Lockdown will end so plan now for post-pandemic property markets

AND so, the start of a new year. Whereas property markets in 2020 collapsed from rude health into a world of intensive care and survival, firms can now be planning their rehabilitation and recovery. The key to that is the ongoing vaccination programme. But what is a realistic timescale for the return of more normal market conditions?

The government plan is to have 700,000 people vaccinated by the end of March, to include all those aged over 70, residents of nursing-homes, and front-line healthcare workers. This alone should see Covid-19 fatalities fall by 80pc. Daily new infections have been reducing from a high of 8,000 on the ninth of January, to approximately 2,000 now. “Exponential” works in both directions.

There is no prospect of government relaxing lockdown restrictions at the end of January. In order for businesses to plan their recovery, and for morale generally, it is important that this is the last major lockdown. Therefore, I suspect it will be late-February/March before we see a wary, gradual easing of restrictions. This might include the re-opening of construction sites, “click and collect” retailing, golf, tennis and swimming pools. We should see an easing of the restrictions around viewing properties, which will unlock many sectors.

April to June will see another 1.8m people vaccinated and this period should see the re-opening of “non-essential” retail, possibly cinemas, and a relaxation on the obligation to work at home.

July to September will see the remainder of the population vaccinated, and with a low number of new infections, this phase should see a re-opening of hotels and restaurants. Outdoor dining may be permitted to open sooner. I don’t see “wet pubs” re-opening until the last quarter.

All of this new activity is still going to involve social-distancing measures and facemasks, until herd-immunity is achieved. I stand by my forecast that when markets reliably re-open, most will be amazed at the speed at which life returns to near normal. Indeed, I predict a wave of euphoric consumption this summer, in retailing, cars, hospitality and travel and there will be a rise in property values.

There are big variables in all this, but most of those look very positive-particularly regarding the supply of vaccines. Experts describe the approval of the AstraZeneca vaccine, due this month, as a “game-changer.” The EU has signed contracts with six vaccine manufacturers, and is negotiating with two others, so the programme may well be accelerated. The downside variable is the transmissibility of the “UK variant,” which could slow reopening.

With the end in sight, Government must continue sector-specific business supports.

AstraZeneca vaccine is a game changer for reopening

With negative interest rates, it would be nonsensical to allow viable businesses to fail at this stage.

And there are opportunities in a changing market, for occupiers, investors and developers. Rents, prices and confidence have reduced, so there are good deals to be done. The best developers and investors have the vision to do now, what appears blindingly obvious in hindsight.

Take new infrastructure; everyone has access to the map showing the new motorway junctions. But few believe the plans until they’ve driven on the motorway. In the meantime, smart investors have bought all the best property, and make a fortune from the uplift in values.

Can you see shoppers packing towns next November, and restaurants and bars teeming with people before attending a concert? Start planning now.