COMMENT This month, I returned from a global trip spanning four continents in six weeks. From the Middle East to Australia, and North America to Europe, the trip provided many reasons to be optimistic about investor interest in London.
Travels provided those of us at Opportunity London with a well-rounded view on how our capital is faring on the world stage, and the signs are tracking up – business confidence in the UK remains strong. With almost all investors we spoke to taking a long-term view on London, they continue to see the UK, and London particularly, as a safe and stable haven for capital. As we met investors, momentum for the UK election was building and, while this was not a key interest for many parties already comfortable with the idea of the UK as an investment destination, it was viewed favourably against growing political instability in other global markets.
London: a long-term view
Investors around the globe recognise London’s resilience and ability to rank consistently among the largest markets traded globally for international real estate investment. As a whole, the UK shows high levels of liquidity as the second most traded global real estate market in the world in 2023, according to our research partner JLL, with transaction volumes exceeding £31.3bn and only shortly behind the US.
They are interested in the city’s status as a hotbed for creativity, talent and potential, where capital could unlock key infrastructure and real estate projects to support further growth.
But London “makes hard work for itself”. The city’s many boroughs and the nuances between them continue to be viewed with a degree of perplexion from global investors. How do we make it easier to invest in our great city? From our inaugural Opportunity London tour, the existence of an independent organisation with the mission of allowing London’s investment opportunities be understood seemed very valued and welcomed.
Global capital has a choice of where to invest and what to invest in, at a time when government bonds are showing strong returns. We need to ensure investors continue to choose London and real estate as a top long-term investment choice.
Just as new capital markets emerge to heighten competition, we are seeing new asset classes alongside the more traditional offices, retail and industrial, including the living sector, a maturation of life sciences, growth in demand for clean energy, and leisure to accommodate changing social habits.
New opportunities also arise from an ever-more porous boundary for London. With occupiers becoming increasingly footloose in the last decade, driven by good design and connectivity, investors, too, are looking beyond core London and diversifying.
Time to be bold
With the positive sentiment and energy that comes with a newly elected government, let’s be bolder about London on a world stage once more. This is not the time to be British.
Momentum can be strengthened by de-risking London further with a 2050 critical plan. Investors want to see how London can provide a long-term strategy for low carbon housing, infrastructure and energy. With our newly appointed chancellor, Rachel Reeves, calling for £3 private sector investment for every £1 the government invests, public-private partnership is a clear priority that creates opportunity for further inward investment.
Labour’s commitment to growth through housebuilding, clean energy, infrastructure and education highlights the potential for the billions of pounds watching London and ready to invest. To meet these ambitious targets, what is needed now is a serious conversation on viability and deliverability that gives investors the certainty they need to press the button.
Key takeaways for supporting London’s ambitious growth
- Reform the planning system to avoid year-long delays: work towards a better level of predictability on outcome and avoid millions being spent on applications that cannot be carried forward.
- Mirror New York’s attractive tax incentives to make inward investment, particularly in low carbon and new economy assets, easier and address the ongoing cost of capital.
- Join up policy at a London and local level to achieve the shared outcomes for all Londoners that collective investment in the built environment will unlock.
Jace Tyrrell is chief executive of Opportunity London
