At the beginning of a new year and decade, property’s leading lights reveal their hopes, expectations and resolutions for 2020 in the second of a two-part special.
Principal, Addington Capital
My hope is that Boris becomes a great prime minister like Margaret Thatcher and gets us out of Europe on time and on budget, so we can all move on.
I hope the government gets serious about housing and reduces the current stamp duty levies back to former levels. If it really wants to build 300,000 homes a year, it needs to simplify the planning system. I hope the politicians commit to HS2 but start in the north and focus on improving connectivity in the ‘northern powerhouse’.
In next year’s elections, I’d like to see a new mayor in London. I expect to see rents up and yields down in central London offices, but retail will continue to struggle. Affordability remains the main issue for residential, particularly in London. In contrast, the regions will continue to show sales growth. Letting activity will remain buoyant across all areas.
Resolutions: To keep Addington sharp and focused on finding good opportunities for ourselves and our partners to add value in our target sectors – offices, residential and retail. On a personal note, I want to improve my golf and real tennis handicaps and spend more time with my family.
Chief executive, Palace Capital
The priority is to unite as a country. My hope is that the government focuses on the infrastructure we need, in terms of HS2 and the northern powerhouse rail link, and that it does not frustrate the Heathrow extension. If the government wants housing targets met and more development generally, it must work with local authorities to make sure their planning departments are fully resourced. Planning delays are one of the major hindrances to local and national economic growth.
As confidence returns, this will create more interest in the listed real estate sector. One issue many of us have had to face amid the uncertainty is the discount to our NAV, but I expect this to narrow. I also expect the northern powerhouse to start to become just that and the formal go-ahead to be given for a high-speed rail link between Leeds and Manchester.
Overseas monies that have been waiting in the wings will make their way to the UK, not only in London but the regions.
Resolutions: To leave no stone unturned in making Palace Capital a £500m regionally focused property investment company. As a co-founder of the PROPS, which are the Variety Children’s Charity Property Awards, I want us to reach our goal of £11m since we started in 1992. Variety’s Wheelchair Programme is very dear to the hearts of my family.
Managing director, Lacey Capital Partners
I hope the global economies continue on a confident growth path and overcome some serious issues relating to trade tariffs, trade deals, Brexit and political and sometimes civil unrest.
I hope that both domestic and overseas investors feel more confident. This should lead to more decisiveness, action and pace within the investment market. I hope that new routes into social impact investment and affordable housing create a clear vision and path for institutional long-term investors.
Concerns about growth prospects and the outcome of Brexit will continue to constrain investment. Much of the commercial property sector will remain tough-going and residential markets will continue to look more resilient, interesting and capable of delivering desired returns.
Different ‘beds’ tenures and price points will become more understood and more investable so enabling the residential investment sector to continue its route towards becoming the largest UK property investment sector. A key driver to this will be the growing and key importance of social impact investment.
Resolutions: To continue to be at the forefront of new and innovative platform investment strategies – all within the beds sector. I aim to progress my JV pipeline of more than £1bn (GDV) projects and secure long-term institutional social impact funding. I also plan to have fun working with partners who share my goals and ambitions.
Chief executive, Grainger
We see good prospects for the build-to-rent sector. The positive impact of a more certain political picture will hopefully see an increase in investment into the sector and a stronger housing market generally.
The labour market is also performing well, with wage growth at an 11-year high of 3.6%. The strong correlation between wage growth and rental growth provides an encouraging signal and direction of travel for the PRS.
Also, as we start to see more supply of BTR coming through, we expect to see a differential between the BTR and buy-to-let markets, which should further support the sector’s growth.
The government’s commitment to regional investment should produce more opportunities outside London.
With the strong labour market and high wage growth, coupled with a continued increase in demand and an ongoing supply imbalance in the PRS, we’re confident the outlook is strong.
Co-founder, Great Marlborough Estates
After a tough few years for the London housing market, I hope a majority government and end in sight for Brexit will see a bounce-back. However, the Conservatives will need to row back on their proposed stamp duty surcharge for foreign buyers if overseas investors are to return in greater numbers.
I hope the new government doesn’t scale back its housebuilding ambitions or commitment to home ownership.
Planning reform is also desperately needed if we are serious about boosting supply and this needs to happen in tandem with greater funding for local planning departments.
However, we shouldn’t lose our focus on quality in pursuit of quantity. Prioritising great design and protecting our built heritage while delivering more homes is all perfectly doable.
House-price growth will likely recover, especially in London. However, the heady days of double-digit increases we saw at the start of last decade are unlikely to be repeated.
While there has been a lot of discussion around the rise of renting, I expect to see more first-time buyers climb on to the property ladder buoyed by stronger wage growth, cheap mortgages and a raft of government measures as the Conservatives look for an alternative to Help to Buy.
If the economy strengthens and wages continue to rise, I think we will potentially see interest rates rise, or at least a discussion about how low rates have helped cause the current level of housing unaffordability.
Resolutions: To build on our track record of delivering high-quality, beautifully designed homes across the capital as we approach the completion of Regents Crescent and finish selling the final apartments at Langham Street.
We are in the process of acquiring more sites with a view to developing exciting projects with more of a mixed-use element to them, working with existing and new partners.
Chief executive, Urban Exposure
We hope to see the new Conservative government push on with implementing the supportive housing proposals that were in their manifesto – on the one hand, aiding home ownership with a series of initiatives focused on supporting first-time buyers, such as the proposed mortgage deposit scheme; while on the supply side, boosting output through policies such as unlocking more brownfield land and championing the use of modern methods of construction. The key, as ever, will be execution and the detail on key areas such as planning reform.
We expect the UK housebuilding market to be boosted by a resurgent economy, as we see the new government make progress on Brexit. The prospect of a trade deal will have a positive impact across supply chains, as well as on demand, as greater certainty breeds improved confidence throughout the sector.
The overall picture for UK housing is healthy, underpinned by a continued lack of supply as housebuilding levels remain below government targets, while demand is supported by the ongoing growth in wages outpacing inflation, which, in turn, should keep interest rates at record lows.
Resolutions: Homelessness in the UK has risen dramatically in recent years – doubling from 2010 levels – and we are committed to playing our part in addressing this. Last year, we set up our charity, Urban Exposure Philanthropy, which is dedicated to transforming the futures of under-privileged children by providing free nurseries in disadvantaged areas in the UK.
Having helped open the first and only completely free nursery in England in September 2019 – in Peckham, south-east London – in partnership with the Harris Federation, we will be looking for further opportunities to deliver on our commitment on this critical issue.
Chief executive, Metropolitan Thames Valley Housing
As 2020 brings not just a new decade but also a newly elected government, there is real opportunity to make progress on key issues.
I hope the social housing white paper recognises the role providing new social rented homes must play in bringing post-Brexit Britain back together. Social housing is at the heart of supporting people to get on and live well and must be part of building connected communities that give people greater control of their futures.
Recognition that solutions to the national housing crisis must be tailored to local circumstances is also vital, including learning from what is already working well around promoting access to home ownership. We also need swift progress on providing support and clarity for residents concerning building safety.
One personal hope is that long-overdue progress on addressing the challenges facing social care comes to fruition, including raising the importance of building homes for older people by making this part of housing provision targets.
Chief executive, PLATFORM_
I hope the UK will finally have some clarity over its future direction. Personally, as a Frenchman, I also hope the final Brexit deal keeps Britain close to the EU while still respecting the outcome of the referendum.
As a BTR developer and operator, I want to ensure the Conservatives do not penalise the sector with the aim of boosting home ownership and helping first-time buyers.
The efforts spent trying to get institutional investors to back lifetime fixed-rate mortgages could be better focused on encouraging patient capital into building high-quality homes for long-term private rent.
While BTR made huge strides in 2019, with more money entering the sector and the next wave of schemes becoming operational, there remains a significant shortfall of quality rental housing across the country with rising demand that must be met but that can only happen if the government and industry collaborate.
I think 2020 will see a flurry of transactions, as investors take advantage of the new-found confidence and certainty following the election while the pound is still relatively cheap compared with other major currencies. The BTR market will continue to broaden out, as investors look to towns and cities with strong fundamentals but little to no BTR activity in search of value creation opportunities and higher yields.
I expect more to begin targeting the mid-market too, where PLATFORM_ is active and the depth of demand is greatest and will likely prove most durable during a downturn.
While there has been a lot of excitement around modular and government backing for the sector, I see adoption being slower than anticipated. The financials still do not stack up in many locations and many lenders are not yet fully comfortable with offsite techniques.
Resolutions: Having delivered our first schemes through office-to-residential, our focus is now on new-build opportunities and we look to grow our pipeline further. We are the only BTR developer-operator with schemes in England, Wales and Scotland and to be the first to have a UK-wide presence, with a development in Northern Ireland, would be a real achievement for us.
2020 vision: predictions for the year ahead
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2020 vision: predictions for the year ahead (part nine)