EDITOR’S COMMENT When America sneezes, the world catches a cold. Or does it? Not according to some of the biggest global players in the real estate industry this week. When America sneezes, the world – or the UK at least – says gesundheit and gets back on with business.
I’ve written here before about the dangers of contagion and of assuming that what happens on the other side of the pond will inevitably happen here.
Yes, the UK has felt pain and has felt a decent amount of it. But if there’s one thing that we’re pretty good at here, it’s resetting. And fixing a problem (though not all problems, granted).
Disaster of a prime minister? Get them out. Quickly.
Not enough homes for all? OK, bad example.
Work from home epidemic? Don’t worry, we didn’t massively over-develop office space and we’ve not been that bad at returning to the office. Some of us even like it. Dare I say, prefer it.
Trading figures from Grosvenor and Cushman & Wakefield, both published this week, reveal strong performances from their UK and/or EMEA businesses. And both have the US to blame for dragging down their figures.
For Cushman, leasing activity in Europe was a highlight in the first quarter of the year, helping the region to post the highest year-on-year revenue growth across the business.
In EMEA, revenue of $222.4m (£178.2m) was 8% ahead of Q1 2023. Capital markets revenue in the region rose by 15%. It still wasn’t quite enough to take the region back into the black, but the loss more than halved from $24.3m a year ago to $10.5m in Q1 2024.
The Americas reported a year-on-year decline in revenue of 6% and a loss of $16.8m.
At Grosvenor, an underperformance in its Americas property business led the firm to report yet another year of falling revenue profit.
Revenue profit, which for Grosvenor is its net income minus administrative and other expenses and financing costs, fell to £41.5m in 2023, down from £52.7m a year earlier and from £99.7m in 2021.
The main driver for the decline was America – I’m paraphrasing a bit – where the business recorded a revenue loss of £27.7m.
The UK, on the other hand, reported an increase in revenue profit to £60.5m – up from £38.3m in 2022.
US investors are seeing the strength in the UK’s real estate sector too. New figures from BNP Paribas Real Estate this week showed a more than £1bn increase in investment from US buyers in Q1 2024 to £3.1bn.
BNP PRE data showed a 117% quarter-on-quarter increase from the £1.4bn recorded in Q4 2023 to Q1 2024’s total, marking the biggest quarterly increase in the post-pandemic era.
There is a special kind of resilience in the UK that we should be proud of. There is something we have in this country that helps us bounce back more quickly than the rest. Maybe it’s because we never get too carried away – that British reserve serving us well. Or maybe it’s because our planning system is one of those problems we’re not very good at fixing, but because of that it takes us longer to develop and therefore saves us from over-development.
Maybe it’s just because we’re Great Britain.
Whatever it is, these financially based examples of the UK’s resilience and strength should surely be the greatest advert for UK plc as we seek to drive inward investment into our successful real estate sector, and just the evidence we need to show that the wall of capital we keep being told is waiting to be invested can now get business booming again.
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