After nearly two-and-a-half years in “the thick of it”, I am finding it rather hard to adjust back to life in the real world. Thankfully, UKR has a seriously GREAT project in the pipelines (and more on this when I am at liberty to divulge) so I certainly have plenty to do. But it is strange not to be sucked into the Whitehall vortex every day; the whole life is so compelling and all-consuming. And I find I am suffering a bit from decompression, no matter how busy I am with my exciting new site.
And of course, more than ever we live in interesting times. One of the last meetings I attended on behalf of HMG was the Commercial Property Forum (see blog 27 July) and we all continue to watch with interest as the new government’s Brexit strategies emerge over the course of this year.
Close perusal of last Saturday’s Estates Gazette would indicate that the industry seems to have settled (roughly) into the position that it is too early to tell what effect the referendum will have on the market. While there is some anecdotal evidence that sentiment has shifted dramatically, there are too few data points to really evaluate the impact.
But there is no doubt that transactions are down. And a sense of normality has not yet returned. And some pundits expect a mid-to-heavy shock, with a reduction of revenues of between 10% and 20%.
And while there are clear difficulties in the property industry, companies who have liabilities in the UK are compelled to also see the opportunities. You can’t shift your land. And the property sector does operate with an unashamedly opportunist culture. We have already seen the opportunities for significant discounts on prime real estate, particularly in central London.
And the fundamentals remain the same: there’s a strong sentiment that good quality deals will continue to do well, particularly with prime stock, but that secondary and tertiary real estate will struggle. Most of all, there is still a major housing shortage. And residential rents still seem to be buoyant. It goes without saying that those with a mixed asset base are more likely to be insulated from shocks. It is a curate’s egg.
Well, I may not be In There anymore, but one thing I know for sure: the government is having a Big Think about what it can do in policy terms to keep the market buoyant. And conversely, the market will need clarity on what government can do to encourage investment and infrastructure development. If anyone has any smart ideas, write to Melanie Leech at the British Property Federation who is channeling the industry’s input to the government strategy. I promise that every positive idea will be welcomed with open arms.