Material disruption: a post-pandemic supply chain

The real estate market is constantly changing, with buyer behaviours heavily influenced by economic and environmental factors impacting the scope for real estate investment and development.

Although we are emerging from the coronavirus crisis and entering an exciting time for asset development across Europe, supply chain issues remain. The availability of resources — from labour to materials — has been scarce, and project costs continue to rise.

As such, it is crucial for real estate developers to understand the issues facing contractors and project managers to mitigate the impact of these disruptions effectively.

Risks and challenges for the contractor market

The COVID-19 pandemic continues to have significant impacts on progression within all industries, and real estate is no exception.

Many sectors have faced labour shortages due to the ‘Great Resignation’, which saw many employees voluntarily resign in the wake of the pandemic. These shortages, compounded by the skyrocketing price of transport and materials, have led to disruption and delays for property developers and contractors.

Many construction employees were forced to take time off work after contracting COVID-19 or due to more stringent sickness leave policies during the pandemic. As a result, an alarming 85,376 contractors in the UK were deemed to be under significant financial distress last year, according to data gathered by IBISWorld for its 2021 Market Research Report on Commercial Building Construction in the UK.

Decreased workforce availability has been exacerbated by the lack of skilled workers in the contracting sector, leading to greater pressure on available workers. Furthermore, an international shortage of HGV drivers in the post-Brexit, post-pandemic world is creating further shipping delays and bottlenecks — preventing deliveries and delaying projects.

The developing conflict in Ukraine and economic sanctions against Russia have led to further complications, including high fuel and energy prices and limited availability of essential materials, leading to economic stresses within projects.

Additionally, contractors are dealing with an insufficient stock of roofing materials such as wood and steel. The sharp rise in the need for resources has caused price hikes across various building materials. For example, timber and joinery materials have seen a price index increase from 190.5 to 207.4 between January and April 2022 alone, increasing project costs overall.

How Rynda is working with market trends

Despite global supply chain challenges, the long-term still looks bright for development within several sectors of the real estate sector.

Many opportunities for exciting new investments have arisen, especially regarding sustainability. For example, recently updated environmental provisions established in the Environment Act 2021 and Net Zero targets have improved energy efficiency standards within buildings. Adhering to these standards calls for building upgrades and new facilities that can offer greater sustainability and environmental, social and corporate governance (ESG) credentials.

Rynda works with investors and real estate developers with the experience and infrastructure to continue delivering their products and services and is eager to shift its focus in line with changing market trends to seek opportunities to meet the changing demands of society.

For instance, Rynda Healthcare’s latest acquisitions in the care home real estate market support the growing need for modern facilities following unprecedented pressures on retirement housing and care homes.

Rynda Property is a real estate investment and asset management house seeking real estate opportunities across the UK and mainland Europe. To find out more about our services, contact us via our online form or call +44 (0) 20 3709 9875.