Editor’s comment: “What’s going on in the market? Everything. And all at the same time.”
That was the view of the chief executive of one real estate plc this week. By which he meant that, for all the challenges and evidence of a weakening market, there are signs that medium-term prospects are positive.
2019 may have been tough on investment markets, but it is the past few weeks that have been hardest of all. By the end of May, according to Savills, £15bn had been invested in commercial real estate. A further £5bn would be needed this month to avoid the slowest half-year since 2013. That won’t happen. However, the wall of money-eying opportunities isn’t getting any smaller.
Hong Kong investors are picking up the phone to brokers from London to Sydney as political risks heighten at home. Germany is wobbling. And despite the unedifying state of our national politics, the UK’s safe haven reputation hasn’t lessened. (Here, I’m reminded of the Chinese investor who, a few years ago, described Brexit as a first-world problem.)
That investor, and any number of others, will be sizing up UK opportunities, emboldened by the state of domestic, institutionalised caution.
Just as there are tests to come for government, there will be tests in the market. And the fate of three London corporate HQs currently up for sale will be instrumental in determining sentiment.
First-round sales of ITV’s former home and BT’s existing HQ both collapsed (though Lendlease is now thought to be in the frame for the former, and Orion Capital Managers preferred bidder on the latter), and would have helped depress activity. If interest in RBS’s former City of London HQ, currently on the market for £173m through Cushman & Wakefield, is as considerable as expected, it may give the market the shot of adrenaline it needs.
■ You’ll have your own view on Boris Johnson’s suitability for the highest office. I lean towards the sceptical on that one though.
Having a prime minister who understands the value that development can bring should be no bad thing. Johnson would provide that.
But the race to be PM may be a sideshow. The key office of state for real estate will be chancellor of the exchequer. Secretaries of state for housing, communities and local government, and transport matter, too – as do those for business, energy and industrial strategy, and international trade.
Assuming Johnson is PM, surely Gove, Javid or Hunt will be chancellor. Moving James Brokenshire from MHCLG is unlikely to be a priority; removing Chris Grayling from transport probably will be. Liam Fox’s politics would suit a Johnson administration, so expect him to continue to hold the DIT brief for the time being.
Might the quietly effective Greg Clarke – who has devoted his time at BEIS over recent weeks to addressing British Steel’s collapse rather than rowing over Brexit – might find himself at odds with Johnson over HS2. Those are the jobs to watch.
■ Two years ago, EG ran a survey to discover attitudes to, and actions around, LGBT+ people in the real estate market. The results were depressing: 81% of over 300 respondents said not enough was being done.
There has been positive progress on diversity and inclusion since then. Now with Pride just around the corner, EG wants to find out how attitudes to real estate’s LGBT+ workforce have changed. Help us by filling in a short survey.
To send feedback, e-mail damian.wild@egi.co.uk or tweet @DamianWild or @estatesgazette
