What to look out for in 2017

Estates Gazette asks the experts for their predictions for the year ahead DRS/BTR Helen Gordon, chief executive, Grainger Most important, is, I think, the housing White Paper. I love the fact the chancellor is acknowledging it is not all about build for sale, but the professionalisation of the asset class. The opportunity is strong for 2017. We still see rental growth being strong. There is a feeling the squeeze on the buy-to-let landlord will reduce their numbers and there is a view a few of them will exit the market, though this is subject to how the underlying market is going. If people think they can sell, they will leave the sector. The only one policy they could move is the 3% stamp duty for large investors. That is really relevant at the end of the day, because while we are developers and do not pay the additional 3%, if you are in a fund, the valuers will immediately deduct 3%. We don’t mind the new competition, we think its really good for the sector, and when we lobby we do it on behalf of all landlords, whether for stamp duty or planning, and judging by the signs from the SPG, I think we will see similar characteristics in the housing White Paper. FINANCE Randeesh Sandhu, chief executive, Urban Exposure In development finance I would say we will see a continuation of the themes of this year. We are not seeing any difference in banks showing more willingness to enter the sector in a meaningful way. Challenger banks are trying to take the mantle, but they are restricted by loan limits. The debt funds and the equity funds are trying to fill in the gaps, while there is a lot of equity knocking around. So we will see more of the same. Really it is about a lack of ability from the large banks to use this space, and a collection of other players to try to fill that gap. In the mortgage market, we see that getting even stronger. It’s a already a deep, liquid market, and something the Financial Conduct Authority is actively encouraging, making regulation for more competition. If it remains strong and liquid and available, that helps prop up a market that in other areas is struggling. We may or may not be approaching the end of an interest rate cycle, we have an economy trundling along and there are tax and development changes affecting the market. There are a lot of things that are still negative about the market, but the mortgage market is a bit of good news. LONDON Mark Collins, exectuive director, chairman of residential, CBRE London has a resilient property market that will continue to attract buyers. There is still a lack of housing stock available, and demand is still there. None of those fundamental things have changed. The top end of the market has been more challenging, there has undoubtedly been a direct impact in terms of stamp duty, but clearly even with the global economic changes, we are confident about next year. Currency changes will continue to impact on foreign buyers and investment. You are still going to get, on super prime, trophy buyers wanting trophy assets and, in terms of zone 2 outwards, we think there will be demand. We are very confident about Vauxhall and Canary Wharf. One thing is to remember is the infrastructure going in, the Northern Line extension and the US embassy. People will look back in five years and say I really understand that. It all comes back to the whole place-making point. PARTNERSHIPS Barry Jessup, director, First Base Private developers are increasingly being faced by a more sophisticated public sector. More and more local authorities are feeling empowered and capable of bringing forward developments themselves, which means an increasing number of public private partnerships, but done on a commercial basis. There is a greater understanding of place-making than there has been before and the reality is that people now understand it. In most cases there is an intelligence and sophistication in what they are asking for which was not there five or 10 years ago. It is amazing how circumstances force the issue. The change in government funding means authorities will need to create income streams for the future, not only joint ventures, but also to retain some of the commercial assets to generate an annuity stream. And that is the massive trend that is only going to get stronger in 2017. Partly as a consequence of Brexit, and partly due to the change in government funding regimes, you are seeing local authorities take responsibility for the redevelopment of their areas. We keep getting asked to bid on major mixed-use developments. And nearly all developments are mixed use now, and I think that’s going to be a massive area of growth. ECONOMY Nigel Hugill, chief executive, Urban&Civic International sentiment on UK growth prospects (especially London) is pretty negative at present, so there may be capacity to surprise on the upside. The Brexit fixation will begin to abate with Donald Tusk’s re-election as EU president in May 2017 exposing substantial tensions in Poland, France deciding on a new president, Hungarian politicians jostling for position and Jean Claude Juncker being forced to moderate the small country/big authority, knee-jerk reaction to punish the UK. London tends to react positively (and fast) to currency devaluation; the stronger UK regions do well from mid cycle onwards. ‎Maintained population growth will continue to be a big driver and a positive differentiator.