Partnerships will be key to property market rebound, says GRE Assets
With offices in the UK, Spain and the Middle East, residential property investment company GRE Assets has had a unique perspective on the business impact of the global coronavirus pandemic as the crisis has unfolded.
From the company’s offices in Riyadh, Saudi Arabia, GRE Assets’ managing director Michael El-Kassir has overseen responses to Covid-19 in all three countries as the pandemic has taken hold. He returned to the UK headquarters in Oxford this week, for the first time since much of the world went into lockdown.
The company has had to react quickly to the differing approaches taken by governments in each of the markets it operates. With thoughts now turning to the easing of restrictions in many areas of Europe, the US and the Middle East, much time has been spent predicting what the new normal will be.
El-Kassir says: “For UK investment, GRE Assets has benefitted from a development model that has proved resilient in the past to downturns in the economy, and while the company isn’t being complacent, it’s a model that has served us well.
“In our view the UK remains an excellent investment opportunity for overseas investors and while recovery from the coronavirus crisis will undoubtedly take time the fundamentals are in place for excellent returns on investment for specific types of property located in the right areas.
“At GRE Assets, for example, we have a development strategy that focuses firmly on providing apartments in areas already undergoing wider regeneration, within easy reach of London at prices that are attractive to young professionals or people looking to downsize.
“Going forward, we expect these areas to continue to perform well as restrictions ease at the UK property market begins the slow road to recovery. That said, we are looking closely at our portfolio and how we need to adapt to ensure the success we have enjoyed to date continues.
“That includes working ever closer with local authorities as key partners in answering the housing need for their areas and also looking at spec of technology, including further roll-out of hyper-optic broadband for example, to allow for greater remote-working capability.
“It has, of course, been interesting to not only see the differences in approach in the three countries in which we operate but for the UK market, in particular, to gain first-hand insight of places that are further along the curve, and we will continue to learn a lot from that insight.
The UK Government is next due to review the existing restrictions on 7 May with pressure growing on ministers to begin to lift the country’s lockdown, while retaining measures to ensure social distancing and protections for the most vulnerable. Indications are that any easing will be phased over time.
Whatever is decided on that date, El-Kassir is confident the long-term impact on GRE Assets and UK investment more broadly can be managed to ensure the company continues to deliver on its investments.
“On the construction side of our business we have continued to react day by day to the situation the sector faces with the health and safety of our staff of prime concern, while continuing to deliver new homes for our clients.
“Our experience of the financial crisis of 2008 highlighted the importance of being quick to react and being ready for when normal business resumes. In that regard we have been using this time to regroup and ask searching questions of ourselves as a business, including looking afresh at local plans put forward by planning authorities to ensure we maximise any future development opportunities.
“In our view demand for property has not gone away certainly not in the markets we operate or the areas in which we are developing, and we are continuing to experience high levels of interest from potential buyers.
“The UK remains an attractive proposition for property investment with interest rates at a record low; an extension on negotiations for a trade deal between the UK and the EU looking more likely by the day; and good value right now for dollar investors. That isn’t going to change. We would also expect capital appreciation to increase after the crisis, so those that are continuing to invest now will see solid returns.”
In terms of strategy, GRE Assets is holding firm to its focus on development sites in regeneration hotspots within the commuting orbit of London; in key locations that are attractive in price and lifestyle to young professionals.
It is a strategy that has worked in the past including the 37 per cent capital growth of Stratford development, Olympic Apartments, during the construction period in the wake of the 2008 financial crisis. City Tower, Reading, also enjoyed 50 per cent capital growth between Q1 2013 and Q4 2015. More recent developments are also showing returns of over 20 per cent.
“Our developments at Brighton Marina; Nene Wharf, Peterborough and Riverside Park, Ashford were performing strongly going into the coronavirus crisis. That is down to their great locations in areas already undergoing transformation - giving our target market the lifestyle they seek without the London price-tag.
“We expect that to continue but are not being complacent. We build homes that reflect expectations of contemporary living and will learn from the lessons of this outbreak. That includes considering how design can be adapted to create living spaces wired into remote working or inclusion of hyper-optic broadband, as standard.
“It’s also about supporting those local authorities in delivering the homes their communities need and we continue to talk with partners about how we can deliver on that once the market begins to return to normal.”