The biggest challenge for brokers in the specialist market is greater scrutiny from insurers
Six in 10 brokers writing real estate business outside of London have seen growth over the past 12 months, according to new research published by Ecclesiastical today (30 May 2022).
The insurer surveyed 166 brokers between February and March 2022 for the research, half of which considered themselves real estate specialists.
One in six (16%) reported significant growth, whereas only 2% saw a decrease in their real estate books.
Those identifying as property specialists reported bigger boosts in business, with 65% of these firms reporting the size of their real estate book has increased over the past 12 months – compared to 46% of non-specialists.
Office space (95%), mixed-use developments (84%), warehouse (83%) and industrial (81%) were revealed as the most popular commercial sectors.
Ecclesiastical commercial director Adrian Saunders said: “The regional real estate market is alive and kicking and our research shows that regional investors want to work with regional brokers.
“While rising inflation is a concern, investor sentiment is still high and this provides an exciting opportunity for regional brokers.”
Three quarters of brokers surveyed agreed that regional investors want to work with a regional broker.
In addition, exactly 68% disagreed that global brokers were pushing smaller brokers out of the regional market.
The findings further revealed that the biggest obstacle facing brokers in the regional real estate market was greater scrutiny from insurers on construction methods and materials, with 81% citing it as an issue.
Increasing costs of insurance (80%), rising inflation (70%) and unoccupied buildings (69%) followed – a third of respondents (33%) said clients’ use of property had changed over the past 12 months.
Exactly 87% of brokers, meanwhile, agreed there was a problem with underinsurance in the real estate market, with the main cause being clients not understanding the true cost of property rebuild and repairs.
Saunders added: “Insurers are placing greater scrutiny on construction methods and materials and with tougher environmental standards planned for next year, brokers need to be able to work with an insurer that not only understands their local market but can also help them navigate these challenges.
“As a specialist insurer with teams in key urban centres across the UK, we’re ideally placed to support our brokers.
“Real estate is our largest sector of business but we write far more of this in London so I’m encouraged by the positivity of regional brokers too.”