Devolution, development and the dash for top-line growth – but the themes of 2015’s biggest stories had more in common than alliteration.
If 2015 was about anything, it was the year that the market got its swagger back. You could hear it in the room at last week’s Estates Gazette Awards, where wine and champagne perhaps flowed more freely than it had done in a decade.
And you can see it if you look back at our lead stories over these past 12 months. Development? There was no shortage of evidence that the market’s appetite for risk was heightened this year: almost half of our lead news stories were development-led.
Devolution? Well, 2015 was the year that Devo Manc became devo all over the place. London, Birmingham and Sheffield were among the headline beneficiaries of devolved power. Nowhere will this emerging, defining trend be more apparent over the years ahead, however, than in Scotland.
The dash for top-line growth, driven by consolidation, was symbolised best by the $5bn (£3.4bn) DTZ-Cushman & Wakefield deal. As Brett White told EG back in May, the desire to create a firm that could challenge global rivals drove the deal. “We are now truly a head-to-head competitor with CBRE and JLL,” he said. “This combination is in response to what clients demand.”
For the impact of this dash you only have to consider the transformation of those businesses which have been aggressive in doing deals for some years. Take CBRE, which has completed more than 100 deals in the past decade. In last year’s EG Top Agents ranking, Savills sat the top of the pile. This year CBRE’s UK turnover wasn’t far short of JLL’s and Savills’ combined.
None of this is to say that deal-driven growth is the only path open to advisers, but it certainly grabs attention.
Just behind the three Ds in terms of impact sat a C: China.
From the state visit of Chinese president Xi Jinping to the UK in October to the country’s summer stock market crash and currency devaluation, China’s astonishing rise and partial wobble was never far from the headlines. Yet it didn’t deter Chinese investment in the UK – from Manchester to the City of London. As Tosca Fund chief economist Savvas Savouri wrote in EG last week: “In emphasising that China’s direct engagement with the UK is extending far from London, I am not claiming the capital is being overlooked, far from it. London is becoming China’s most significant overseas hub across the northern and western hemispheres.”
So will these trends continue in 2016? Yes is the short answer. Most of the devolution promise still needs to be delivered. Development will continue – schemes already under way coming through, of course, and those yet to begin, not least in industrial and, let’s hope, residential.
And China will continue to amaze, if not always for the right reasons. Local real estate intelligence site MingTiandi this week reported that more than 1% of China’s richest people have been prosecuted for economic crimes. According to the Hurun Report, the country’s real estate industry is the leading source of these charged, jailed or executed kingpins. (Thankfully, hopefully, it seems the reappeared chairman of Fosun Guo Guangchang has merely been helping police with inquiries.)
But it was Wednesday’s decision by the US Federal Reserve to raise interest rates that may have the greatest impact. It may have been a modest rise, but it undoubtedly represents a turning point in the economic cycle. Whether it will inject further confidence into the market or mark the end of the upcycle remains to be seen.
At this stage it is certainly not enough to prevent any of us from having a happy Christmas and a prosperous new year. Estates Gazette will be back on 9 January, though EGi will, as ever, be updated throughout the festive period. Season’s greetings from everyone at EG.
