The data in the Emerging Trends in Real Estate Europe 2022 report reveals the issues most concerning the industry are construction costs and resource availability (88%), availability of suitable land and assets (66%), sustainability and decarbonisation requirements (61%). Supply chain delays and worker shortages are also likely to exacerbate these issues in the coming year.

However, the 19th annual survey of its kind has seen a significant leap in confidence going into next year among the 844 property professionals who took part.

The report records the highest levels of business confidence since 2014, reflecting a broad sense of relief and short-term optimism that the industry has remained resilient during the pandemic and that real estate remains a favoured asset class. 

PwC UK and EMEA real estate leader Angus Johnston says: “A short-term lift in confidence hides significant medium term concerns. There is a shortage of construction materials due to global supply chain issues and those available are set to rise in price even further. The surge in energy prices is likely to impact the cost of heavy duty construction materials like ceramic products, glass, steel and bricks and the rise is set to continue throughout 2022. While the UK is not unique in its shortages, Brexit is likely to have increased the issue in the haulage of these materials. With all eyes on the sector, especially post COP26, it has a real opportunity to make significant change but must work hard to ensure it’s long-lasting.”

Most concerning factors for real estate businesses are reflected both short term and over the next five years. However, survey participants also believe re-development is the most attractive way to acquire prime assets (76%). This increase in demand for (re)development without sufficient supply and/or affordable costs is likely to cause challenges. From those who had already repurposed assets in the last year, 70% had changed from office to residential.