I spoke passionately before 23 June about the risk that a Brexit vote would jeopardise everything that the property industry has achieved in London and the regional cities since the financial crisis, and it was interesting that these were the areas (along with Scotland, Northern Ireland and Gibraltar) that voted, for the most part, to remain in the EU.
It is still too early to judge what the full impact of the result will be. On balance, we think the decision to leave will create a more challenging economic environment generally, but also perhaps generate new and unexpected opportunities. The biggest concern to us is the uncertainty it has created in London, national and foreign direct investment markets.
Many office occupiers are putting off plans to expand or move – residential sales may be affected by market sentiment and constrained mortgage availability, and retail and leisure brands may act more warily owing to a perceived dip in consumers’ discretionary spending. Similarly, investors are either sitting on their hands or seeking to withdraw funds, which is proving difficult in a relatively illiquid sector such as property. There may be a few who will see this as a buying opportunity, but it is hard to know what “fair value” is in a market with low transaction volumes and febrile speculation.
Argent, with its four mixed-use schemes in primary cities – two in our new company Argent Related with our US based-partner Related Companies – is well-placed to navigate the next few years, whatever economic turbulence they may bring.
Our two current projects at Paradise in Birmingham and King’s Cross, N1, (the former for Hermes Investment Management and Canada Pension Plan Investment Board and the latter with AustralianSuper and Hermes Investment Management) are well-capitalised and well under way, with several of our tenants recently reconfirming their commitments.
In the past week, the Argent Related partnership has made significant progress on its two new schemes. On 11 July the joint venture with Barnet Council to take forward Brent Cross South, NW4, was signed, and on 13 July Haringey announced the formation of a strategic development partnership with Argent Related for the area around Tottenham Hale, N17.
Together these projects will deliver 7,500 homes and 4m sq ft of offices. They are sensible land deals in good locations with transport links and proven demand, and are important to wider strategic regeneration aims and objectives.
I have had meetings with Related in both New York and London following the vote. It is one of the largest developers in the US and Ken Wong, its chief operating officer and the joint managing partner of Argent Related, expressed a position we share. As developers and operators of property, we must take a long-term view and focus on the fundamentals that matter for us – location, access, transport connectivity, land cost, and the opportunity to use our skills and relationships to create places where people want to work, live and visit.
We remain focused on London and its ongoing need for quality housing. All our projects are aimed at a market sector that continues to generate huge demand at moderate prices while offering superior lifestyle experiences in mixed-use districts. So while Brexit creates near-term market headwinds and a sense of political uncertainty, we remain committed to our investment thesis and project pipeline.
Argent Related will continue to seek out opportunities to put into practice our urban development model of public/private partnership and work with local authorities to create our own certainty.
This is the ideal time to prove that the private sector and commercial development can and should take a lead, unlocking and developing land to transform urban areas and improve the lives of communities with the right housing and 0 provision, community facilities, public infrastructure and other investment. We will work with the government and local authorities to deliver against broad objectives, achieving healthy financial returns from long-term success and long-term value, for everyone.
Whatever we think of the referendum result, the underlying message must be heard and addressed – and we believe that our brand of regeneration can achieve the best mix of progress and fairness, creating value and opportunity for all.
David Partridge is managing partner of Argent
