Does anyone take economic and market statistics at face value any more? If you do, stop right now: there are too many contradictions, too many estimates and too many partial stories being told to continue.
Take this week’s GDP data, which confirmed we were back in recession. The reported decline in economic activity of 0.2% was only the first cut of the data. Let’s hope that, on revision, the first cut proves to be the deepest.
But, for now at least, it flies in the face of the recent PMI figures, normally a reliable indicator of activity, which produced a better-than-expected positive index movement earlier this month.
Such contradictions were there in the detail, too. Construction sector output decreased by 3% in Q1 2012, the single biggest cause, statistically speaking, of the economy’s double dip. The PMI survey, meanwhile, had told us the sector was growing at rates well above the long-term average.
Or look at vacancy rates. Across Britain, retail vacancies stabilised at 14.6% last month, the Local Data Company said on Tuesday. By Wednesday, Capital Shopping Centres had said retail administrations and lease expiries had driven down occupancy across its portfolio by 2.4%. Not retail, admittedly, but on Thursday SEGRO said its vacancy rates had increased to 9.6% at the end of March, up from 9.1% at the end of 2011.
So what should the rational conclude from all this?
1) Don’t rely on a single set of numbers for judgment even if – especially if – they comfort long-held preferences and prejudices.
2) Be sceptical. But this industry doesn’t need to be told that.
3) Draw on experience. And if you don’t have it, find someone who does.
Are “developer” taxes sustainable? Some councils charge as much as £42,300 for pre-planning advice on even relatively modest schemes, according to figures complied by Estates Gazette and the British Property Federation. Add to that corporate and employment taxes, local and national charges, s106 agreements, the community infrastructure levy and so on, and the number of schemes that stack up financially can only head one way.
The problem is property developers elicit little sympathy on the Clapham omnibus. Indeed, prospective London mayor Ken Livingstone this week devoted a section in a key campaign speech to “good and bad landlords alike [who] keep rents high”. He was talking in the context of residential, but property in its entirety still presents an easy political target.
In this week’s EG, Almacantar chief executive Mike Hussey voices his frustration, suggesting the overall tax burden risks curbing regional development by starting “to push people into certain markets”.
“I am really worried about tax; I think we are just getting taxed at too many levels,” he said in the interview at last week’s Estates Gazette/Profile Network event. “What really worries me is this layered attack on development, on taxation, and it’s becoming less and less attractive and more and more risky, with very little reward for people to enter into the development arena. There is only so much tax that a development can sustain with all the other things it has to cope with.”
We are not yet at breaking point, is his view, but we are in danger of sleepwalking there: “In the end, the risk to the equity that you are trying to encourage to develop and renew is going to be too high, and that worries me.”
So it has been happening: the government is disposing of chunks of its bloated estate.
In the first quarter alone this year, it has announced plans to vacate 500,000 sq ft of space in central London. Almost half of that came this week as the Serious Fraud Office is to, ahem, charge ahead with its plans to consolidate with the Department for Culture, Media and Sport in SW1. Meanwhile, the Ministry of Defence has agreed to, profuse apologies, surrender its lease off New Oxford Street.
EG has been critical in the past but the Government Property Unit deserves congratulations for its efforts and success over the last year and a half.
damian.wild@estatesgazette.com
