’s content strategy, both of these tools are incredibly valuable and worth consideration. Drop us a line if you’re looking to fine-tune your digital strategy further. As always, we’re keeping a close eye on new developments in the social media sphere so we can help our clients do better business.More