What A New Government Might Mean For Commercial Property
With the snap election of 2017, the relative calm of the U.K. commercial property market could be shaken up by a Labour victory — or even the possibility of one — according to experts.
Theresa May is the only choice for many in the commercial property industry. After the uncertainty caused by Brexit, investors and developers are seeking stability, which they by and large believe May will deliver.
“A strong Conservative victory would give investors and developers renewed confidence; but I think there has to be cognisance that the Labour party campaign around reducing economic austerity measures and having a more equitable society does seem to have gained traction, particularly among younger voters and women.”
Labour’s focus on fairness is evident in Corbyn’s manifesto, where he has promised to build over a million new homes, at least 100,000 of them council and housing association homes that would be “genuinely affordable” for rent or sale. However, he has also made tough regulation of the private rented sector a major tentpole of his campaign, which will not endear him to developers or landlords.
Theresa May is viewed by property executives as the candidate of opportunity. She has endorsed the Naylor Report, which calls for selling off surplus NHS land and property, and she promised to build 160,000 new homes on government land.
“For retail, we want someone who is pro-business, pro-growth, pro-opportunity," JLL Head of European Retail Capital Markets Jeremy Eddy said. "Concepts in retail go out of date very quickly so we need someone who can re-energise the sector, and who brings confidence to investors.”
Investors need a shot of confidence. Though the stock market losses suffered after the Brexit vote have been recouped, Coutts Investment Advisor Shanti Kelemen said growing uncertainty about the U.K. election hit sterling and the markets last week when one poll indicated conservatives may not win an outright majority.
“Volatility is likely to continue until the election,” Kelemen said. “Trying to predict the ouctomes of elections and its effects on the market is notoriously difficult.”
Hone noted there is more at stake than just the stock market: Brexit is looming.
“Some in the sector will consider that anything less than a convincing Conservative victory could create market and investment uncertainty and therefore impact future growth and development," Hone said. "Conversely, I believe the U.K. construction sector and development market, particularly in London, has already proved itself to be very resilient since the Brexit referendum."
There are difficult negotiations ahead regarding the thousands of EU workers in the U.K. construction industry, and future trade agreements, but Hone said he does not buy that the U.K. position will be weakened if May does not get a substantial majority.