Inflation under control and an uptick in GDP figures has left the county’s property and construction industry purring with confidence, according to a new survey.
Those attending the annual Property Outlook event in Faversham last week were quizzed over confidence levels \- with 86% predicting growth over the coming year - despite continuing economic uncertainty and a potential change in government.
Industry leaders gathered for the event co-hosted by law firm Brachers Caxtons Property Consultants and accountancy firm Crowe.
When surveyed, 86% of attendees predicted year-on-year growth in their business’ turnover and profits over the coming year - up 12% compared to last year’s responses.
However, inflationary pressures such as material costs and wages and issues around the recruitment and retention of staff, remain the most reported obstacles to growth.
Inflation dropped back to 2.3% in April - just shy of the Bank of England’s 2% target. It had hit a 40-year high in October 2022 of 11.1%.
GDP, meanwhile, rose by a modest 0.6% - lifting the UK out of its shallow technical recession.
Ash Jilani, commercial property partner at Brachers, said: “Kent’s property sector is known for its resilience, but it’s had to withstand a raft of economic shocks over the last few years, from the pandemic to geopolitical unrest.
“The sector has undoubtedly felt the pinch due to rising overheads, with 60% of attendees reporting that people-related cost increases are having the greatest impact on their business, while 30% suggest that material costs are taking a toll.
“However, now that energy and fuel costs have come down, their impact is naturally lessening, with only 7% of respondents reporting such costs as having the greatest impact. One would hope that as the benefit of dwindling inflation begins to trickle through the economy, the financial pressures on Kent’s property businesses will be further alleviated.”
The survey also found balancing growth with sustainability remained a challenge.
Explains Simon Crookston, corporate tax partner at Crowe UK: “While being net zero is not yet a strategic objective for most businesses in the property and construction sector over the next two years, almost half said they were committed to significantly reducing their emissions over the next two years.”
Mark Coxon, director at Caxtons, added: “The Investment Property Forum (IPF) and others are predicting an improvement in UK property performance in 2024, as falling interest rates support subdued rental growth and a stabilisation of capital values for first class assets, ahead of a more sustained recovery in 2025.
“Increasing rents in some sectors and the number of projects underway particularly in the industrial and distribution sector, also show that confidence in the sector is increasing.
“When asked what one thing government could do to significantly help the property and construction industry, 35% said planning reform - the top result by a good margin.
“We know developers and investors find planning frustrating, particularly in Kent where nutrient neutrality rules in Ashford and east Kent continue to prevent construction of a large number of much-needed homes. Although constructive dialogue is underway, there is still no solution in sight.”
Speakers at the event, at the Shepherd Neame brewery, included Kieran Dent and Patrick Campbell from the Bank of England.
