New year, new ideas
EMERGING FROM GLOOM
RICS Chief Economist Simon Rubinsohn takes a global perspective for construction in 2010
Construction has been one of the worst hit sectors during the credit crunch, not just in the UK, where the peak to trough decline in output currently stands at around 15%, but also in other parts of the world.
The industry has been hit by both a significant scaling back in demand and a dramatic shift in the availability of leverage. However, there is now a chink of light at the end of the tunnel. Economic news across the globe has turned a little bit brighter and this has begun to filter through to property markets.
Development finance, particularly in Europe and the US, remains constrained but appears to be flowing more freely elsewhere. This suggests that a recovery in construction output is probable over the next few years.
To give a flavour of the scope for the sector to grow, Global Construction Perspectives and Oxford Economics have just produced a 10-year forecast for global construction, covering 35 countries.
Significantly, the projections are disaggregated to give a flavour of the likely contribution from residential, infrastructure and non-house building construction in each of the countries as well as globally.
The resulting report, Global Construction 2020, demonstrates that emerging markets are set to dominate output growth over this period, with the value of construction more than doubling in this part of the world. By way of contrast, developed countries will, on average, see an increase in output of around a third.
Predictably, the analysis indicates that the most dynamic countries for construction will be India and China, with growth set to average between 8% and 10% pa. The impact of this will be to make China the world’s largest construction market by 2018 and to raise India into third place.
Interestingly, the US is forecast to experience the highest growth in construction among developed countries, led by a double-digit rebound in the residential sector. Western Europe, meanwhile, is projected to be a laggard, dragged down by Spain, Italy and France.
Finally, Global Construction 2020 does hold out some hope for the troubled UK market. Despite concerns about the sharp drop in the level of housing starts, the analysis forecasts residential construction leading the way. It does, though, acknowledge that infrastructure spending may suffer as the public sector begins to address the huge fiscal deficit.
For more about the report and accompanying database, visit www.globalconstruction2020.com
GROWING GEO 2.0
RICS Director Land Group James Kavanagh MRICS predicts further technology benefits for the industry
2009 was a watershed year for web-based mapping, integrated dataset provision and the relentless advance of web 2.0 type initiatives from crowd sourced mapping, neogeography and the ‘cloud’. But what will 2010 bring?
2009 saw some new, sharp geo and property orientated start-ups spring into life such as www.findmaps.co.uk and the almost constant policy ‘chipping away’ at the hegemony of government agencies and public access to property datasets.
2010 will see this ‘asset’ restructuring continue as HM Gov seeks to streamline government and possibly bring together Ordnance Survey, Land Registry and the Valuation Office Agency into one department as has happened in Belfast.
But 2010 will also be the year of truly interactive three dimensional datasets and the integration of property related info (in real time and everything from crime statistics, to house prices, to energy usage).
The possibilities are endless and cutting edge web portals such as www.scapeworld.com can stream terra bytes of information online.
Augmented reality services will also increase, just look at the latest relatively simple but highly effective augmented apps on the iPhone and imagine a property/planning app – where highly accurate 3D city models can have the legal ‘planning’ regime augmented upon them.
Social media use will increase as will mobile usage – at a recent RICS Telecoms conference an industry speaker stated that 2009 had witnessed a remarkable x17 rise in data being transferred by mobile devices.
Increasingly, RICS members will find themselves ‘mashing up’ data from numerous sources, without even realising it, or buying in bespoke data integration services and outputs – which can be held online and made available to staff from any office.
Everything will become far more visual as online property mapping, imagery, 3D environments and related metadata become commonplace. The use of virtual communities will increase exponentially as will online working.
2010 could be the year all surveyors move into a new technologically driven future. Perhaps all those hours ‘gaming’ were not wasted after all!
For more about the science and study of spatially related information, visit www.rics.org/geomatics
NEW YEAR REVOLUTIONS
Political upheaval promises to make 2010 a challenge, believes Gillian Charlesworth, RICS Director of External Affairs
For those who love politics, the UK will be an interesting place to be in 2010. With an election inevitable and remaining doubt over who will win, this will be a fascinating year for pollsters and pundits.
For those who want to get their businesses back on track, retain good employees and develop their professional skills, the UK political and economic scene looks a little bleak, with the end of fiscal stimulus and renewed uncertainty over borrowing, funding and employment.
Through its connections with governments across the UK, RICS is playing its part in encouraging and informing initiatives and policy solutions that concentrate on restoring a vibrant and sustainable market, and that will cross the electoral divide.
Efficiency in public sector asset strategy and management will be to the fore, whichever parties are elected to run the UK and RICS members in the public and private sectors will lead in this arena.
A ‘New Industry, New Jobs’ approach in construction will require new skills and professional standards to meet the needs of a low carbon economy. Further progress on devolution for Wales, Scotland and Northern Ireland will provide new powers on a number of areas including, taxation, housing and planning.
There will be some different directions and terminology for the devolved nations, with PFI and PPP already abandoned in Scotland, to be replaced by the Scottish Futures Trust.
Across the globe, politics will continue to dominate the news this year, as countries emerge from recession and seek a new world order – or a return to the old one. Brazil, Sweden, Ukraine and Australia also face elections (federal, in Australia’s case), while other countries, such as America, New Zealand and Germany are getting used to new governments from last year.
The European Union is also going to be getting used to a new political structure, led by President Herman van Rompuy, which shifts the balance of power towards the European Parliament and reduces the requirement for unanimous agreement amongst member states.
New energy performance of buildings legislation, for adoption across Member States, will emerge, with a focus on the need for sufficient and well-qualified energy inspectors.
By the time this is published, the outcome of Copenhagen Climate Change conference will be known and countries around the world will be looking for ways to fulfil obligations they’ve made.
Opportunities for RICS members to play a role in creating a low carbon built environment are emerging all the time and there will be increasing demands for practical solutions to climate change-related effects on the globe from flooding to drought, energy efficiency to new infrastructure.
Politicians are looking to property professionals to help them address these major challenges in a practical way.
In many countries, property plays a key role in economic stabilisation and regeneration as well as in addressing climate change. In India, with its new regulatory priorities and legislative controls, RICS will be working with government to embed consistently applied real estate valuation standards through accredited valuers, many of which will be RICS members.
Government campaigns, ‘Housing for All’ and ‘Slum Free India’, call for new skills and property expertise. The Australian Government plans to introduce mandatory disclosure of energy usage from mid-2010.
This will require all owners/tenants occupying 2,000 sq m or more to disclose energy and water usage prior to sale or lease. In Spain, the government, banks and the property sector wait to judge the potential of newly introduced REITs.
The UK Government has announced a Treasury-led review of the Private Rented Sector for England, with a focus on tax structures and investment incentives.
Following major shifts in financial and political power, it is not yet clear whether politicians and market forces will return us to the status quo or whether we will see a new, perhaps more sustainable, approach.
Whatever the answer, political activity in 2010 looks like bringing opportunities for RICS members in the upturn across the globe.
For more on RICS political influencing activity, visit www.rics.org/externalaffairs
GRADUATE GROWING PAINS
It’s been a tough year for graduates, but young surveyor Euan Kelly explains why it’s worth toughing it out
Four years ago I embarked on a degree in property at the University of Aberdeen, at a time when the property market was strong and there were many graduate opportunities. Unfortunately those times are no longer with us and the competition for jobs amongst graduates is extremely tough.
Students graduating in 2010 will not only have their fellow year group to contend with, but a large share of the unsuccessful graduates from 2009, who will hopefully have managed to gain some work experience and matured professionally over the last 12 months.
I had limited success in applying to the major graduate recruiters for the 2009 intake so I turned my focus towards a year of work outside the UK. I had not taken a gap year after school so I saw this year as my chance to travel and gain some work experience and hopefully return to the UK in 2010 a more employable individual.
I got a round-the-world ticket from my parents as a birthday/graduation present and I managed to secure a month’s work experience with Knight Frank in the Middle East before I left the UK in September 2009. I achieved this by exhausting as many possible links from family and friends.
This is probably one of the most important things that struggling graduates can do to get their ‘foot in the door’ – it is just as much about who you know as what you know.
My work experience with Knight Frank was invaluable, within my first week I was working on a major global contract and the exposure to other major developments was far greater than anything I had received in the UK.
During my time in the Middle East I was busy organising the next stop of my round the world trip in Singapore. I got offered an internship in Singapore, but it unfortunately didn’t work out due to issues with getting a visa.
To say I was disappointed would be an understatement. Plans had to change and I made the positive decision to stay in the Middle East for a further two months.
This decision was by far the biggest decision I have made in my short professional career to date as it has resulted in a permanent job to complete my APC and possibly continue further with Knight Frank.
I have to be honest and say that I was in the right place at the right time in Bahrain and within the company, but you have to put yourself in these situations to have the possibility of success.
My travel plans have changed due to the start date of my job being early 2010, but I have the opportunity to finish my round-the-world trip beforehand.
Although new to the property market, for what it is worth, I have some advice for graduates. I have heard tales of companies who have hired what have seemed the most intelligent of graduates, but have failed to become good surveyors.
This is important for all graduates to understand. There is more to being a surveyor than just being the smartest in the class. It is how you interact with your colleagues and clients that will get you places.
I have never been top of the class when it comes to academic success, I believe my strengths lie elsewhere and it will do for many other people.
Each candidate needs to know where their strengths lie before job hunting as you need to be proactive in showing your strengths to potential employers and be aware of your weaknesses – as you need to know them before somebody else finds them.
There is no possible scenario that will see all property graduates this year getting a permanent job to complete their APC in the UK as the demand for graduates just isn’t there. I would urge graduates to think hard about getting out of the UK for a year or two and sampling life somewhere else.
It will by no means do you any harm and there are possibilities to have success outside the UK. The exposure I have gained to the whole of the Middle East is more than I would have got being in London or Edinburgh on graduate programmes.
I predict that when demand in the property market does re-emerge, the industry will be facing a gap where too few people have qualified in the last two years.
Euan Kelly is a consultant for Knight Frank in the Middle East, currently studying for his APC
CHANGING PERCEPTIONS
Jacqui Allen MRICS looks forward to the first female RICS President
Whilst in the past decade there has been a small increase in the number of women becoming chartered surveyors, I think one of the biggest targets for the coming ten years needs to be turning this in to a dramatic increase.
Women currently only make up under 15% of the profession and we should be looking to double this figure at the very least.
In order for this to happen I think we need to change the perception of surveying, which is still seen by many as unglamorous, spending your days in wellies and hard hats. This is not an image that will attract twenty-something women to the profession.
We need to address the lack of knowledge about what surveyors really do and promote the breadth of work that is involved.
It looks like when we come out the other side of the recession, we will be operating in a more creative environment, where surveyors need a rounded set of skills and the ability to multi-task. It is this that needs to be demonstrated in schools and colleges to encourage the next generation of female surveyors.
Hopefully then we can take from the pool of talented women who are considering accounting, law and architecture as suitable career choices.
The idea of the glass ceiling is something that has become prevalent again across the business world, but this is certainly not something I have experienced as a surveyor, even though it is still a male dominated world.
I think there is the desire from everyone involved in surveying to get more women qualified and give them the same opportunities as men, hopefully this will become increasingly evident as the number of practicing female surveyors increases.
We need to see an increase in the number of female role models in our various specialisms coming forward and getting themselves known. Ideally, in the next decade we will see the first female RICS President, as that would really provide a building block on which to demonstrate the potential that women have to go far in the profession.
And no, this is not me setting up my own campaign, but there are plenty of inspirational female surveyors out there who can lead the way!
Jacqui Allen is a partner with the commercial property team at Tuffin Ferraby Taylor
IN THE RIGHT DIRECTION
Roger Russ FRICS
comments on what he thinks will happen in the housing industry this year
In early 2010, the UK Government will want to do their utmost to get some feel-good factor into the public psyche prior to the General Election. There will be further pressure exerted on the banks to increase the amount of residential lending necessary to stimulate the housing market and improve consumer confidence in the economy.
The Government will want to make use of all the tools at their disposal to demonstrate that the economy is finally heading in the right direction.
An increasing number of lenders are coming back to the market with competitive products geared towards the intermediaries, a big shift from the dual-pricing stance of recent years. This could create the competition needed to stimulate activity in the housing market, which currently suffers from a lack of funding and available stock.
In the short-term, this could have a negative effect on house prices with a potential glut of properties, though this could be offset by some vendors hanging on in the anticipation of the Conservative Party winning the election and honouring their pledge to scrap HIPS.
Post-election, if the Conservatives win with a workable majority, then there may well be a ‘honeymoon period’ in the second half of the year with improved public confidence. Scrapping HIPS will see the return of the speculative buyer.
However, lenders will need to do more on loan-to-value ratios and increase the availability of buy-to-let products to help the first time buyer and investor landlord.
Whoever wins, the next Government will have to make spending cuts and decisions that will be undoubtedly prove unpopular. That, combined with the end of the VAT discount, may create a period of uncertainty with consumers.
However, with base rates unlikely to rise much above 1% in 2010 and with better availability of reasonably priced housing stock, affordability should not be a problem.
There will still be tough trading conditions ahead for the property-related professions with firms needing to continue to control costs and run ‘lean’, but for those that adapt and focus on diversification to maximise their income generation, 2010 could see the start of the recovery to reap the rewards for enduring some of the hardest challenges seen in many years.
Roger Russ is operations director at Tyser Greenwood Surveyors
