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Centuries are a bit like late-blooming teenagers; they don’t really develop their full character until their mid-twenties. The electric, modern age of the 20th century didn’t dominate the zeitgeist until the “roaring twenties”, while the first 14 years had seemed more like an Edwardian continuation of the Victorian age.
When historians look back on the 21st century, I think the dividing line with the previous era will be marked by the 2020 pandemic. In the UK, this was closely followed by the end of the second Elizabethan age and the arrival of Charles III and Chat GPT. But what will the second Caroline era actually be like and feel like? The very first infant yowls of the 21st century are difficult to interpret this early on, but clearly involve developments in technology that we can barely comprehend right now. Meanwhile, environmental disaster and accompanying changes in the social order could make Paris in 1789 look positively stable by comparison.
It is now more than four years since Boris Johnson told us all to stay in our homes in an unprecedented move to curb the effects of the COVID pandemic. The consequences have been era-changing: economically, socially and technologically. Government spending on COVID alone was £372 billion in addition to all other public spending, totalling £840 billion in 2019.
The ongoing public inquiry is due to make its first findings known in the next few months, but I thought now might be a good time to take a look at the “post-pandemic” built environment, and how the cooler thinking after the event differs – and where it’s similar – to what I wrote in June 2020 in the heat of the moment.
When, in the turmoil and extreme uncertainty of May 2020, the esteemed and enlightened editor of Property Chronicle requested some predictions for exactly one year on, it seemed the perfect opportunity to put some of my blue sky thinking to the test. How did I do?
While I clearly followed some past-based red herrings into dead ends, I think I picked up on some themes that are now widely accepted as shaping the real estate world; and may do for decades to come. Also, there are some further themes that haven’t yet permeated the psyche of the property world, but need to.
So, starting with what I got wrong: I underestimated the capabilities of science and technology to rapidly provide a vaccine, and thus an end to lockdown and physical separation of people in buildings and on public transport. This, in itself is a characteristic of the 21st century; machine-learning and other modern factors give us the capability to make technological advancements quickly, creating an accelerated pace of change in many areas of life, including medicine. We underestimate the capability and speed with which new technology can help solve problems, as well as create them.
My most accurate prediction was: “I’m glad I don’t have to be in the office often”. The great stay-at-home social experiment of lockdown meant that, for the 46% of the workforce who are able to, the majority still work at home for at least some of the week.
Surveys differ, but the norm seems to be two or three days per week. This means that there is still demand for office space, but with a much higher emphasis on the quality of that space and the capability of it, and the place it is in, to attract talented workers. Asset management has become much less about trading a uniform commodity and much more hands-on and about creating value. It is the “on-the-ground” management team rather than the stock pickers who increasingly determine investment performance.
The qualitative shift in demand for both commercial and residential accommodation has continued to impact housing markets. Economic recession and house price falls came later than I expected after a mini-boom in certain types of housing for which there was a new-found demand. House price averages continue to cover up a polarisation between the liveable homes and neighbourhoods we discovered in lockdown and the, often newly-created, homes and places which lack the amenities necessary to attract buyers.
It is high inflation that has done the job of stripping out value in these buildings over recent years. There may be further nominal price falls to come, particularly for leasehold flats with increasingly high service charges. Meanwhile, homes in good neighbourhoods will see growth as purchasing power slowly increases.
Little did I realise in May 2020 that, when contemplating the coming year, I wasn’t just looking at the impact of the pandemic for the next 12 months. Rather, I was also marking the start of a whole new era with huge implications for how we perceive and characterise the life of the nation in the coming century and the world of real estate in particular.
In this light, the concluding paragraph to my May 2020 article might be instructive:
“When this is all over, I will find – if any survive – the best independent coffee shop I can and buy myself a proper barista-made flat white. I will savour it at a crowded table, in close proximity to complete strangers next to a plate-glass window where I can people-watch the crowds jostling by on a busy London street.”
I say instructive because it reminds us that we are still human beings; social animals who also need to eat and drink. Any real estate which provides this will do well in the 21st century. Agricultural land, new urban spaces for food production, places to eat, drink and make merry will have value—even if we are immersed in virtual reality, augmented reality, or some other artificial reality for the rest of the time; we still need space to live and food to survive.
Re-examining my 2020-based predictions made me wonder how good we are at predicting the future in the midst of turmoil, change and real shifts in the status quo? This is especially important as few of us can believe we do not face more of this in decades to come.
I think it all depends how curious and imaginative we have been in previous decades, before the crisis. Predictive analysis which relies entirely on backward-looking data and established, empirical relationships will be much less adept at identifying turning points and paradigm shifts than more explorative, interdisciplinary approaches.
A highly-focused, one-subject approach and a search for a single “silver-bullet” solution to the wicked problems of the 21st century has clearly not worked; if we learn anything from the pandemic, perhaps it should be that we need expand our interdisciplinary thinking and adapt our institutions, at pace, to embrace a world of “everything, everywhere, all at once”.
