It is said that Slovakia is a land of 12,000 sayings, but I will start by borrowing the English expression “time in the market is better than timing the market”.
This phrase on the wisdom of staying invested over the long term is one of the fundamental reasons that London remains an attractive location, despite the ongoing challenges created by Brexit, as with uncertainty comes advantage. Investing for the long term also resonates with our philosophy at JTRE, and it underpins our strategy for entering the London market at an otherwise challenging time.
It is impossible to build a successful property business with short-term thinking. Large-scale property development is a long-term enterprise. Finding a suitable site, securing finance and planning, constructing the scheme and selling it all takes a considerable length of time. In this respect, investing in property is unlike other forms of investment, such as the stock market, where the flow of capital is constant and trades can happen at the tap of a key.
We will not let the shadow of a potential no-deal Brexit looming over the property sector distract us
JTRE decided to enter the London property market before the EU membership referendum, and we had been looking for a suitable project prior to the vote. We acquired a prime development site with a GDV of c. £400m in conjunction with luxury London property developer Sons & Co in July 2018, two years after the UK voted to leave the EU. It was then, as now, a time of political uncertainty. More recently, we have further consolidated our foothold in London by putting people on the ground and appointing a UK operations head.
Confident outlook
Uncertainty is not good for business, but we have confidence in the British political system (after all, your last revolution ended in 1660!).This belief has been matched by others, and we have not been alone: foreign investment from all corners of the globe totalling billions of pounds has continued to flow into this fantastic city.
This is not to deny that investor appetite has been tempered by Brexit. Institutional investors and large funds have no doubt thought long and hard before committing. Perhaps some, on weighing up the risks, have decided to sit on the sidelines and wait to see how Brexit plays out.
However, we do not believe that Brexit will have a significant impact on our establishing a foothold in the UK. If anything, a weaker pound will mean that London continues to remain attractive to foreign investors. The pace of selling may have slowed down, but we are confident we are developing an excellent product in the perfect location. The only downside of a no-deal departure is that it may push up our costs since we are importing materials from the EU.
Over the next decade, while our primary market will continue to be Slovakia, we will focus on residential and office development opportunities. We will continue to watch the development of Brexit carefully, but we will not let the shadow of a potential no-deal Brexit looming over the property sector distract us.
London is one of the oldest, most stable and most prestigious markets in the world. It is unique – a political capital, the UK’s business and financial centre and a city with significance beyond national borders. Few cities in Europe or the world can compete with London’s economic, cultural or political power.
From a development point of view, London is a city that offers certainty. The planning system and regulatory framework may not be perfect, but they are transparent and fair. London’s status as a global gateway for trade and investment is unlikely to change any time soon and, for companies with ambition, London is a platform on which to build an international business.
We want to be part of this global success story, and we are confident that countless others will too.
Peter Korbačka is the founder of JTRE
