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The property industry must now adapt to the new reality

Paul McNeive


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Paul McNeive

Paul McNeive

Paul McNeive

I did a ring-around of senior property players on Monday, and some drew parallels with the emotions felt after the 9-11 attacks - nervousness and uncertainty, yet a determination to adapt and keep going. The main issues are the wellbeing of staff, and possible effects on the market.

Savills deputy managing director Mark Reynolds told me that their offices have closed, with staff working remotely. Calls to the main telephone numbers are diverted to the receptionists at home, who then transfer calls to individuals.

Staff are using tele-conferencing for meetings, and that also allows documents to be displayed and discussed.

On the market, he said that the current crisis would be regarded as a "blip" by pension funds and international investors, who take a long-term view, although there may be a delay in getting some contracts signed, for example for development projects.

"After 9-11, everything came back in two weeks," he said.

"This will take longer, but it will be the same. The fundamentals are right."

JLL CEO John Moran told me that it is closed this week and are keeping that under review. They have a skeleton staff keeping some buildings in operation, but most staff are working successfully from home under their "agile working policy."

He said that ongoing deals appear to be progressing normally, but he expects to see delays now in bringing new instructions to the market.

"75pc of the investment market is overseas investors and they are affected by the travel ban, as is much of the occupier market," he said. "As against that, the private equity houses are all now looking for opportunities."

He said he would be surprised if there wasn't some short-term turbulence on values, and those who are over-leveraged may get into some trouble.

CBRE managing director Myles Clarke said that, following a trial run last week, all staff are "100pc laptop mobile and successfully working remotely".

He said: "On a normal day we would have 30pc working remotely anyway."

The staff are meeting clients off-site and using Skype meetings, virtual teams and DocuSign, to maintain normal operations.

CBRE has called all key investors, he told me, "and the money raised is still there".

If this lasts two months, he said, investors will come back very quickly, and good assets won't drop in price. He points out that because bond yields have gone even more negative, the yield spread to prime property is even more attractive. Mr Clarke doesn't foresee a major real-estate downturn - "perhaps a hiatus, and a little bit of value".

The residential business can often lead the way with technology.

Joanne Geary, director at Sherry FitzGerald, told me that its branch network had closed and that all staff are working remotely.

She told me that it has seen a 30pc jump in volumes on its website and social media channels since last Friday, and it has 12 staff manning its "online chat".

She tells me that it has moved now to "virtual viewings". These are held at set-times for multiple viewers, or for single viewers, by appointment. Viewers watch a video of a property, whilst the selling agent appears on the screen alongside, and talks you through the property. Viewers can ask questions, either audibly, or by "chat".

It's unclear what the impact will be on construction sites and there are reports of some layoffs.

I suspect that larger apartment sites are at most risk, due to proximity of workers.

However, I spoke with one smaller builder and his 25 staff (including sub-contractors) work far enough apart and want the site to stay open. The site canteen has closed, and workers eat in their cars.

I suspect we're looking at much reduced activity until September. There will be big challenges if some tenants, particularly in the hospitality sector, are unable to pay rent.

But once we are through this crisis, people will be amazed at how quickly everything returns to normal.

Indo Business