Cluttons brought together a range of experts at the first-ever RESI Senate Lunch at this year’s Mipim to discuss how the residential sector is placed to deal with the housing crisis, the prospect of a Labour government, the risks of Brexit and attracting young people to the construction industry.
A fortnight ago at Mipim, Property Week introduced the first-ever RESI Senate Lunch. The discussion on the state of the housing market was sponsored by Cluttons and included some of the biggest names in property.
The key question the panel intended to answer was: where are we at in the housing market? The debate, however, touched all sorts of topics, from the housing crisis to the possibility of a Labour government, from Brexit to the appeal of property to young generations.
Our panel of experts
- Mark Allan, chief executive, St Modwen
- Philip Barnes, group land and planning director, Barratt
- Neil Brearley, founding director, Cast
- Johnny Caddick, managing director, Moda Living
- Mark Collins, chairman of UK residential, CBRE
- Helen Crane, deputy news editor, PropertyWeek
- Dominic Grace, head of residential development, Savills
- James Gray, managing partner, Cluttons
- Liz Hamson, editor, Property Week (chair)
- Killian Hurley, chief executive and co-founder, Mount Anvil
- Richard Jackson, founding partner, Apache Capital Partners
- Geeta Nanda, chief executive, Metropolitan
- Tom Roberts, director, Blackstock Consulting
Liz Hamson, editor of Property Week, kicked off the discussion expressing the will to refresh the residential sector, after the revelations of the Presidents Club scandal. “We have a golden opportunity and right now it is the perfect moment to do it,” she said.
“One can feel that there’s a momentum going,” agreed Dominic Grace, head of residential development at Savills. “Cynics can say that has been the case before, but now we have the real financial power to do it. The government and local authorities are not embarrassed to use words such as CPO anymore. We’re seeing some heavy intervention now.”
Grace said that the right word is acceleration. “We, in the private sector, are never going to deliver the numbers, either at a national or a London level, without some muscular intervention from the government.”
Mark Collins, chairman of UK residential at CBRE, echoed Grace’s words, saying that the industry is “still too fragmented”. “It has to get behind the government drive,” he said. “We critically need a uniform voice, a general consensus that would give us the possibility to reply to the government.”
The biggest risk that we face as an industry is Jeremy Corbyn’s rhetoric
Richard Jackson, Apache Capital Partners
Guests agreed that after the “self-inflicted dominance” of Brexit, housing is the second biggest topic on the government agenda. So how damaging is Brexit going to be?
“From an investment perspective, the most important thing is confidence and when you have events that shake investors’ confidence, you’re in trouble,” said Richard Jackson, founding partner of Apache Capital Partners.
“We have a number of investments that have fallen out of bed because of Brexit and other political events such as the snap general election. But the biggest risk that we face as an industry is Jeremy Corbyn’s rhetoric.”
Philip Barnes, group land and planning director at Barratt, was more confident. He said that a reinforced Help to Buy scheme would be the silver lining to Brexit. “I was very happy to see the Help to Buy extension until 2027 in the Labour manifesto,” he said.
The prospect of a Labour government as a result of a hard Brexit was the most debated topic of the day. It was unanimously accepted that the possibility of Corbyn as prime minister would create a period of economic uncertainty. It would, for instance, dissuade foreign buyers from investing in the country.
However, most guests said that eventually this scenario would not have a devastating impact and that his powers would be very limited.
Tom Roberts, director at Blackstock Consulting, said that the most likely election result in 2022 will be a Labour minority government. “Corbyn will not be able to implement anything because he won’t get the majority he wants,” he said.
On the other hand, Geeta Nanda, chief executive of Metropolitan, said that a Labour government might bring some opportunities.
“I think there would be more focus on local authorities, which is not a bad thing,” she said. “Giving them more flexibility and allowing them to spend more would be beneficial.”
Whether we’ll have a Tory or a Labour government, Killian Hurley, chief executive and co-founder of Mount Anvil, said that “any government that would preside over a significant drop in house prices would not get re-elected”.
That is “a lesson” that the Tories have learned, according to Apache’s Jackson. “For the vast majority of people their most valuable asset is still their house,” he added.
The conversation then shifted towards the sector’s appeal in the age of Brexit. How do you get young people into the construction and property industry?
Neil Brearley, founding director at Cast, said that Brexit is only one of many factors that is scaring people off. “We have to encourage people coming to the industry, making them want to be architects, engineers and work on building sites,” he said.
Jackson agreed: “We’re not educating young people on what the property industry is about through schools, universities and apprenticeships. That’s a major problem.”
A perception bias was identified as the main issue. “What I find disappointing is that there is such a low understanding of the industry and the routes of getting into the industry,” said James Gray, managing partner of Cluttons. “It’s bad, because there’s a variety of jobs and multiple ways of getting into these jobs.”
If you’re not doing it as a leader, you can’t possibly say to someone else in your sector that they should be doing it
Philip Barnes, Barratt
The consensus was that the public associates construction with hard hats – a gross simplification of a “wonderfully diverse” industry.
“It’s beyond that. It’s interior designing, it is creating companies, marketing, branding, IT, technologies,” said Mark Allan, chief executive of St Modwen. “We have to make it exciting for our kids. Make them say ‘that’s what I want to do’.”
Barratt’s Barnes needled the panel by asking how many people at the table had been to a school to promote their sector and their business. “If you’re not doing it as a leader, you can’t possibly say to someone else in your sector that they should be doing it,” he explained, adding that the reaction within schools has been “absolutely fantastic”.
The industry could do more, the audience agreed. One way to do it is through technology, which can help to inspire new generations in a more engaging way.
In a recent survey, 87% of people said that connectivity was the most important factor when they were looking for a new home.
“Technology is paramount,” said Johnny Caddick, managing director of Moda Living. “Most people now work from home two days a week. They need high-speed Wi-Fi. If you, as a developer, are not going to provide them with that, the building next door will. It’s a vital opportunity.”
An opportunity that the industry leaders are willing to seize, despite the obstacles that they will face within the next 12 months. The UK will ultimately leave the EU in March 2019, but the residential sector is ready for a change and there is optimism about what the future will bring.