National Index
Updated: 16th February
We’ve adjusted the methodology used to calculate the Recovery Index to make it better reflect the pace of recovery. Indices are now calculated as a weighted average rather than by proportional weighting, meaning that sharp falls and rises in the data are mitigated. Because of this, historic data has been revised but still follows the same broad trends as previously.
UK CITIES RECOVERY INDEX
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The overall measure for the National Recovery Index achieved its recovery peak in early October 2021, before experiencing a plateau in growth in the last two months of the year. Following the emergence of the Omicron covid variant in December, the Recovery Index declined until around the 17th of the month when a Christmas surge in activity was recorded.
Over the Christmas period, the Recovery Index experienced its largest decrease in activity since the implementation of the third lockdown restrictions across the UK in January 2021. Although some ground has been recovered in the first week of 2022, the Index remains subdued relative to its recovery peak, reading 83.1 on 7th February.
As of 7th February, all sector indices remain below their levels observed at the beginning of December. This is despite significant growth over the past month in all sectors bar the Residential sector index. The Mobility and Return to Office sectors in particular have seen very positive levels of recovery, gaining 23.9% and 15.8% respectively as Covid restrictions – and public perceptions of the virus – have eased.
UK CITIES RECOVERY INDEX
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Sector indices
Commercial Activity
- The Commercial Activity sector index has remained level over the past fortnight, with the latest figure of 89.1 recorded on the 7th February. Supply chain difficulties persisted through Q4 2021, and have spilled over into the new year with manufacture delivery times continuing to push up. PMI readings suggest that these problems may be easing, along with material price growth. Additional pressure on the sector index is also being sourced from the ongoing staff shortages in several sectors, most notably construction, manufacturing and hospitality.
Hotel & Leisure
- The latest reading of 77.1 on 7th February for the Hotel & Leisure sector index is 29.4% below the recovery peak observed on the 23rd December 2021, following a decline after the Christmas period which has failed to recover.
- Consumer demand is likely to be impacted by the inflationary environment, with considerable cost of living impacts already visible and scheduled to increase. Consequentially, the Hotel & Leisure sector may experience further hardships, particularly if pandemic losses are having to be compensated for through higher prices.
Mobility
- Following a downturn over the Christmas period, the Mobility sector index has been recovering lost ground with the latest reading of 111.0 on 7th February 23.9% above the level a month previous.
- This growth is attributed to the lowering of Covid cases, meaning fewer people are in self-isolation as well as reduced restrictions encouraging greater levels of mobility across the UK.
Residential
- In the last week of January, the Residential sector index has declined to its lowest level since the initial downturn at the beginning of the pandemic in March and April 2020, with a slight recovery in the first week of February to read 74.2 on the 7th. This decrease continues the downward trajectory initiated at the beginning of December, despite the continued strength in house price growth.
- We attribute this trend to the usual seasonal lull in housing market activity as buyers, sellers and conveyancers avoid completing over festive period. There may also be added drag from the rise in Covid-related uncertainty, as well as an impact from the inflationary environment and the consecutive rises in the base interest rates delivered by the Bank of England which pushed up borrowing costs.
Retail
- Our Retail sector index achieved a new recovery peak in the run up to Christmas 2021, reaching 95.6 on 22nd December following a plateaued period of growth since mid-2021.
- Subsequently, the sector index receded down in early 2022 before recovering to its latest level of 84.0 on 7th February.
- The structural shift in the retail environment is continuing, accelerated by Covid. This is visible in the performance of city centre footfall levels during the recovery period. Footfall levels remain around 20% below their pre-pandemic levels. Meanwhile, online retail sales have retained a greater share of the market, accounting for around 26% of total retail spending – up from 19% in February 2020. These persisting trends suggest that a new retail landscape is being carved out, bringing with it considerable real estate implications.
Return To Office
- The National Return To Office sector index has • The National Return To Office sector has been impacted by the removal of the government guidance to work from home where possible. This, along with reductions in case numbers and the emergence from the festive period, has encouraged the sector index to recovery to 59.4 on 7th February.
- We expect this number to continue to edge up as workplaces gradually increase their occupancies. However, the return to the work from home routine for many may have cement reduced office hours in the longer-term, hence we do not expect the sector index to return to the pre-Covid baseline level of 100.
UK CITIES RECOVERY INDEX
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This index has been prepared by Avison Young for general information purposes only. Whilst Avison Young endeavours to ensure that the information in this index is correct it does not warrant completeness or accuracy. You should not rely on it without seeking professional advice. Avison Young assumes no responsibility for errors or omissions in this publication or other documents which are referenced by or linked to this index. To the maximum extent permitted by law and without limitation Avison Young excludes all representations, warranties and conditions relating to this report and the use of this index. All intellectual property rights are reserved and prior written permission is required from Avison Young to reproduce material contained in this index.