It might seem strange to suggest that November saw a return to normality, but in many ways that is how it felt to me, albeit a very depressing return to normality.
Most of the economic news over the last months has just been plain awful and there is much more to come, particularly from the property market; but most of it has been a confirmation of what we were expecting or fearing.
For those of us working in property, and particularly in the quoted property sector, it's now well over 15 months since this current crisis started and I thought that I would use this space to take stock of where I think we are.
In a previous life, I worked in change management and I always found a model called 'The Change House' particularly helpful in working out what was going on in the midst of the chaos that my projects created.
For those who are interested, this is also the secret recipe behind Gordon Ramsay's Kitchen Nightmare miracles and if it works for Gordon then, in his language, it flaming well must be OK for the rest of us.
The Change House describes the four stages that we have to move through for successful change to occur.
- Stage One - Denial: everything's OK and most of us feel there's no need to change. Well we've certainly been in denial for the last couple of years about the real source of our prosperity (debt) and the amount of risk that we're carrying (trying to match short-term liabilities with long-term assets).
- Stage Two - Confusion/Anger: our world collapses and we've no idea what's happening so we look for someone to blame; sound familiar?
- Stage Three - Vision: a new way of seeing things emerges and plans are created.
- Stage Four - Action: we all work together to bring about the changes (or depart).
These things don't happen by accident; doom-mongers, visionaries, leaders and managers are needed to move us from one stage to the other and instil belief in the future.
And it always helps to have a few tricks up your sleeve to shock us into moving from one stage to another. Think about Gordon Ramsay taking his hapless kitchen brigade out of their comfort zone into some apparently irrelevant activity to learn to think in a new way.
I'm not saying we should see Gordon Brown or even Barack Obama as three-star Michelin chefs (lets get things in proportion here) but I do think we're just starting to move from 'confusion' into 'vision' and there seems to be emerging some sort of consensus about the sort of things that need to be done to get us out of this mess. All told, I'm actually quite positive about the longer term prospects for 2009.
So what does this mean for property investors? Don't try to call the bottom of the market because you'll just get it wrong, but look for long-term value and income whilst managing your cash to take advantage of the short-term opportunities and downturns. If you can afford it and have cash in reserve then there are going to be lots of opportunities to buy property but the problem is to how to recognise a fair price.
The lack of transactions means that nobody really knows the market price of commercial property, to the extent that RICS has just issued guidance to valuers about how to behave at present. Interestingly this says that in each local market and for each property asset type the valuer must decide whether an element of market instability - an example of valuation uncertainty - exists.
Well there's certainly lots of market uncertainty around at the minute and, looked at logically, this must undermine the view that direct property is less volatile (i.e. less risky) than property shares. If you don't know the value of your assets, then the actual price when it emerges is going to be different to the estimated value.
Finally I know I said I wouldn't talk about pubs 'til Christmas, but my wife forced me to have a couple of glasses of wine at the weekend so I feel I can break this pledge as well.
Anyway its all Darling's fault for mentioning them in the PBR when he tightened up the REIT rules and finally ruled out most of the PubCos from converting. I just wish he'd done something more useful and changed the rules to make a Residential REIT possible.
I've banged on about the issues too often to repeat them again but it beggars belief that this obvious boost for the sector (and government credibility) has been overlooked again. But as I started, so I'll finish and be hopeful that this is something we'll see in 2009.
Dave Butler is head of external affairs at Reita
The views expressed in this article are those of its author and do not necessarily represent those of the company he represents, IFAonline or any other Incisive Media affiliated organisation.IFAonline
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress