EDITOR’S COMMENT The sun may not be shining here in the UK and those glorious early days of summer may feel like a distant memory, but the world’s biggest real estate advisers are seemingly starting to feel the warmth of recovery and looking on the brighter side of life.
Now, the chatter of green shoots and a rebounding 2024 could be that wonderful agent trait that we’ve all come to love of talking up the market.
And with those big agencies all based in the US and Fitch this week downgrading the country from AAA to “just” AA+, it is hard not to think the sector may well be clutching at straws that everything really will be alright.
But sometimes we need that hope. And we need people to voice it. Even if it is not quite true yet.
And to give them credit, leaders at CBRE, Newmark and Cushman & Wakefield, among others, aren’t getting too carried away with the “it’s all going to be okay” rhetoric. There is a strong sense of realism.
At Cushman, which posted a net income loss of $71m in the first half of 2023, down from a profit of $143m in 2022, it knows it needs to continue to cut costs if it is to right-size the business.
The firm has already made $49m of cost savings in the year-to-date and has this week increased its 2023 target from $90m to $130m. New boss Michelle MacKay promises to leave “no stone unturned” in making sure the business flourishes.
At Newmark, chief executive Barry Gosin knows there is a whole lot of pain coming in the debt world, with record levels of maturities expected over the next few years. But one person’s pain is another’s profit. And he’s readying the business to seize on that opportunity.
And then there is the big green giant. CBRE’s Bob Sulentic this week told the market that things would get worse before they get better, updating the firm’s 2023 outlook from low to mid double-digit declines to pretty solid double-digit declines – earnings per share to dip 20% to 25%, advisory to dip by 20%, real estate investment down 35% to 40%. There is still some pain to come.
But all are sensing a change in sentiment. Gosin reckons we are on the “cusp of a new market”, Sulentic sees signs that will “eventually lead” to improved business and MacKay is ready and waiting for the “thawing of capital markets” and the dam to break.
Perhaps this is the kind of talk we need to be hearing from all our leaders. Yes, interest rates are going to rise further, yes we’re going to have to struggle a bit longer, but nothing ever stays the same forever.
What goes up always comes back down and what comes down always goes back up. It is a question of when, not if.
Even Lord Deben, who many of you will remember as former environment minister and EG columnist John Gummer, wants to see more realistic fighting talk from our leaders. From his own party, in fact.
He is the subject of this week’s EG Interview and tells us how he wants government to get realistic about climate change and to push forward with plans, not unravel them. Even if that means making life a bit harder in the short term.
“We were the first people to do anything about this,” Deben tells EG. “We were the first country to put net zero as a statutory requirement. We have done those things. What we haven’t done, what we are not doing, is the delivery.
“It’s all very well saying at the moment we’ve had too much net zero, but when the storms strike, when the heat is intolerable, when the immigration becomes impossible to stop because people are moving in vast quantities – and need to because there is nowhere at home for them to be – when that happens, the government and the opposition will be blamed.”
It is a fair point and a lesson for us all. We’ve all had enough of the current economic climate, we’ve all had enough of deals slowing and getting harder to get across the line, but this is our world right now and we have to work on those challenges to ensure that when those green shoots do start to show, we’re all able to capitalise.
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
