The property market in general was very glad to say goodbye to 2009 and hopeful about what 2010 would bring for its participants. The last eighteen months have been disastrous for the sector and the pain continues. While some are predicting that we are at the bottom of the cycle, that capital values are increasing and the worst is behind us, others suggest that these values are being falsely inflated, are unsustainable and point to a ticking bomb which will cause great damage in the future when a raft of large CMBS deals will need to be refinanced.
Many observers predicted that 2009 would see fire sale activities with the banks taking possession of properties and selling them to attempt to recoup their losses. Investors prepared to swoop, but as asset values had taken such a battering, this did not happen as banks were understandably reluctant to crystallise a loss and so held off from taking action. While it seems that the banks in general have been slow, (and perhaps now it would seem, wise!) to tackle the problems lurking in their loan books, there are now a number of banks engaging property companies to work with them on various deals and portfolios with the aim of protecting the asset and extracting value in the longer term.
New lending remains relatively low; despite the number of banks with an appetite to lend against commercial property increasing, there is a serious lack of product in the investment market.
The recruitment market is certainly showing signs of improvement with increased activity in most areas and while it is very easy to buy into the optimism, this must be tempered with reality. The increase in activity is encouraging when compared to the first half of 2009 but is in no way indicative of a healthy recruitment market.
Hiring continues to be selective and in contrast to the exuberance of 2006/2007, the number of candidates still vastly outweighs the number of roles available. As such it remains a buyer’s market for labour, with clients who are actively hiring getting greater value for their money, as candidates’ expectations in terms of package and role have become more realistic.
So where will we see hiring activity in 2010? Increased lending has not translated into recruitment of origination/ business development specialists and is unlikely to do so in any volume in the short term. Hiring across support functions including credit and risk management and administration has increased slightly but is still slow.
Recruitment in real numbers is only really occurring within the large commercial banks which are leading the way by ramping up their Real Estate restructuring teams. While the trend initially was to move existing staff internally, now that this transfer of talent process is complete, appetite to recruit externally is on the up.
Given the length of the last Bull Run in property, there are a limited number of candidates with vast experience in restructuring and workouts, but demand for strong property professionals with the technical skills and commercial acumen to realise value for the banks is on the increase.
There are reasons to be positive, but overall 2010 will be another challenging year for our sector!
Ciara Murphy
