Key takeaways from the London Real Estate Forum
16 June, 2018
Complacency is a great danger
While there’s plenty of stats to back up claims that Brexit is not harming London’s economy, scratch the surface and things aren’t quite so rosy.
According to Deloittes, the UK remains the most attractive destination for Fortune 250 Companies but a different survey, also by Deloittes, says the reason people prefer the UK is because “it’s diverse and multi-cultural”.
The word ‘diversity’ word cropped up a lot and like ‘place making’, it sounds good and everyone is jumping on the bandwagon. But if it turns out what people value most about the UK is its openness, tolerance and internationalism, this can’t be packaged and sold. That’s why Deloitte’s vice-chairman Angus Knowles Cutler urged caution: “This is where the danger lies” – and to think otherwise is complacent, he said.
Tech is the saviour, sort of
Nothing new here, but it was interesting that in the sessions I attended panelists talked about tech companies as if they were the only game in town.
It’s true that London remains very attractive for start-ups despite fears they’d all leave for Berlin but as Dickon Robinson pointed out, why is no one talking about education? “ It’s fashionable to talk about tech… we have 40 universities in London but this gets missed out in the narrative”, he said.
Despite the generally upbeat tone on stage, the conference’s “curated exhibition” told a different story. Unlike previous years, when models of residential towers dominated the venue, this year they’ve all gone.
Tax crackdowns and stamp duty have both hit foreign investors and the buy to let market. “This is having an impact and lessening how many homes we can build,” said Ballymore’s John Mulryan. On top of this, construction costs, the Community Infrastructure Levy (CIL) and the fear of foreign workers leaving London are adding to the mix. The GLA estimate that 25% of people working on building sites are from the European Union.
A story to watch as Brexit unfolds.
Build to rent
Every cloud has a silver lining and property’s continues to be the build-to-rent sector. Quintain is currently building the largest build-to-rent scheme in the UK, at Wembley Park, with a whopping 5,000 units. Michael Allen, Quintain’s American Build to Rent director said it was appealing to a “diverse audience with a “diverse range of product offering”. Intergenerational living -something that has never taken off in the UK –is one way Quintain plans to encourage diversity alongside co-working.
Leaving aside that build-to-rent homes can be delivered 10 times faster than homes for sale, behind all the jargon there’s some concern that once the market revives properties will be “flipped’ and sold off. There’s also the tenure issue, the design issue – Quintain’s model of Wembley Park was causing a fair number of raised eyebrows- and whether build-to-rent can create genuine mixed communities.
Good news and bad news for architects as Aecom’s Nicola Gillen talked about the impact of co-working on real estate.
WeWork, the US co-working group is now the biggest occupier of London offices after the Government.
“Co-working is a massive disruptor in our world… sorry architects”, she said. The bottom line is there will be fewer new offices and more refurbs converting traditional office space into more flexible formats, but new build will be higher quality with the emphasis on wellness and social experience.
Euston is a car crash waiting to happen
“Euston will be a fantastic, special place,” said Jon Milward from Deloitte Real Estate – except no one on the panel really believed him. HS2 is Europe’s biggest infrastructure project being delivered by an uneasy alliance of different bodies with competing agendas. Camden’s director of regeneration and planning David Joyce looked like he’d rather be somewhere else instead of trying to explain how the council was going to deliver “a vision that everyone can buy into”.
“Camden has to be a robust client to Lendlease otherwise they will have you (Camden) for breakfast” said Sadie Morgan, chair of the HS2 Independent Panel, who couldn’t hide her frustration at the process so far.
Network Rail’s MD David Biggs said the problem is funding for Euston station.”HS2 funding is there but the conventional side is not”. This means the vision of a fully integrated station is still a long way off.
The London Real Estate Forum took place on June 13 and 14 in Mayfair, London.