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What to expect in 2022?

With another eventful year almost over, Business Leader spoke to some leading industry experts to see what they expect to happen in the next 12 months.

Investment landscape

Richard Taylor, CEO of Lumi, (AGM provider of all the FTSE100) shares his thoughts on the outlook for the investment space for 2022.

Shareholder enfranchisement

The year of 2021 could be called the rise of the retail shareholder. We’ve seen investment apps like Robinhood open up investing to a wider audience, and in 2022 and beyond companies will be facing a changing shareholder demographic.

The big challenge will be making sure everyone who owns shares is able to access the AGM. Some investment platforms are making it easier for shareholders to vote by proxy, but it can still be incredibly difficult to navigate this – with the vast majority of shareholders not realising that they can’t easily attend. We’ll see strides being made next year to make this easier, such as providing a single sign-on that gives access to meetings, but there is still significant work needed to simplify the chains of complexity that stand between the underlying owner and the holding company.

While it’s good corporate governance to allow more people to attend meetings, we’ll only see this become a reality if there’s a huge groundswell from retail shareholders – or a legal workaround.

Convergence of IR and governance teams 

We’ve been seeing IR and governance departments working more closely together across the last year as a result of digitalisation, and I expect this trend to continue growing.

In the past, company events such as AGMs, earnings calls and IR events would have operated completely separately but companies are now recognising how AGM technology can be used to make IR events accessible to a wider audience. Next year I expect to see even greater engagement with shareholders at different events across the year – which is something almost 20% of retail shareholders say they would value.

ESG as a key issue in 2022 AGMs

The rise of ESG is undeniably here to stay, as the movement is being driven hard by investors rather than the Government. To demonstrate this focus from investors – 77% plan to stop buying non-ESG funds completely by 2022.

This topic will no doubt be an issue on the table at upcoming AGMs and corporate secretaries need to be prepared. Q&A sessions have become such an important aspect of AGMs in recent years (partly driven by digitisation) that managing incoming questions, adding structure to the process and making sure the meeting serves its purpose is now critical. Hybrid meetings will be key to supporting this in 2022, as instead of putting board members on the spot on the day, shareholders are able to ask questions in advance, giving the board crucial time to prepare a considered response.

We may even see the growth of dedicated ‘think rooms’ which are commonplace in Germany. Shareholders submit questions ahead of the meeting either by in person or digitally, and executives prepare comprehensive answers that are then shared back. This gives the board time to consider a response and means shareholders get a meaningful answer.

Flexibility of format

It’s clear that the hybrid meeting format for companies will prevail as the standard for the industry. This is replacing physical meetings as the only choice, with hybrid offerings able to embrace different types of contact between shareholder and the company.

Shareholders, just like the rest of us, have virtual meeting fatigue and in some cases want to use the opportunity of an AGM to physically attend. Alongside this, the benefits of remote participation will remain, so the onus is on organisations to provide a flexible solution that suits everyone. The key to achieving this hybrid setup is to properly engage the attendees whether they are in-room or online. This can be done by maintaining the benefits of purely virtual events, including increased transparency, accessibility for all and slick virtual involvement for question and answer sessions, as well as continuing to invest and modernise the in-person experience.

Mental health, hybrid working and the war on talent

Through 2021, the impact of Covid-19 has continued to send ripples in affecting the way we work. Organisations have not only been tackling the return to the workplace but have seen a significant shift in talent with the Great Resignation. With the latest Omicron variant making a surge in cases, organisations will again have to prioritise employee wellbeing.

According to the ONS, one in six adults experienced a form of depression in summer 2021, compared with one in 10 before the pandemic. Recent research by Westfield Health found that 59% of respondents said that mental health is driving them to change jobs. Over half the workforce (51%) felt that they were less than a month away from burnout and 47% of all employees consider flexibility to be more important to them before the pandemic.

Below are some predictions from DeltaNet International on tackling the issues that will be important going forward in 2022 – the war on talent and flexibility, the next steps with hybrid working, mental health and wellbeing, DEI and sustainability.

War on talent and flexibility

Darren Hockley, Managing Director: “In 2022, we’ll continue to see a battle for talent. Covid-19 and Brexit have created a perfect storm with masses of skilled and non-skilled non-UK nationals leaving the UK. Organisations who still don’t recognise the need for rapid change to support remote and hybrid working will lead to significant skills gaps.

“Expect a war on talent. The need to value and develop your people has never been more crucial. One of the reasons for the Great Resignation was when employees were forced to return to the office when they were perfectly capable of doing their roles from home. These employees who prefer that flexibility will be the ones who will leave your teams. Not providing flexibility or allowing employees to enjoy more work-life balance is history. Organisations that put people first will win in the war of talent. Treating employees with the respect they deserve and empowering them to thrive in the environment that suits them best will be pivotal to securing and retaining the best talent.”

Hybrid working – the next steps

Darren Hockley, Managing Director: “Despite what the government wants, don’t expect to see a rush back to office spaces, especially with the new variant of Covid. Many organisations will continue to offer home and hybrid working policies moving forwards, and the war on talent will give individuals a greater say on this. Organisations need to play catchup with ensuring compliance for their remote/hybrid workers and that they still offer supportive and safe workplaces for their home workers. This compliance will cut across many areas, including display screen equipment (DSE), ergonomics, information security, data protection, collaboration, health and wellbeing.

“When the lockdowns first hit in 2020, organisations could be forgiven for taking time to adapt and adjust. But we are well beyond the honeymoon period now, so if these things are not 100% right, then expect to fall foul of legislation.”

Mental health and wellbeing

Darren Hockley, Managing Director: “2022 will be more challenging than 2021 for mental health and wellbeing. We often see a delayed response to stressful situations, e.g. PTSD, combined with further change and uncertainty, will see more people than ever suffer. Then the added impact of skills gaps, where fewer employees will need to do more, resulting in a very vulnerable position. Organisations need to do more than ever to help their employees through these difficult times through good effective management, building awareness for self-awareness and help, and providing support mechanisms. Investing in employee mental health and wellbeing will be crucial, not just for organisations and team management, but for talent attraction and retention.”

Diversity, equity and inclusion

Darren Hockley, Managing Director: “Attitudes to DEI is a problem often in the home or nurtured through social settings, which then leaks into all aspects of life. Tackling this as a workplace issue is very important, but alone will not achieve significant results. A joined-up approach across all spectrums of life and multiple generations will be required to make substantial results.

“Recent events indicate progress is going backwards rather than forwards. But, just maybe, it could also imply the progress being made. The voice for change is getting stronger. Which could suggest people now have more confidence to speak up because they believe more people are listening.

“Much focus remains on what you should and should not say. Terminology that is acceptable to use today might not be tomorrow because of subjective meaning. People get confused about which words can and cannot be used. And this distracts from tackling the underlying problems. It is not what words are said, but the intended meaning. We must positively influence how people think or feel, and to do this, we will often need to change deep-seated views that have been cemented at an early age and nurtured ever since. Changing viewpoints is a big challenge and not one that training alone will address.

“Organisations will need sophisticated tools and resources that go far beyond policy and training; these tools will support organisations to develop the appropriate values and culture by promoting a clear vision of an inclusive workplace that values and embraces diversity. Easy right? Far from it. But expect to see lots of innovation coming through in this area.”

Sustainability

Stacey Taylor, Learning Design Director: “The key trend for 2022 is going to be sustainability. As we all start to overcome the challenges posed by Brexit and Covid, it’s time to start turning our attention to the big issues we face as a society and how organisations have the opportunity to impact that. The COP26 and the UK’s expectations for larger companies to publish their net-zero plans are just the beginning of the legislative ‘’squeeze’ we can expect and embrace. Organisations are bound to face increasing scrutiny on the actions they take to demonstrate their commitment to sustainability, so offering training through eLearning is an easy win to that effect. Forward-thinking organisations will increasingly see this as a competitive differentiator as the surge of green activities continues.”

2022 property market predictions

National estate agent Jackson-Stops expects house prices to increase by 3% in 2022, with this figure rising to 5% in higher value country markets. This prediction is based on the assumption that interest rates rise marginally, and Stamp Duty Land Tax remains at the same rate.

The effects of the pandemic on the housing market will continue to be an underlying factor throughout 2022, with country homes set to be in high demand and short chains likely to occur across the regions that house hunters and renters alike flocked to in 2021.

Over half (58%) of Jackson-Stops’ branches predict chains will become shorter in 2022, due to a higher volume of cash buyers in circulation and an influx of purchasers returning to the sales market from rental. This will be particularly prominent in the South West of England; the latest analysis of Jackson-Stops’ nationwide sales data reveals there are currently 23 buyers chasing every newly listed property here.

Whilst demand will continue to outstrip supply in Q1 2022, fresh sellers are set to list their homes later in the year, levelling out the stark imbalance between supply and demand which dominated the 2021 housing market.

Nick Leeming, Chairman of Jackson-Stops, comments: “Lack of supply governed the 2021 housing market, with our latest data revealing that nationally there are currently 19 buyers for every newly listed home. These strong market conditions caused some sellers to delay listing their property for sale until they felt confident that they would find a suitable next home. An increase in new listings, fueled by homeowners realising the extent to which their properties have risen in value over the last two years, will convince these previously cautious vendors that there are viable onward properties. We should therefore see a steady flow of new stock coming to market by the second half of the year.

“We anticipate only minor upward movement in interest rates as inflationary pressures increase but this will do little to dampen transaction volumes which are set to remain stable.

“Over half of our network expect that the average property chain will be shorter next year. This will be particularly prevalent in the South West, with chains shrinking to as few as two links for many sales in the most saturated markets, such as Devon. Shorter chains bring more certainty to the housing market which in turn will boost buyer and vendor confidence.”

Private sales in the country homes market

A reassessment of property requirements will continue to fuel the country homes market throughout 2022, with prices set to rise by 5% across higher value price bands. Those homeworkers who remain unaffected by the reopening of their offices will now have the confidence to make a permanent move to a more rural location. These factors, coupled with a desire for more space, will ensure the rural homes renaissance continues throughout 2022.

Flexible living spaces will be key next year, with house hunters chasing properties with ancillary buildings rather than multiple bedrooms. These outbuildings will be in high demand as buyers seek to convert the space into work areas, gyms, hobby rooms or a source of additional income. Green credentials will also be at the forefront of homeowners’ minds.

Nick Leeming, Chairman of Jackson-Stops, comments: “Complex and ongoing changes to the nation’s working patterns and lifestyle aspirations will continue to fuel the country homes market in 2022. Buying a home is a long-term commitment and with lockdowns still fresh in people’s minds, house hunters are looking for properties that are more flexible, spacious and rural than where they lived pre-pandemic.  Nearly a third (30%) of Jackson-Stops branches reported an increase in buyers requesting homes with easy access to open countryside with scenic walking routes.

“There is still a large number of people who lost out on buying their countryside home this year due to strong competition in the market. Many of these house hunters are now in rented homes and are keen to buy a permanent base in the areas they have tried and tested over the last 12 months.

“We expect property owners to be more focused on increasing the energy efficiency of their homes in the face of rising energy costs. In particular, country homeowners may consider installing ground source heat pumps, or other measures that in the long-term may bring energy costs down, whilst also reducing their carbon footprint.”

Nearly every Jackson-Stops branch (91%), from the North West through to the West Country, agrees that home offices and fast broadband connectivity will continue to be at the top of house hunters’ wish lists next year, with many noting that buyers want these working facilities to be located outside the main house in outbuildings or a garden office.

Jonathan Weeks, Director of Jackson-Stops’ Norwich branch, comments: “With the work from home trend here to stay, house hunters no longer have the same ties to large cities. The countryside continues to offer excellent value and a lifestyle that many have wanted but had been unable to enjoy whilst previously chained to their city-based desks.”

Meanwhile, a renewed love of British boltholes, coupled with ongoing uncertainty around international travel restrictions, will support transaction volumes in the second homes market.

Ben Standen, Director at Jackson-Stops’ Truro branch, comments: “Covid concerns and extra bureaucracy in terms of international travel will keep the UK’s hotspots busy during 2022. Many of our second home buyers are seeking escapism – being surrounded by greenery, sea air and coastal views can make a really positive impact on wellbeing and can encourage a happier and healthier lifestyle.”

Private lettings in the country homes market

The country house lettings market will continue to gather momentum throughout 2022. Off-market rentals and price competition will not be uncommon in the family homes market as a lack of new rental property creates upward pressure on rents.

Paula Bereznyckyj, Head of Residential Lettings at Jackson-Stops’ Newmarket branch, comments: “If the last 18 months is anything to go by, rental levels will continue to rise throughout 2022 due to the high demand for properties and the shortage of homes available. We have had a number of listings where tenants have actually offered more than asking price to try to secure the property they want.

“This has been particularly prevalent in the family homes market. Recently we have been inundated with enquiries on new listings and many properties are being let without even going to market as we have so many tenants waiting for larger properties. A recent new listing generated about 40 enquiries in just two days.”

What will we see in the South West?

Dave Ferris, Head of the Corporate Team at international law firm Osborne Clarke has written some comments on what he expects to see in the South West market next year.

I expect strong underlying economic performance will continue in the US and, in particular, western Europe despite the pandemic. M&A activity here in the South West should follow suit as there is an abundance of uninvested capital – including in the Private Equity space together with low interest rates and availability of debt.

US and European Investors and corporate acquirers are looking for opportunities in the areas of business transformation for which the South West region has a strong track record, with its focus on technology innovation, defence, security and aerospace and decarbonisation technologies.

Like many in the market, I’m waiting to see how the relatively new National Security & Investment Act, which comes into force on 4th January 2022 and gives the UK Government power to intervene in acquisitions that pose a risk to national security, will impact on M&A.

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