Review of 2022 - Baked in complexities but land & property fundamentals will endure
Mon 12 Dec 2022
The past twelve months have been more than challenging as domestic and international headwinds conspired to create a complex setting in which to do business but the long term value of land & property prevails as Shouler & Son looks to 2023 - and beyond.
At the end of last year, in its review, Shoulers’ residential, commercial & rural professionals flagged high inflation, interest rate rises and regulatory reforms for 2022.
And these did come in to play through the year.
As the year advanced, conflict in Ukraine, ongoing high politics in Westminster and the ‘end of an era’ feeling as the UK marked the passing of its monarch all served to reinforce the sense of business uncertainty that has come to characterise the past twelve months.
RESIDENTIAL
The cost of living crisis most instantly affects the housing market and Shoulers’ residential sales agency does report a marked cooling of market activity in the final quarter of 2022.
This year, the Shoulers’ partners concluded a strategic re-engineering of the firm’s residential sales offering.
A string of residential appointments, chiefly the recruitment of a new head of agency, has seen the re-organisation of back office systems to best support the sales process.
In what is becoming a hardened market in heading towards 2023, a proactive relationship between agent and vendor, and all parties involved, will be more crucial to secure sales than it is in a flying market.
Residential agents with experience and micro-market insight will be invaluable for successful transactions in 2023 in a way not seen for the past decade.
Shoulers’ award winning residential lettings agency continues to be busy with a broad sweep of rental properties in town & country locations across its patch in and around the Melton district and the Vale of Belvoir as the year closes and the new one begins.
COMMERCIAL
The commercial property market has been very cautious - particularly in this last quarter with finance becoming an issue, report Shoulers’ business property professionals.
Industrial and storage units are still underpinning agency transactions.
Shoulers’ geographical position and reputation for representing East Midlands’ rural property interests have seen the firm involved in a number of ‘farm shed’ development projects on which it has commented extensively in 2022.
Regulatory reform in the shape of the 2023 introduction of minimum energy efficiency rating of ‘E’ for the lawful letting of commercial premises is causing concern for investors and landlords.
Shoulers - along with peer property professionals - lament that the details of this reform and the impact on the business interests of owners and occupiers have been poorly thought through.
Next April will see the first new valuations régime since 2017 and how this plays out with the £13.6 billion package of measures centred around business rates that was announced in the Autumn Budget Statement last month (November) remains to be seen.
While noting the plight of non-supermarket retail on the high street, the firm’s commercial professionals wonder if increasing wage and fuel costs might, to a greater or lesser extent, recalibrate the balance between online and on-street retail in the coming year.
It’s one to watch along with the potential for commercial opportunities for clients as development of the proposed sites for the East Midlands Freeport (EMF) takes shape.
Development land for both commercial and residential is ‘holding its own’. This is driven by the localised lack of provision in historical local plans.
Central government’s recently renewed focus on the lack of general housing provision and the quality of, in particular, the social rented sector keeps long term development land opportunities in the mix for investment interests.
RURAL
Farms and farmland remain solid performers in the rural sector in being underpinned by a favourable Inheritance Tax (IHT) framework, rising food prices - if not always ‘farm gate’ prices - and also investor appetite for green goods and natural capital.
However, Shouler advises of an air of caution by some established rural interests that conservation schemes do not count as ‘trade’. This could damage take-up in the long term.
There is what Shoulers describes as ‘muddle’ around renewables as some of the earlier schemes come to maturity, together with poorly targeted government subsidies.
September’s ‘Rapid Review’ by Defra of the desirability of ELMS (Environmental Land Management Scheme) as a robust replacement for the BPS (Basic Payment Scheme) has concluded under the newest Secretary of State.
The full details of the review are yet to be published and the sector awaits clarity early in the new year.
The farming sector is, according to Shoulers’ rural professionals, ‘treading water’ in the light of this specific uncertainty among that of the wider economy too.
Yet against this backdrop, farm sales have progressed in 2022 through the hard efforts of the firm’s agents.
Instructions in this sector are always a long sell, even in the best of market circumstances.
Shoulers’ autumn portfolio launched with Hall Farm, Goadby Marwood, Melton which featured in Country Life magazine’s autumn advertising schedule.
The last quarter of 2022 has also seen the successful dispersal sale of specialist equipment from an award winning Leicestershire dairy by Shoulers’ rural sales auction team who handled almost 1,300 bids in this sale alone.
The coming year could see a turning point for many involved in agriculture and food production and Shoulers anticipates a rise in enquiries abouts its onsite and online auction services and facilities.
Shouler & Son’s County Auction Rooms business provides seasonal sales highlights.
Regular sales continue to attract an eclectic mix of sale items with in person and online bids from new and established dealers, as well as members of the public - all whom are as keen as ever to acquire pieces to move on, re-purpose or complete collections.
In reviewing the past year and anticipating the coming twelve months, Ben Shouler, Managing Partner, Shouler & Son, commented, “The new normal business spoke about post-Covid is no longer new.
“And in 2022, trading conditions were far from normal.
“However, challenges and complexities are now baked in and businesses who will prosper are those who are geared to hold their nerve in the face of flux.
“Bricks and mortar remain an attractive investment for those who take the long term view and, as for land, they aren’t making any more of it - as the saying goes in our profession.
“At Shoulers, we are fortunate that we can take the long term view because of our sector specialisms and our heritage.
“Next year marks 180 years since William Shouler set up in business as an auctioneer and land agent. The firm has weathered much since then.
“The business strategy we embarked upon pre-Covid has bedded down by this year’s end with the beefing-up and reinforcement our residential agency service.
“We are preparing for a bumpy ride in 2023 - but it’s our role to steer our clients through with confidence and an understanding of the fundamentals of land & property that a firm with Shoulers’ longevity and credentials can give.”