The property industry is an ever-changing sector, known for adapting to challenges and demonstrating resilience, and this has shone through more than ever in recent years.
Spanning a huge array of sectors, from commercial to industrial and from residential to special use, the property industry’s various segments are all judged by different metrics, and are all affected in separate ways by external events – both positive and negative.
Property investment in the residential space is more commonplace among individuals, compared with some of the other niche areas that tend to attract more business investment. And the country’s housing market has proved a fruitful place in recent years for those looking to make long-term gains from their investments.
An interesting set of research has recently been released, compiled by Business Name Generator and using a range of government and Office for National Statistics (ONS) figures. This looks at how much the property industry as a whole has grown over the last five years, and the results are impressive.
Second-highest growth in property industry
The industry that has seen the highest rate of growth over the past five years – based on the number of additional new businesses within the sector – is transport and storage. Over half a decade, this sector has recorded growth of 26.42%.
In second place sits the property industry. The number of businesses operating in the space has increased by a huge 18.81% over the past five years. This equates to an additional 17,500 new companies being set up to operate within the property sector.
Some of the most impressive growth was recorded most recently, with more than 5,000 new property businesses joining the sector between 2021 and 2022.
In third place and only slightly behind the property industry was construction, which has seen the number of companies involved increase by 17.23% in the same time period. Construction and housebuilding have struggled for a variety of reasons since the pandemic, so this growth level is hugely encouraging.
Accommodation and food services have seen business numbers increase by 16.56%, putting them in fourth position overall. Finally, retail has grown by 13.95% in five years, placing it in fifth position.
Risk and reward
As is the case with any investment, there are risks involved with the property industry alongside the potential rewards. Some of the risk comes from external factors outside the individual’s control, making extensive research vital before embarking on a new investment.
The Inside Housing Risk Register Survey found that 47% of housing associations believe external economic conditions are a ‘strategic risk’. The report also flagged up recruitment and retention of staff as a challenge within the property market.
Chloe Chai, spokesperson from Business Name Generator, says: “The 19% increase in the number of companies in the UK property industry is a positive sign of growth and resilience in the face of economic challenges.
“However, as we look ahead to 2023, property businesses must remain vigilant and proactively address financial constraints to continue this upward trajectory. It’s important for companies to seek out new opportunities and adapt to the changing market to maintain this growth and stay competitive in the industry.
“With predictions that the housing market will experience a slowdown in the year to come, residential property businesses in particular should focus on ensuring they are in a position to adjust to a more turbulent market.”
The number of property investors operating through limited companies – deeming them a business rather than individual investor – has multiplied in recent years. This has mainly come about due to alterations within the residential property industry, including the Section 21 tax relief changes.
According to Paragon Bank, data shows that professional landlords are spurring on growth in the buy-to-let property sector overall. You can read more about this here.
