As we wrap up the turbulent year of 2022, there are a number of valuable lessons to take-away. Let us touch on three below, so that we can all better prepare for what is to come in 2023 and beyond.
1. Planning is Key
With the supply-chain disruptions amongst many other issues occurring in the world, we have learnt that planning in advance is pivotal to getting things done efficiently. Builds and renovations can no longer run to timelines it once did, even though in some aspects normality is starting to come back. Anticipating longer timeframes and having bigger budgets are the consequences of actioning property related projects in this economic climate. Timing and planning are pivotal to the success of projects in 2022, and likely well into 2023.
2. Over-leveraging Comes with Consequences
As inflation runs rampant through-out the world, rate hikes are being implemented in many places around the world. It is becoming increasingly painful for the over-leveraged, and the pain is set to continue to get worse before it gets better in 2023. The valuable take-away from 2022 is that, even though the Reserve Bank can say one thing, ultimately action speaks louder than words. Have a de-leveraging strategy in place to weather out this storm in a safe and sustainable manner.
3. Could the Dip be Over? The 18.6-year Economic Cycle Says it is Likely
2022 has been a blood-bath in many asset classes, even real-estate market wasn’t spared due to the rise in inflation. But it helps to zoom out and have perspective as to where we are in the macro-cycle. The 18.6 year macro-economic and real-estate cycle states that we are currently in the post mid-cycle corrective phase. If this cycle were to rhyme with the past historical cycles, then the major corrective phase should occur closer to 2026-2027. It is helpful to remember though, that all models are wrong, but some are useful.
In an increasingly unstable global economic environment, have a clear strategy in mind for 2023. Execute actions with decisiveness and precision. Plan in advance as timing will almost certainly be the deciding factor between success or failure.
From the team at Simply Frameless, we wish everyone a happy new year.