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Careers & workplace advice from Hays

If we take the real estate sector in the UK and consider investment strategies, what is patently obvious is that the growth rate of residential valuations has begun to fall, especially in the last 18 months or so. Previous record highs simply could not be sustained.

What are the implication for careers in the sector?

It’s certainly not all negative. The speculator looking to maximise investment strategies will continue to look for residential real estate opportunities in potentially lucrative prime property markets, such as London.

Lending at a stretch

Investors from the Asia and the Middle East have been flooding in

Despite an increasing demand for capital to finance these development projects, the banks no longer have the appetite of yesteryear to readily offer lending facilities for certain higher risk property transactions. Having had their fingers severely burned, these venerable institutions aren’t keen to expose themselves to yet more catastrophic scenarios. Risk aversion has become the order of the day. The vast swathe of financial regulatory measures (we’re now at the third Basel Accord) imposed on the banking sector has also meant that the once freely flowing lending tap has now been reduced to a mere trickle.

However, it’s not all doom and gloom for our property developer friends. The banks’ reluctance to provide the level of finance needed has opened the door to a burgeoning number of boutique funding providers. These firms are prepared to take a risk and are willing to provide stretch senior loans. As the name implies, these financial instruments are a way to increase the lending percentage of the project’s gross development value (GDV), thereby boosting the housebuilder’s cashflow and ability to complete concurrent projects.

Gold rush for student digs

The other area of significant growth for investors is the purpose-built student accommodation (PBSA) market. Major refurbishment projects are taking place in London and across the UK in all the big university towns, with Manchester, Liverpool, Birmingham and Brighton leading the way.

Investors from Asia and the Middle East have been flooding in to get a piece of the action in what is fast becoming one of the UK’s best performing asset classes. In 2016, the Financial Times reported that Mapletree, the real estate arm of Singapore-based investment company, Temasek, acquired a UK portfolio of student accommodation said to be worth £417 million.

According to property agents Savills, £4.2 billion was spent on student digs in the first half of 2015, 40% above the previous peak of 2012. With increasing numbers choosing to continue their studies away from their place of birth, the competition to provide affordable and premium quality housing is red hot.

While the UK remains a magnet for foreign students, the market has huge potential not just here but across Europe and beyond. An article in the Sydney Morning Herald revealed that the student housing market was worth around $20 billion to the Australian economy, making education the country’s third largest source of export revenue.

Demand for debt origination

Most organisations are themselves still in growth mode

What are the actual implications for recruitment in the sector? While there is an obvious demand for talent, most organisations are themselves still in growth mode and therefore the development, retention and training of staff will be paramount at this stage of the business cycle.

The market is however favourable to those individuals who can demonstrate a solid track record in property lending and employers are willing to offer improved salary and sales commission structures to attract top talent. Originators in senior debt finance and stretched senior debt finance are particularly sought after.

Although employers are having to contend with a limited, nascent supply of talent, we would, however, expect the labour market dynamics to change as departments and teams increase specialist headcount over time.

The big banks are rationalising and diversifying their risk positions, typically reducing their annual real estate investment exposure, but non-traditional lenders, including challenger banks, are stepping into the fray to provide that much-needed financial lifeline. Demand for people with real estate experience could be on the up.

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I hope you found the above information useful  – please see below for links to other financial markets blogs which may be of interest to you and your teams:

Congratulations – you’ve got the job, however the hiring process isn’t over yet. If you really want to make a great impression in your new role then consider the first day an extension of your interview. Present yourself as professional, personable and knowledgeable, and overcome any nerves by reminding yourself you’ve been given the job because the employer has confidence in you.

Whether you’re a graduate, manager or CEO, your first day on the job can have a huge bearing on how you are perceived by other staff from then on. No doubt you want to make the right impression quickly (some research concludes you only have a tenth of a second to make a good first impression!), and a new job success strategy will help you do just that.

Listen to the blog below:

Continue reading How to make a great impression on your first day →

In a time when finance functions find themselves under increasing pressure to provide “value” to the overall business in which they operate, more previously unchallenged finance basics are under question. Some of these are as a result of the fact that finance finds regulatory and “compliance” tasks increasing in volume and staff costs under scrutiny. 

Continue reading Are budgets worth the effort? →

It seems every week a new study is published claiming that within decades, humans will be replaced by machines in the workplace. But how much truth is there in these suggestions?

Leslie Willcocks is Professor of Technology, Work and Globalisation at the London School of Economics and Political Science. He points out that studies forecasting huge job culls tend to overlook the potential for new roles to be created. “Certainly our work suggests every person’s job is likely to be changed by at least 25 per cent over the next decade, as technology increasingly permeates task performance,” he says.

However, there will also be new opportunities. “Forward-casting studies we have done with corporations suggest that for every 20 jobs lost from the combined impact of technologies such as SMAC (social media, mobile, analytics and cloud), digital fabrication, Internet of Things, big data, knowledge automation and robotics, another 13 will be gained,” he says.

While we will have to wait to see which of these predictions come true, it is worth considering approaches that will get the best from both automation and a human touch.

Emotion can’t be emulated

Willcocks notes that technology cannot replace roles that require human emotion.  “Capabilities like empathy, creativity, intuition, judgement, tacit knowing, and the human need for social interaction and peer judgement are not at all easy to replicate in specific contexts,” he says.

“Humans have a facility to combine any or all of these in ways that machines are unlikely to master. In our own study of service automation, we found plenty of examples where these skills were vital, whether in healthcare, insurance, utilities, service providers or legal services. The challenge for organisations is to take the best elements of both, combining the processing power of technology with the softer skills and lateral thinking of humans.”

Creative capabilities must be considered

Professor Valérie Claude-Gaudillat, Director of the Institute for Innovation, Design and Entrepreneurship at Audencia Business School in France, says that machines can offer insight but it is down to humans to interpret the data.

“The ideal mix is one that combines the best of both worlds: efficiency and productivity for technology; creativity, problem solving, emotion, complexity management and close relationships with stakeholders for the workforce. “Technology cannot discover new drugs, find adapted answers to complex problems or be creative. The human touch is indispensable to creativity, to solve high-level problems and to manage the unpredictable.”

Interaction brings inspiration

Dr Tom Hoyland, is a lecturer in Organisational Behaviour and HR at Hull University Business School. He agrees that idea generation will remain a human job. Furthermore, in-person interaction can be key to generate fresh ideas. “Technology cannot replicate the chance meeting within the organisation where chit-chat unveils common problems or builds linkages,” he says. “Organisations like Google and Facebook are now creating spaces and environments for people who want to hang out and talk, and the key reason for that is to bring about that cross-fertilisation of ideas, and the important relationships that are built in the workplace itself.”

A balanced approach is best

Mark Sear, CTO, EMEA of cloud computing and data storage business EMC says a balanced solution can give the best results, using technology to improve efficiency while incorporating a human touch to reduce errors.

He gives the example of staff picking out products for mailing in warehouses. “Warehouses are normally laid out in aisles. A computer will give you a ‘pick route’ and this will move you down an aisle collecting products, then back, then up, then back, then up. The issue is people get really bored, and if they follow the same route again and again, it becomes more boring still and they make more mistakes. Deliberately changing routes and the layout of the warehouse in a way that encourages workers to stop and have a quick chat, just for one or two minutes, alleviates the boredom and massively improves their accuracy.”

If you enjoyed the above blog then you might also appreciate these other articles, which also originally appeared in the Hays Journal:

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