This week’s topics:
- Business support for refugees from Ukraine
- New research shows high levels of global confidence in real estate is now couched in caution
- Everyone’s a gamer now - how video game technology is influencing different walks of life
- How airlines can accelerate recovery and growth
Business support for refugees from Ukraine
PwC UK is among a consortium of 45 businesses that have come together to support refugees from Ukraine. The consortium is being co-ordinated by entrepreneur Emma Sinclair and is in discussions with the Government.
Kevin Ellis, chairman and senior partner at PwC, commented:
With a humanitarian crisis of this scale, everyone wants to do what they can to help. Businesses like PwC can play a key role - particularly when it comes to skills and jobs. With almost 30,000 clients across the UK, we want to use our networks to match skills to opportunities. There will also be jobs we can offer at the firm, as well as broader support such as accommodation in the communities where we operate.
New research shows previous high levels of global confidence in real estate is now couched in caution
New research by the Urban Land Institute (ULI) and PwC charting the expectations of real estate investors of the year ahead shows that despite cautious optimism, the current conflict in Ukraine has dampened confidence.
Gareth Lewis, real estate director at PwC UK, said:
- Coming out of the pandemic we have seen generally high levels of confidence in the outlook for real estate investors, driven primarily by the availability of capital looking for yield.
- Our research this year has highlighted some familiar themes to the last few years. Ever present in the background are concerns around the lingering impact of the pandemic, the endurance of the already prolonged real estate cycle and the impacts of the structural changes impacting the sector.
- These structural changes are varied and a number have been accelerated by the pandemic. From ESG to building obsolescence, working from home to the impact of e-commerce on physical retail, real estate investors were generally optimistic but it was firmly couched in caution.
- However, the war in Ukraine has created a new and more sharply focused cause for immediate concern, particularly around rising inflation and interest rates. These are impacts and stresses that the real estate world has not had to grapple with in earnest for decades.
- The traditional view of real estate as a good inflation hedge has underpinned continued confidence but will be tested in what is a unique set of circumstances.
Everyone’s a gamer now
In the latest episode of PwC UK’s A-Z of Tech podcast, Jeremy Dalton, PwC’s head of Metaverse Technologies, and Tanya Laird, an inductee to the Women in Games Hall of Fame, discuss ‘V for Video Games’. From the rise of Esports and professional gamers, to the growth of the metaverse and the way we work, to the gamification of User Experience to encourage different behaviours, video game technology is influencing many walks of life.
Jeremy Dalton, PwC’s head of Metaverse Technologies, commented:
- The video gaming industry towers above the movie and music industries despite people’s perceptions. The highest grossing film in the last decade, Avengers Endgame, made US$305m globally in its first two days. By comparison, Grand Theft Auto 5, a video game that was released almost six years prior in September 2013 made more than twice that - US$800m - in a single day.
- Many may scoff at the term ‘Esports’, thinking that people sitting at a computer playing video games does not justify the term ‘sport’, but it is a highly competitive environment. The prizes being rewarded have reached the millions, and it's legitimate to say that you can become a professional gamer now - the money is there.
- Metaverse technologies allow people to collaborate remotely from different parts of the world, coming together in a digital environment and feeling like they are in the same place to workshop and solve problems. It is also used for training to help people develop and practice soft skills in a very convenient and scalable way. Listen to the episode.
How airlines can accelerate recovery and growth
Airlines were damaged by the economic effects of the pandemic, incurring losses above $200bn. Although facing a challenging recovery, there is still reason to be optimistic about the outlook for the sector.
- Sector recovery will be led by visits to friends and relatives, but there is concern over business travel recovery, which subsidises non-business travel.
- The climate challenge is immediate and requires a response, and commercial aviation is responsible for 2% to 3% of global carbon emissions. This is not an insignificant amount but the airline industry is demonstrating that it is up to the sustainability challenge and it will do more.
- Most airlines publish sustainability strategies and commit significant financial resources to sustainability improvements, while aircraft manufacturers have worked on engine efficiency since the mid-1960s. Notably, most airlines would buy zero-emission long-haul aircraft tomorrow if they were available.
- Future sustainability will be predicated on greater fleet efficiency, sustainable aviation fuels and componentry linked to advances in connected sectors. Over the medium term, sustainable aviation fuels will become more prevalent while general aviation short-hop planes will increasingly be electric.
- In many ways, there remains chronic over-capacity in the sector, driven by subsidy and a sectoral risk-return which has long underperformed. Low sector return on investment will not be sustainable as the sector looks to grow, flourish and pay back the bridging finance that kept many alive during the pandemic.
Matthew Davy, director at Strategy&, part of PwC’s consulting business, comments on the key levers the sector needs to consider in order to grow in challenging times:
- Over the last two decades, airlines have grown either through mergers and acquisitions or organically through fleet additions. Consolidation is both necessary and predictable - the airlines of the future will be larger and fewer in number. Cross-border consolidation could build a far more efficient set of multi-brand airlines.
- Many airlines have used the pandemic-induced hiatus to understand and enable their digital strategies - benefitting their own efficiency and the customer experience.
- The mobility ecosystem encompasses not just roads, rail, shipping, and air, but also finance, insurance, banking and payments. This will bring opportunities for successful airlines to purchase new aircraft, open new routes and to reimagine their business models through a mobility lens.
- Brands should look to new ways of applying technology to create data-driven products, services and infrastructure that will enhance the consumer experience.
- Leading airlines are already exploring electric vertical take-off and landing (eVTOL) and Supersonic aircraft, and the network opportunities that these new technologies will be able to provide.
Something to read:
In a time of pay budgets under pressure, there is an opportunity to take a transformative view of reward. Read more from Alastair Woods, Reward & People Analytics Partner, and Amber Hunt, Reward & Performance Manager.
Something to listen to:
Athlete. Business Woman. Olympian. These are just a few words used to describe Abigail Irozuru. In this episode of the Northern Lights podcast, PwC’s Regional Chair for the North Armoghan Mohammed speaks to Abigail and uncovers her use of flow state and winning vs personal best.
Something to watch:
Lennie James and Paapa Essiedu, actors in Caryl Churchill’s gripping drama A Number, join PwC’s multicultural and diversity networks and London Colourbrave charities to discuss diversity and inclusion, and the role of the arts in making positive changes in society. Watch here.