It has been a year of extraordinary highs and lows as the industry braces for Brexit. Property Week rounds up the events, people and issues that defined 2017.
Comeback kid of the year
After a five-year absence from the UK property market, Israeli billionaire Igal Ahouvi re-entered the market with a bang in January when he snapped up a portfolio of 15 care homes in London and the South East for £79m. And he didn’t intend on stopping there – Ahouvi, who had been an active investor in the UK market in the early 2000s, plans to splurge an additional £200m building his care home portfolio after identifying a lack of ‘four-star’ care homes.
Campaign of the year
In January, Property Week launched its Call Off Duty campaign and set out five key planks, including the abolition of stamp duty on residential property purchases for first-time buyers. A month later we delivered a petition to the Treasury that was signed by more than 100 property companies that supported the campaign’s aims. The hard work bore fruit in November when in the Budget chancellor Philip Hammond announced plans to abolish stamp duty for first-time buyers up to £300,000.
Revolving door of the year
There is a certain irony to the fact that Croydon Central MP Gavin Barwell, who wrote a book about how to win a marginal seat, lost his marginal seat by a majority of more than 6,000 votes in the June general election. The housing minister didn’t even last a year in the job before being replaced by Alok Sharma following a cabinet reshuffle by Theresa May in the wake of her disastrous election campaign. It was not the end of Barwell’s political career, however, as he was appointed chief of staff by the prime minister.
Brucie bonus of the year
Executive salaries have hit the headlines more than once over the past 12 months, but the Brucie bonus award has to go to SEGRO chief executive David Sleath, who in March was rewarded with a bumper £1m increase in total pay having hit targets that were part of the company’s long-term incentive plan. This boosted his salary from a modest £2.8m to a slightly less modest £3.34m.
Retiree of the year
At the end of March, Sir Howard Bernstein stepped down from his role of chief executive of Manchester City Council after 20 years at the helm. Bernstein played a central role in the rebuilding and regeneration of Manchester city centre following the IRA bomb in 1997. After toiling away at the coalface for so long, he was expected by many to pop on the slippers and reach for his pipe but Bernstein had other ideas. In November, it was announced he had accepted a development-focused role at the parent company of Manchester City FC.
Buzzword of the year
The word that seemed to be on everyone’s lips was ‘co-working’. And no wonder when you consider that as well as the continuing relentless rise of WeWork, the likes of British Land were launching their own branded co-working space, Blackstone was acquiring a majority stake in The Office Group from Lloyd Dorfman and Carlyle Group was making a trio of acquisitions in London for its ‘Uncommon’ flexible workspace platforms. Even department store operator John Lewis started exploring the idea of co-working or serviced office space in its stores.
Makeover of the year
Croydon used to be a laughing stock. Not any more. In 2016, Boxpark opened its second UK site next to East Croydon train station and this year, HMRC moved into the Ruskin Square development by Schroders and Stanhope and Chinese developer R&F Properties bought the iconic Nestlé Tower and surrounding buildings for £60m with a view to building 1,000 new homes. Then there is all the build-to-rent activity taking place across the town. The icing on the cake came in November when joint venture partners Westfield and Hammerson received permission for the £1bn redevelopment of the Whitgift Centre.
Office letting of the year
Following the series of large letting deals that completed last year, 2017 was always going to feel moderately quiet in comparison. Thankfully co-working operator WeWork continued to greedily gobble up stock and the most significant deal of the lot was the 280,000 sq ft pre-let it signed at Almacantar’s Two Southbank Place on London’s South Bank in June – the largest in WeWork’s global portfolio.
Rebrand of the year
In 2017, there seemed to be a trend for property-related businesses to rebrand and abbreviate their names to what people had been calling them for years anyway. So it was with Land Securities, which in June unveiled its incredibly bold and innovative new brand: ‘Landsec’. Hold the front page. Actually make that the back page, where we amused ourselves no end with the headline: ‘No secs please, we’re Landsec’. Yes, we were that shallow.
PW covers of the year
Our March cover on the latest twists and turns in the Candy brothers court case and our November cover on sexual harassment in the property industry.
Story of the year
Images of the charred, smouldering remains of the Grenfell Tower block in Kensington will linger long in the memory. The fire, which ripped through the block in June, left 71 dead and hundreds of residents homeless and prompted a lot of soul-searching about our attitudes towards social housing and the people who live in it. It quickly became clear that a number of factors were probably to blame for the fire, but one that was singled out as playing a potentially key role was the cladding. Subsequent safety tests on other tower blocks up and down the country identified significant flaws, which Property Week discovered could cost as much as £12bn – and counting– to put right.
After the fire, the property industry did what it could to help survivors. LandAid launched a fundraising campaign that attracted donations from the likes of Knight Frank, Grosvenor and British Land, and St Edward – the joint venture between Berkeley Group and Prudential – sold 68 flats at its Kensington Row development to the council, reportedly at cost price, to rehouse survivors.
Occupier of the year
When you look at the cold hard numbers, there was only ever going to be one winner of this prize. WeWork continued its aggressive expansion adding more than 1m sq ft of space between Q4 2016 and Q3 2017. In addition to taking Almacantar’s 140,000 sq ft building at 125 Shaftesbury Avenue in London and its 280,000 sq ft pre-let at Two Southbank Place – also owned by Almacantar – the company also completed a 186,000 sq ft pre-let at Cain International’s The Stage in Shoreditch, in November, and took its first office outside London at Allied London’s No.1 Spinningfields in Manchester. That’s not the end of it. Last week, Property Week revealed that it plans to double the size of its UK business in 2018 and double it again in 2019.
Industrial deal of the year
In 2016, it seemed that barely a month went by without news breaking that online retail behemoth Amazon had signed for another shed somewhere around the country. Although its lettings activity in 2017 was nowhere near as intense as last year, the company still notched up the most significant industrial deal of the past 12 months when it announced it was going to develop its own facility for the first time after purchasing 33.5 acres of land from Severnside Distribution Land at Central Park, in Avonmouth, near Bristol. Amazon intends to create a 2.2m sq ft multi-storey distribution facility on the site.
Man of the year
Prestbury Investments chairman Nick Leslau was the obvious front runner for this prize having landed top spot in Property Week’s inaugural Power 100 list in June.
His Secure Income REIT was the strongest performing in 2016 and unlike many of his peers Leslau remains bullish about the UK’s future prospects post Brexit (although don’t ask him his views on the prospect of a Labour government led by Jeremy Corbyn). Leslau advises his peers not to panic, to “batten down the hatches and sit tight for what is going to be a long ride”. Considering the current political climate, those sound like wise words indeed.
Regional deal of the year
A number of investors scouted the regions for opportunities this year thanks to a scarcity of options and high pricing in London. The most significant deal to complete was Schroder Real Estate’s purchase of No.1 Spinningfields, in Manchester, from Allied London in July. The 300,000 sq ft tower, which is one of Manchester’s largest and highest-valued office buildings, attracted a rumoured price tag of £200m.
Issue of the year
The revelations about Hollywood producer Harvey Weinstein swiftly reverberated beyond the entertainment industry and the US and it wasn’t long before the property industry was forced to take a long hard look at itself too.
Following a provocative leader comment by Property Week editor Liz Hamson, we were contacted by people wanting to share their horror stories and we ran a hard-hitting investigative feature revealing that in real estate 20% of workers have experienced sexual harassment at least once. None of it made for comfortable reading and, depressingly, there is likely to be more fallout yet.
IPO of the year
The PRS REIT stands out from the crowd in a bumper year for initial public offerings (IPOs). As well as being one of the biggest floats of 2017 with £250m raised, it was also a ground-breaking deal, being by far the largest REIT focused on the private rented sector to launch. It was also the first to secure the government’s Homes and Communities Agency as a major shareholder.
Most read leader columns
- How many Weinsteins are there in this industry?
- 2017 predictions: how will Brexit affect UK real estate in the coming year?
- Why so many agents are seeking pastures new
- After Strutts deal, it’s time for BNP PRE to go
- Croydon facelift pulls in new wave of investors
Power play of the year
Blackstone’s sale of Logicor to sovereign wealth fund China Investment Corporation for €12.25bn (£10.8bn) was the biggest real estate deal of the year by a country mile. The acquisition was also highly significant as it came in the wake of a crackdown by the Chinese government on foreign real estate deals and showed that the authorities were happy to make exemptions for investments linked to China’s ‘One Belt, One Road’ policy of supporting its international trade routes.
Top trump of the year
Intu’s chairman John Strachan hailed Hammerson’s proposed £3.4bn takeover of the shopping centre owner as “the most significant transaction in British real estate in a generation”. And it was for a few days, until it was announced that Unibail-Rodamco intends to buy Westfield in a deal that would create a £53.9bn shopping centre behemoth two-and-a-half times the size of the Hammerson-Intu beast. As deals – and seismic shocks – go, they don’t get much bigger.
Profit warning of the year
Not everyone is sharing in the spoils of the boom in the flexible office market. IWG, formerly Regus, shocked the market in October with a profit warning that sent the shares plunging by more than a third in a day, wiping more than £1bn off the value of the company. IWG chief executive Mark Dixon denied it was losing market share to new market entrants, and instead blamed falling revenues in London on Brexit. But others believe Regus’s woes are self-inflicted, with one rival saying: “They have come to value profit over service when the market has moved the other way.”
Investment deal of the year
Landsec and Canary Wharf Group’s £1.28bn sale of the Walkie-Talkie to LKK Health Products trumped British Land and Oxford Properties’ £1.15bn sale of the Cheesegrater to CC Land for size and was also the biggest-ever deal for a single office in the UK. But the Cheesegrater sale, announced in March, was arguably more important as it demonstrated the depth of investor demand for trophy assets and the willingness of foreign investors to pay top dollar and paved the way for the Walkie-Talkie deal in July.
Top 10 stories (PropertyWeek.com)
- Paul Institute finds home at White City Place
- Grafton’s Nigel Kempner passes away
- Housing white paper: the nine key takeaways
- Ex-CBRE and JLL agents set up niche firm
- Help to Buy could end early under government review
- Two founding directors leave Essential Living as M3 restructures developer
- Nick Leslau takes top spot in PW Power 100
- Housing white paper delayed for second time
- Chinese developer buys Nestlé Tower and surrounding sites in UK debut
- Turkish restaurant Gökyüzü takes Walthamstow BHS
Row of the year
London mayor Sadiq Khan hasn’t been afraid to ruffle a few feathers since he took over the reins, so it came as little surprise when he squared up to some of the UK’s major later-living providers in November. The spat centred on the mayor’s new planning guidance on affordable housing. McCarthy & Stone, Churchill Retirement Living, Renaissance Retirement and PegasusLife filed a claim for a judicial review of Khan’s decision to issue supplementary planning guidance (SPG) earlier this year on three grounds, with the claimants arguing the SPG would scupper delivery of retirement housing schemes. The claimants are currently waiting on a response from City Hall.
Political event of the year
There are plenty of contenders for the worst political decision of 2017, but the runaway winner was prime minister Theresa May’s decision to call a snap general election. Buoyed by opinion polls showing the Tories had built up a significant lead over Labour, May decided to take the nation to the ballot box in June in the hope that she would strengthen her majority and her hand in negotiations with the EU. The tactic backfired spectacularly as ‘Corbyn-mania’ spread across the nation thanks to mis-step after mis-step by the Tory party. The upshot was a hung parliament and a desperate deal with the DUP in Northern Ireland. May is still clinging on to power for dear life, but few political pundits think she will still be prime minister come this time next year.
In February, it was announced that Nigel Kempner, founder of Grafton Property Advisors, had died aged 60. A key figure in the West End property market, Kempner had previously been managing director of listed property company Benchmark.
A month later the industry was rocked when development legend Irvine Sellar died aged 82. In 2000, many members of the property industry laughed when Sellar announced plans to build Europe’s largest skyscraper above London Bridge station. Today, The Shard sits as a fitting monument to his achievements.
Sadly, more industry stars were to follow. In April, John Wills, the former head of West End at Healey & Baker and known to his friends as the ‘king of the West End’, passed away at the age of 83. In July, Avison Young principal and former CBRE and JLL industrial agent James Swallow died suddenly at the age of 38. At the end of August, it was announced Robert Hodges, co-founder of Red Tree Capital, had died aged 49 following a short battle with cancer. And on 30 October, Henry Angell-James, a director at developer Graftongate who was a well-known figure in the world of industrial property, died aged 54. They will all be missed.