Ahead of publication of EG’s UK Cities Investors Guide, three industry figures set out the prospects for future growth and productivity improvements
Following a year of record levels of foreign direct investment, my focus is to make the case for investment in Britain as we prepare to leave the European Union, writes Graham Stuart, minister for investment, Department for International Trade.
The UK has a strong reputation for attracting investment and is Europe’s number one recipient of foreign direct investment.
Encouraging international investment in property, infrastructure and energy projects has always been a priority for government and will continue.
Working in partnership with our world-leading domestic property sector, buyers interested in long-term investments will help us build more homes, deliver new and upgraded infrastructure, and regenerate towns and cities across the country.
This will drive economic growth and job creation in all regions of the UK.
At the heart of this is the flagship Invest in GREAT Britain and Northern Ireland campaign. Support for foreign investors ranges from finding the right location to registering a business, opening a bank account, understanding legislation and starting recruitment. At each step, DIT’s team of expert advisers is on hand to help businesses set up or expand in the UK.
Investors have already seen the potential in places such as Manchester in the Northern Powerhouse. Hong Kong-based business Far East Consortium International announced last year its investment in Manchester’s northern gateway to create 10,000 new homes.
As an international economic department we will reinforce the UK’s role as an outward-looking, free-trading nation.
Government policy, from the ambitions set out in the Industrial Strategy to the establishment of the mayoral combined authorities, creates a clear framework for investors to ensure that they share in the future prosperity of our nation.
Britain is open for business and the UK government stands ready to support investment in our economy from all parts of the world.
Challenges that also mean opportunities
Through the capital investment directorate, the Department for International Trade brought some £16bn of overseas investment into UK property, infrastructure and energy projects last year, writes Gavin Winbanks, director, capital investment directorate, Department for International Trade.
The government recognises how vital this investment is to delivering its policy objectives around the provision of new housing and infrastructure and regenerating towns and cities across the UK.
A series of commitments across government are aimed at and will facilitate continued and increased foreign investment by providing a stable framework within which overseas funds, individuals and corporations can make long-term returns.
A crucial aspect of attracting this investment is the ability for government to act across departments to create opportunities. DIT is working with colleagues from the Ministry of Housing, Communities and Local Government, Homes England, the Department for Business, Energy and Industrial Strategy and Department for Transport among others to present investors with a unified offer and support.
The Industrial Strategy will have a significant effect on how investors view the UK’s national and regional offer. Each of the four grand challenges – artificial intelligence, clean growth, ageing society and future of mobility – will create new opportunities for investment, whether in buildings or physical or digital infrastructure.
As we develop new modes of transport, the shape of our towns and cities will change and we will need partners to help us achieve this transformation.
With the emergence of local industrial strategies allied to increasing powers for major city regions to drive growth through the mayoral combined authorities, the opportunities for the property sector are clear. Government understands that real estate is a key driver of economic growth and productivity and will support the domestic property sector as well as seeking to attract overseas funding.
The construction sector deal is one of the first four sector deals to be agreed. The UK construction industry has a turnover of £370bn, contributing £138bn in value added to the UK economy and employs 3.1 million people (some 9% of the total UK workforce). Boosting the sector’s productivity through greater investment in innovation and skills, reducing the environmental impact, improving the efficiency and reducing whole-life cost of new projects and buildings will see outcomes for investors improve through faster and less expensive project delivery.
Property’s role in increasing productivity
The UK’s future success is predicated on increasing productivity. Over the past decade it has largely stagnated and it is therefore unsurprising that the government is focused on improving it, writes Helen Gordon, junior vice-president, British Property Federation, and chief executive, Grainger. The government’s industrial strategy took aim squarely at it, while the chancellor’s November budget launched a £23bn national productivity fund.
However, the Office of Budget Responsibility does not believe that these measures will necessarily solve the problem. The OBR forecasts productivity will only increase by 1.5% a year, compared to the 2% growth the UK experienced prior to the 2008 financial crisis, and behind many of the UK’s peers.
In many ways, the real estate industry can help fill this gap. Investment into real estate will underpin economic growth and improve productivity.
Providing better offices, more flexible and dynamic retail premises, creating logistics and distribution centres to support our growing digital economy and, critically, providing the quality homes that will house all this required talent are all the ways in which the real estate industry can help. Indeed, our industry’s contribution underpins prosperity and long-term value creation, supporting most (if not all) other industries through the physical environments we create.
Through the British Property Federation, we recognise the role real estate has to play in achieving this goal of increasing productivity and avoiding any Brexit-related hiatus in economic growth. We are therefore committed to building a long, meaningful partnership with the UK government to achieve this. In addition, we are focused on demonstrating how our industry can support government’s ambitions and consistently providing a consistent and clear, singular voice on behalf of the industry to ensure better understanding.
Meaningful policy change and opportunities have already materialised as a result – the UK government’s housing strategy has seen a significant step-change in its approach, with a new focus on increasing housing supply across all tenures and offering tangible support for the Build-to-Rent sector as a significant contribution to achieving that objective.
Rental housing accelerates housing delivery because it is occupied more quickly than that built for sale. It can help professionalise the rental market and improve housing standards.
It also has great potential to accelerate regeneration and become a catalyst for investment into larger sites. We are seeing this come to fruition across the country. The BPF’s research shows that this trend is also growing among the UK’s university towns.
The UK government recognises that building the homes people want to live in, but also the offices capable of driving innovation, the places where people want to spend their free time, and the logistics warehouses that support our modern economy, are all integral to the country’s success.
It is the real estate industry’s job to step up to the task, and work alongside the government to help achieve this laudable goal.
While the UK and its real estate market remains as one of the world’s most attractive investment propositions, working with the government we will be able to achieve more, adding to housing supply, jobs and innovation.
The uncertainty caused by Brexit is unavoidable, but real estate’s role in navigating the UK’s future outside the EU is indisputable. For investors seeking long-term value and attractive risk-adjusted total returns, new and existing opportunities across the length and breadth of the UK will become increasingly evident.
