30/07/2024Memery Crystal acts for private seller on sale of King’s Place student housing site to Unite Students
Memery Crystal has acted for a private seller on the sale of King’s Place on… Read more
27/03/2019
In spite of the frustration and ‘wait and see’ approach around Brexit, the London market is still strong with a lot of appetite in a number of sectors including prime office, PRS, hotels and student accommodation.
Thousands of property professionals from London travelled to the 30th edition of the MIPIM expo earlier this month thinking a lot about Brexit. How would Britain’s departure from the EU affect the domestic property market?
Such a difficult question. But, at least the uncertainty would be resolved by the time they flew home.
Wrong.
Parliament, of course, failed to reach consensus on what Brexit would look like – or even when it would happen. And so the 26,800 MIPIM attendees – including nine Memery Crystal partners – were left to ponder more uncertainty in the months to come.
And yet, the reality is that the London market has proved remarkably resilient since the Brexit decision of 2016.
“Brexit has not been a problem thus far — since the vote, the investment market has continued at a level well above the last peak in 2006 and 2007,” Savills’ Head of Cross Border Investment Rasheed Hassan told the property website Bisnow.
The numbers back him up. A few weeks before MIPIM, Knight Frank’s London Report 2019 confirmed that the UK capital is still the world’s top destination for investment in commercial real estate.
The headline findings included:
Knight Frank’s contention is that yes Brexit is an important event, but it doesn’t negate the wider appeal of the UK capital. Its report concluded that London survived the 1980s stock market crash, the ERM crisis of the early 1990s and the dotcom bubble of 2000. It will survive Brexit.
This was broadly the sentiment expressed by many of our clients at a special dinner in Cannes, hosted by Memery Crystal.
Without doubt, London has history, language and even time zone on its side. The city is at the heart of the global knowledge economy. It has ‘adjacent’ expertise in finance, insurance, law and accounting that is difficult to replicate elsewhere.
This might be why Office for National Statistics figures show that in the two years after the referendum the capital’s workforce grew by 278,000. And it might explain statements such as this one from Qatari Diar, which is redeveloping the Chelsea Barracks: “Not only are we confident and committed to London and the UK property market – both commercially and residentially – but we will continue to look at locations to invest in for the future.”
The expectation that London’s population will keep growing has fuelled growth in two areas in particular.
The first is hotels. Figures show that investment in the London hotel market during 2018 rose by 23 per cent (excluding developments), with transactions exceeding £2.5 billion. Investment deals hit £1.5 billion, with fixed lease deals scaling to over £530 million.
The second buoyant market is student accommodation. Knight Frank’s Student Property team forecasted that more than 29,000 additional purpose built student beds will be delivered this year. This will bring the UK’s total to over 600,000.
Memery Crystal’s real estate team, with its full service offering, has been particularly active in both these sectors in the last year.
In fact, the London market is so buoyant that it is even putting pressure on Greater London locations. In a new report, Savills explains that companies such as eBay, Nando’s and WaterAid (with HQs in Richmond, Putney and Vauxhall respectively) may be forced to move. It says there is limited room to expand in these regions thanks largely to Permitted Development Rights (PDR).
In response, Savills identified seven key sub-markets for investors looking to capitalise on the imbalance: Wandsworth, Lambeth (excluding Waterloo), Richmond, Camden (Town & North), Croydon, Merton and Newham.
Despite this, central London looks set to retain its allure to both the world’s investors and workers. And the City of London Corporation is keen to keep it that way – in the Square Mile at least. Its City Plan 2036 shows how.
The ‘once in a generation’ document showcases a strategy for the 21st century, which centres in making the area more able to cope with larger numbers. To that end, it focuses on urban greening, reducing air pollution, more floor space for SMEs and better facilities for pedestrians and cyclists.
It’s a 20 year plan. Long enough to give the UK time to finalise its Brexit strategy? We can hope.
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