Might this year be an inversion of last? 2016 started poorly for most: Uncertainty in the run up to the referendum; relative market stability after.
2017 is looking altogether different. The first half was stronger than expected, but the mood appears to have changed in these early weeks of summer: a variety of property businesses are reporting a different, weaker climate. Investment and occupational demand has thinned. Incentives are moving out. Mid-market residential sales of new stock has have slowed. A summer recess or a new, longer-lasting theme?
Here are 10 things that will help determine which way the dial moves for the rest of 2017.
1 Global investor view of the UK
Leaders of big European and global banks including JPMorgan’s Jamie Dimon and HSBC’s Stuart Gulliver met in Paris this week at a forum organised by the city’s main financial lobby group. Dimon rightly pointed out that what happens next will be determined by the EU, not the UK, and said people were wrong to focus on banks’ “first step” job moves. Whether it’s a decision to stay in or quit London, it’s their “second step” that will be more significant, he intimated.
2 Global occupier view of the UK
“Samsung kommt nach Berlin,” said German paper Der Tagesspiegel this week. The Times explained: “A division of Samsung has chosen Berlin for its European HQ because its boss believes that the cost of living in London makes the city ‘not a fun place to live unless you are really rich’.” It’s a bit extreme but there is an underlying truth: the cost of living for staff is a major negative when it comes to companies committing to the capital.
3 Proptech
Enabler or disruptor? Partner or competitor? All of the above, perhaps. Just don’t ignore it. EG isn’t. With Pi Labs, we’re launching a competition for early-stage proptech businesses. EG’s TechTalk Academy is seeking entrants to pitch their ideas to a formidable panel for the chance of up to £150,000 of investment.
4 Strategic reviews
Almacantar is reviewing its assets, as are some of the open-ended funds that suffered a run last year. Property businesses of any shape and size will be asking themselves some pretty fundamental questions right now.
5 Domestic interest
Sales of flats in London to overseas investors have been under the political microscope for years. Indeed, a mayoral report dropped last month and suggested the problem is less widespread than feared. Manchester has seen off-plan flats sold to overseas investors for some time and one local developer is taking action: Capital & Centric is offering the first homes at its 201-flat scheme in Manchester exclusively to locals. Might others follow suit?
6 Grenfell
Its consequences should be profound.
7 Will jobs growth continue?
May’s Labour Force Survey showed improved job creation and the unemployment rate falling to another multi-decade low. Importantly for this sector, full-time posts – a better indicator of occupier demand – accounted for around three quarters of the total increase. “Combined with the elevated level of job vacancies, that suggests demand for employees and the property they occupy is not about to dry up,” said Capital Economics.
8 Implications for retail
“The squeeze on real household incomes worsened,” says Capital Economics. “The implication is that the retail property sector is likely to suffer disproportionately over coming months.”
9 Agency M&A
At home and abroad. I won’t bother to list the rumoured names again. It’s getting boring.
10 Backlash backlashes
Evans Randall Investors is repositioning a £115m Midtown office as a “sophisticated” workplace to challenge the “office-as-playground” trend. The beginning of a “new sophistication” trend of its own?
To send feedback, e-mail damian.wild@egi.co.uk or tweet @DamianWild or @estatesgazette
