With all the uncertainty around the lockdown and its impact on the economy, we thought it would be useful to give you The House Crowd’s opinion on the impact over the short, medium and long-term on the property investment market.


One of the biggest changes to our daily lives since the COVID-19 outbreak has been how we work.

The Office of National Statistics published a summary which found that less than 30% percent of the working population had experienced working from home prior to the pandemic.

Since lockdown restrictions, 60% of the UK’s adult population are now working from home. This is a huge shift in working practices.

Many would agree that the transition has been surprisingly easy and could spell the beginning of a shift in how businesses operate.

Barclays’ chief executive Jes Staley commented that “the notion of putting 7,000 people in a building could be a thing of the past”.

While Sir Martin Sorrell, founder of the world’s largest advertising and PR group WPP has found working from home “energising” and has already started ending leases at some of his sites.

Some experts have predicted that demand for office space could fall as much as 20%. These changes will have massive implications for commercial landlords.

“The traditional approach of ‘build it and they will come’ – I don’t think that will fly anymore” said Knight Frank’s Global Head of Occupier Research, Lee Elliot.

Landsec – The UKs largest commercial property developer and investor has reported that just 65% of their rent due on 25 March was paid by 31 March compared with 96% for the equivalent period last year.

With offices typically making up between 8% and 15% of a company’s budget, it is logical to assume that many employers will now be looking at ways of reducing these overheads at a time when cutting costs will be of paramount importance to the survival of UK businesses.

Based on the current state of the commercial property environment, it is suggested that we will see many changes in the coming months and years ahead. Arguably the key driver for change in this sector is cost. Businesses are now enormously sensitive to cost and any opportunities that arise to reduce it, will likely be taken.

The biggest unknown of sending employees home to work remotely was whether businesses could still operate efficiently. This has now been proven correct through the use of advanced video conference technology and cloud based storage systems.

But with many companies tied into long-term leases, we believe this movement away from commercial offices may not be immediate, but rather a gradual transition.

Perhaps the sector which has seen most change is retail. According to Barclaycard data, which records nearly half of all UK debit and credit transactions, consumer spending fell by 36.6% in April compared to the same month in 2019. It has marked the biggest drop since records began in 1995.

Conversely, online sales excluding grocery items grew by a massive 57% which is impressive given the average annual growth rate is 8.5%.













“Brits have turned their focus online and looked to takeaways, digital subscriptions and DIY to keep entertained,” said Esme Harwood, director at Barclaycard.

Supermarkets also saw a surge in demand in March with in-store sales jumping by 20.5% compared to the same month last year. According to research conducted by Kantar, total sales for groceries totaled £10.8bn.

The high street however has taken the biggest hit since lockdown. Melanie Leech, chief executive of the British Property Federation predicts there will be a 50% reduction in shops on a typical high street,

“inevitably there will be casualties,” she said.

RICS have noted that there could be potential changes on the high street with many retail premises now sitting vacant. Occupiers are now desperately seeking ways to repurpose their spaces to preserve cash flows. By using permitted development rights, planning consultants may find themselves busy facilitating temporary change of uses for these retail units.


Lockdown has meant that estate agents, surveyors, and potential buyers have all had their respective activities frozen.

Construction output throughout the UK has also been impacted significantly. Many home builders have ceased activity altogether or in some cases gone into administration causing major postponement of house building within the residential sector.

The Financial Times have predicted transactions to fall by as much as 60% for the three months between April and June, while RICS have forecasted sales to drop to the lowest level seen in 20 years for the same period.

Zoopla’s Research and Insight Director, Richard Donnell also anticipates that the housing market will be at its lowest point in May and June with an 80% drop in transactions.

It is undeniable that in the short term, the residential sector has been impacted. But when we look at the situation in more depth in terms of supply and demand and valuations, it is likely that this sector could be the most buoyant as government lockdown restrictions are lifted or eased.

We must first look at the state of the housing market prior to Coronavirus to get a true sense of the health and stability of the sector before all activity had been suspended.

Recent figures from Halifax showed that there was an increase of 3% in property prices in March 2020 versus the same period last year, indicating a very clear upward trend.

“These factors all underlined a positive trajectory and increased momentum in the early part of the year, with confidence rising as political and economic uncertainty eased” said Halifax Managing Director, Russell Galley.

The economy was also in a strong position. Between December 2019 and February 2020, as the Office of National Statistics reported record levels of employment at 76%.

February 2020 also marked the beginning of an upward shift in UK GDP after a period of flatlined movement that was inevitably caused by Brexit uncertainty.

We must conclude from the above that unlike the 2008 crash there was nothing inherently wrong with the economy or housing market heading into the postponement of activity brought about by COVID-19.

Parallels must not be drawn with 2008 where a flawed system ultimately sent the economy into a deep recession. This recession has not been caused by sub-prime mortgages or a failed economic system.

The housing market was in a healthy and stable condition pre Covid-19.

History tells us that we can expect house prices to bounce back quickly following a recession. Richard Donnell of Zoopla expects “demand to pick up once the government’s restrictions are eased”.

The chart below illustrates annual house price growth since 1970 with periods of economic recession highlighted in red. Based on this research alone, it could be argued that house prices are likely to return to levels we saw before the Coronavirus outbreak within a relatively short space of time.

















Like many others, Savills also predicted a fall in the short term, envisioning a drop between 5% and 10% in house prices. However, the estate agent also highlights that government measures will cushion this short term fall and reduce any chance of forced selling.

By introducing mortgage holidays and the governments multi-billion pound furlough scheme to support employees and businesses, homeowners have been protected and the potential of forced selling has been greatly reduced.

This suggests that the housing market will stabilise fairly quickly post pandemic, ensuring a relatively quick bounce back.

On the 12th May, The UK Housing Secretary announced that viewings and house moves can now continue, allowing buyers and renters to resume their search and house moves to progress.

Since easing these restrictions, we are now beginning to see the release of the demand that has been held back since the start of this hideous pandemic. On the day that Robert Jenrick announced that the government would lift restrictions, Rightmove saw a 45% increase in website visitors compared to the day before, while enquiries grew by a staggering 70%.

Perhaps the most significant reference point however, for the prosperity of the residential sector once restrictions are eased, is the fundamental principle of supply and demand.

Last year the government set out a target of building 330,000 homes a year by the middle of the next decade.

The chart below shows that in the year ending 2019 we only managed to build 180,000 homes. This is a far cry from the proposed target. This inability to meet demand had been aggravated by Brexit uncertainty and has now been amplified by Coronavirus.












The bottom line is that there is huge pent-up demand and a monumental need now for new affordable homes to be built.

Purpose Built Student Accommodation (PBSA)

With the United Kingdom home to 18 of the world’s top 100 universities and an increase of half a million full time students expected by 2030, fueled partly by a 35% increase in foreign students, the prospects were bright in November 2019.

A study from Knight Frank showed that much of the current investment in student accommodation came from North America and latterly Asia as they saw the UK as a safe haven for investment.

Many international students have now left the UK and returned to their home nations and have continued their study programs online while worries grow of future job prospects.

Property Investors Today reported that there is also growing concern that some less well funded Universities may not make it out of the current crisis.

Many PBSA providers are now being forced to release students early from their contracts months ahead of the academic year causing vacancy rates to soar and rental income to plummet.

Due to the huge number of vacated rooms and flats, some PBSA will need to be repurposed into rented accommodation to fill the void, particularly now that the 485,000+ non-UK higher education enrollment is now in jeopardy.

So, it is clear that the short term prospects are not encouraging as PBSA operators are concerned about soaring vacancies and plunging rental yields. The longer term prospects however are more encouraging for this sector due to the longer term resilience of UK higher education and its standing within the global HE sector.

Universities among the prestigious UK Russell Group will likely remain attractive despite the current short-term blip in international movement. And these universities, which are currently contributing much needed research to the battle against COVID-19, will arguably fill the void of international places with UK places if required to smooth the transitional period.

Furthermore, Savills have forecasted an increase from 5 million to 8 million of international students globally by 2025, and due to the UK’s foothold as one of the most attractive places for PBSA investment and the lack of supply already, we predict this sector to move out of the pandemic with relative ease.

Leisure / Pubs / Restaurants

It was a tough few years even prior to COVID-19 for the casual dining sector. Jamie’s Italian chain went into administration last year and closed 22 of its 25 UK restaurants. Other big chains such as Carluccios, Gourmet Burger Kitchen and Byron Burger also saw a high number of closures.

The number of chain restaurants grew by a quarter in 5 years. The industry had become highly competitive after experiencing an influx of private equity, forcing an over-supply within the market.

But with rising rents, taxes, food costs, payroll bills and increased competition, many could not survive and were forced to shut up shop.

With the arrival of coronavirus forcing all restaurants to close, it may prove too much for many to return to a profitable status after the restrictions are lifted. Carluccios has since filed for administration, condemning “challenging trading conditions” aggravated by COVID-19.

The government however has recently announced that some restaurants could reopen as soon as early July should the necessary distancing controls be implemented.

But even if they do open their doors and manage to reconfigure their spaces to accommodate safe social distancing measures for sit-down diners, it is hard to imagine that the capacities and covers required to turn a profit will be achieved.

Furthermore, this is assuming that the public have quickly become less wary of public gatherings, packed seating areas and crowded bars. Again, this is very optimistic.

However, it’s worth noting that the industry had seen the beginning of a resurgence in the first quarter of 2020 with improved revenues before the virus, which is encouraging, and could provide a firm foothold to bounce back from towards the end of the year. That is assuming the UK public have the appetite to return to their once favourite haunts.












There are question marks over the survival of many pubs who have all had their doors locked since the government announced lockdown measures.

In 2018 CAMRA claimed that pubs had been closing at an alarming rate of 18 every week. The Office of National Statistics also reported that the number of small pubs operating had halved between the years 2011 and 2018. The pub sector was clearly experiencing a downward trajectory before the global pandemic had arrived.

Just like the casual dining sector, the public may still be wary of social gatherings and many pubs and bars may also struggle to maintain safe social distancing measures during the transitional period.

On the other hand, there will likely be a big surge of business for most pubs once lockdown restrictions are ended. This influx could provide these operators with a solid cushion of revenue to enable them to bounce back from.

Savills reported that the UK fitness industry had an estimated value of £5.1 billion in 2019, an increase of 4.2% from the previous year. The health and fitness sector have seen huge growth in the past decade. And during the coronavirus outbreak, health and wellbeing is still a top priority for much of the population.

Despite government measures forcing all gyms to close, many have managed to maintain their engagement with existing customers and reach new ones through the application of online workout programs and classes.

Nuffield Health, David Lloyd and PureGym have all launched numerous innovative services to their apps and online channels including, home workouts and on-demand video classes.

By maintaining engagement with their members and reaching new ones through these digital practices, they may have been able to absorb some of the impact from COVID-19. It could also be argued that due to lockdown restrictions there is much pent-up demand for getting back into the gym with many household’s stationary in self-isolation. This could possibly be a similar situation to the post-Christmas gym influx we see every New Year in January.

Warehousing & Logistics

We have all been driven online whether we like it or not. According to the Office of National Statistics, internet sales made up a total of 21.9% of total retail sales in March 2020 compared to just 7.9% for the same period in 2010.

KnightFrank have made references to the overwhelming demand for online grocery supermarkets during self-isolation measures. These online supermarket platforms have experienced exponential demand since lockdown which has put extensive strain on their existing supply chains. UK warehouses are also quickly reaching capacity.

Peter Ward, CEO at the UK Warehouse Association has noted that orders placed and dispatched before the lockdown of non-essential goods have been continuing to arrive at UK ports and have been causing problems for warehouses.

“Warehouses in this situation are quickly reaching capacity, and if they cannot accept any more goods, the consequences potentially could be catastrophic – blockages upstream in the supply chain, fully-loaded containers and trucks unable to discharge, ports unable to cope with the backlog, ultimately prevention of the flow of essential supplies such as food and pharmaceuticals,” he said.

Amazon’s business model is perhaps the best example of how a business can remain operational and thrive during these testing times. They have seen a surge in demand while households across the UK have been in virtual lockdown.

The Financial Times reported that the ecommerce giant had reached record sales of $75.5 billion in the first quarter of 2020. It is undeniable that their heavy reliance on warehousing and direct selling without the need for high street presence has worked for them during this period.

Many manufacturers however have seen demand dry up and many occupiers are receiving rent holidays. New developments meanwhile are likely to slow down with developers and lenders more cautious.

Supply chains which have relied heavily on international transportation of goods and foreign manufacturing have been stalled considerably by the virus. Reduced workforce, border restraints and spikes in demand have all put significant strain on supply chains.

We may see supply chains bolster their resilience in the future by reducing their reliance on foreign production and onshoring their supply chains. This may help to rekindle interest in a more localised supply chain which could reinvigorate the market.


There is no question that the coronavirus will have a long lasting impact on the development of most sectors. Commercial office spaces could diminish as businesses discover that working remotely can save them a substantial chunk of their total annual budget.

The landscape for casual dining and pub operators looks bleak and we could see this sector shrinking considerably further in the aftermath of coronavirus. However due to the upward trajectory in revenues prior to the virus, there is a strong suggestion that many could bounce back once all restrictions are removed.

Gyms have shown that by utilising technology they can maintain engagement and their services during isolation. The highly popular health and wellbeing sector may well return to previous levels post-lockdown and receive an initial surge of demand once restrictions are lifted.

As we’ve seen over the past decade, the high street has been on a downward slide as companies like Amazon take charge of the ever changing retail revolution. The pandemic may prove too much for many high street brands who were already holding on by a thread prior to the crisis.

In one way or another, the majority of these sectors are currently at the mercy of a rapid shift in demand.

The residential sector, on the other hand, is not.

We must reiterate that parallels with the 2008 property crash cannot and should not be made. The only similarities that both events share is in the hysteria surrounding them both.

Demand for housing outstripped supply before COVID-19 and now after weeks and months of frozen activity, the demand to build is even greater.

We cannot stress this point enough, and it is for this reason that we see the residential sector as the strongest and most predictable of all as we begin our journey out of lockdown.

Our research with agents who operate throughout the Country confirm these thoughts. Agents who had deals under offer prior to the COVID-19 lockdown have seen residential deals proceeding typically at the full value agreed prior, and for deals at £750,000 and above, with discounts of up to 5%-6%, typically because the seller had committed to buy elsewhere and just needed to give a small incentive to get a sale through. Land sales and development sites have not been particularly affected, with builders and developers taking the view that longer term, demand still outstrips supply. Enquiry levels and offers received for sites in the seven days since agents have been undertaking viewings were all considered at pre lockdown levels. Perhaps the biggest surprise is that during lockdown, residential property auctions sales increased and despite no viewings taking place, specialist auctioneers who have always been ‘online’ have seen a steep increase in sales with prices exceeding expectations.