EDITOR’S COMMENT: The next five weeks could hardly be more significant in determining real estate’s fortunes in the months and even years ahead.
The period begins with the marking this Thursday of a year to go until Brexit. It ends with the local elections on Thursday, 3 May. Both events are significant. But much else in between also matters.
Let’s deal with Brexit first. In many ways it’s a red herring, when so many other macro shifts are in play. The impact of tech on the office, retail turmoil and – connectedly – continuing strength in industrial have had a more profound impact to date. And, let’s not forget, real estate has surprised on the upside after every major macro-political shock of the past few years.
But that could change. The “relentless globalisation” of investment in recent decades means Brexit will pose tests. And as Hermes’ head of private markets Chris Taylor notes, “if the economic use or desirability of a location changes then [real estate] value will change too. Arguably, the biggest risk for real estate markets arising from Brexit uncertainty – apart from short-term investment decisions being put on hold – would be artificial barriers to attracting and retaining global talent in our biggest cities.” Ensuring that message is heard in government will be a further challenge.
Then in five weeks we go to the polls. All 32 London boroughs, 34 metropolitan boroughs – including Birmingham, Leeds and Manchester – and 17 unitary authorities will be contested.
With Labour grassroots movement Momentum hoping to influence the outcome of several votes in London, there will be serious implications for regeneration projects and how public and private sectors work together.
Nowhere more so than in Haringey, where leader Claire Kober is stepping down. Kober has said she will not sign off a jv with Lendlease to deliver the Haringey Development Vehicle, leaving the decision to the next leader. It would be a victory for Momentum, which has fought to kill off the £2bn project to develop more than 6,000 homes in the borough, if her successor doesn’t seal the deal.
There are elections for four mayors in the capital,too, including Tower Hamlets. Here, Labour has already deselected mayor Sir Robin Wales as its candidate. His replacement by Rokhsana Fiaz – backed by Momentum – has thrown into doubt Newham Council’s arms-length PRS company Red Door Ventures’ £120m acquisition of the Collective in Old Oak, NW10.
And then there are several bellwether deals whose fortunes could be decided in the next five weeks.
AXA IM – Real Assets had been in talks to buy Lendlease’s 25% stake in the Bluewater shopping centre in Kent. Lendlease put the stake in the 1.8m sq ft centre up for sale last June for around £500m but the silence around the deal is deafening.
Klépierre’s £5bn cash-and-share takeover approach for Hammerson may have been dismissed by executives at the target company, but it could yet happen. Where would that leave intu, its preferred partner to date?
And in the City, Abu Dhabi sovereign wealth fund Mubadala Investment Company has been in advanced talks to buy the UK headquarters of UBS for £1.1bn. It’s gone quiet on that front too.
It is too much to hope for resolution on all these fronts by 3 May. But demonstrable progress would be a comfort.
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