The industry has enjoyed an upward trajectory for some months, but what issues remain and how will they play out next year? Our latest sentiment roundtable asked the experts whether the good times will continue to roll beyond central London. By Rebecca Kent
Henry Pryor, buying agent, on…
London versus the regions
It is desperately pessimistic to suggest London’s fortunes won’t ripple out to the regions. We have to appreciate that the UK is a patchwork quilt of different operations and the markets change, but there is excitement. There is business being done and there is investment being made in all sorts of parts of the country that are away from the Royal Borough of Kensington and Chelsea.
Pitfalls
One of the biggest threats to residential property values remains government interference and civil unrest. The fact that the country is being polarised and is being pulled in two directions on a social level hasn’t been properly played out and we haven’t modelled that to see what the implications will be. You only have to get away from central London to see how quickly people are feeling desperately disenfranchised from how the system operates elsewhere.
The housing crisis
There is still a huge amount to work out in terms of how we solve what we glibly call the national housing crisis. Who is going to provide housing? The public sector? The private sector? Who needs to help? Who kicks it off? Who makes it happen? Is there a genuine chance of the corporate sector riding to the rescue of whatever is required and providing that? Can pension funds be given whatever reassurances they need in order to invest in that side of the economy? Social housing remains the proverbial elephant in the room.
Michael Lowndes, executive director, Turley Associates, on…
The upswing
We are breathless at the moment because there is so much activity and we are finding it difficult to resource it, to get the people to help us deliver the work that is coming forward.
Attracting talent
Firstly, even if we could find the talent that we need, they are going to find it increasingly difficult to live in London – they are being priced out. Secondly, we need to attract brighter people into the universities because actually there is a great career to be had in our sector, in any of the disciplines, but we don’t seem to be getting the brightest people.
London versus the regions
We are going to see the return of the renaissance cities: Birmingham, Manchester, Leeds. They are going to accelerate their renewal and become attractive to people that might otherwise have lived in London for balance of life reasons. They are affordable and the jobs are there.
Pitfalls
Planning. The government’s delivery of the national planning policy framework and associated guidelines have made a big change, and authorities are now behaving more pragmatically. They know that if they don’t, they are going to lose on appeal.
Growth of the TMT sector
At one level it is good for the London office market and economy because it is creating demand for a different sort of product in a different location, and it is driving demand away from glass boxes in the core business district. But it’s also positive for the regions because the nature of the employees in that sector is more mobile, more tech-savvy and they are therefore looking for a different sort of working environment. So you could readily see that population becoming more distributed across the UK. It’s a counter-balance to the magnet of London, providing the major focus of jobs growth, rental growth and therefore, capital value growth.
Simon Hardwick, partner, PwC legal real estate, on…
London versus the regions
There is no doubt the government is very keen – whether they are saying it publicly or not – to shift the centre of gravity
away from London and the South East. Rolling out high-speed broadband into other cities and schemes like HS2 will
pull people away from this fixation we have that civilised life can only occur inside the M25.
Market pitfalls
The anticipated improvement in the level of economic activity not picking up at the rate that is expected – either in the UK or in the eurozone – is going to be a risk. At the moment the improvement in sentiment is being driven by the implications of capital flow, not because there is a strong underpin of occupier demand.
Retail
We are only halfway through a period of transition in the sector and I think there are another five years to come of almost revolutionary change in the way that consumers behave and the impact that it is going to have.
The year ahead
There is going to be a resurgence of activity. There’s capital flowing into Western Europe, there’s capital flowing into commercial property and I think it will lead to a battle for assets and a battle for talent. It will also lead to some really interesting opportunities. We will see the capital being deployed into other cities and, on a broader scale, into other territories across Europe. Spain is becoming increasingly a focus for opportunistic investment and Dublin is becoming a very popular place for investment. All this is an illustration that we are in a global industry and I think that 2014 – in the absence of unexpected global shocks – will be a good year to be in the industry.
Chaired by Emily Wright
