JLT Specialty’s European Real Estate team hosted a breakfast seminar for the City Property Association at the House of Commons on Tuesday 9 June 2015. Here are the highlights from the event:
Bill Gloyn, a former treasurer and past-President of the City Property Association and former partner at JLT Specialty welcomed guests and CPA members. Bill sent apologies from Mark Field, MP, who was, sadly, unable to attend due to his participation in a Commons debate on London’s air pollution, something that is very important to Mark.
Barry Gilbertson, Property consultant
Barry had been asked to take a retrospective look back over the past five years that he has been speaking at this event and entitled his presentation ‘Echoes of the past - Have we learnt anything?’
In 2011, Barry had concentrated on the recession and how this was impacting the UK retail situation:
- A retail business in financial trouble will immediately jettison 27% of its stores, very quickly increasing to 36%. This had resulted in 11m sq ft of empty retail accommodation;
- Estimated that a total of 3,600 retail stores would be vacated;
- Stated how monetary policy measures were pulling against what banks were struggling with, leading to freezing of debt markets; and
- View that each sector would recover at a different pace.
In his 2012 presentation, he looked at the complexities of the market and focussed on:
- The complex relationship between the economy, the way banks do business and sentiment within the real estate market and the importance of how these overlap;
- Trying to think more about what your customer wants than trying to sell them what you think they need;
- View that tenant failure is the biggest threat; and
- Ethics and trust are paramount.
In 2013, Barry said that hoping for a post-Olympic effect, we had ended up with a ‘zig-zag’ economy and it was difficult to understand what was happening! He looked at:
- The effects of quantitative easing and Basle issues;
- The start of ‘alternative’ lenders;
- How retail vacancy rates had started to ‘flat-line’ at 14.1%, but that over 4,000 shops had been lost resulting in another 7m sq ft of empty retail space; but that
- There was some cautious hope for the future.
In 2014, Barry focussed on the importance of real estate and risk awareness:
- Again emphasising the key drivers of the economy, banking and real estate sentiment;
- Property is key and a valuable business asset;
- Stressing that risk awareness is critical to success.
Looking at 2015 and beyond, Barry said that this remains a complex market; we have growth and believes this will continue. He warned that too many investors are risk-blind and suggested paying attention to cyber risks, communications, consistency, constructively challenging the board and executives and change and innovation.
Summing up, Barry said that UK business needs to be flexible, dynamic and competitive.
Stephen Down, Head of Central London & International Investment at Savills
Stephen gave a fascinating insight into international investment in London and began by commenting how the skyline of the City had changed so dramatically during his 30 year career due, mainly, to international capital.
He believes that this is not a short-term phenomenon due to:
- Benefits of long leases and landlord friendly aspects of Landlord/Tenant relationship.
China, in particular, has a large number of investors with significant funds to invest, mainly in North America and the UK, with the City of London being widely regarded as the financial centre of Europe. In 1983, the total annual investment turnover in London was £1.4 billion and by last year this had risen to £22 billion, mostly from international investment.
Looking at what could stop the flow of money, Stephen stated an EU pull-out, although believes this to be unlikely. The other main fear is of an overheated market and he warned that something eventually will have to give. We should not be complacent as the danger is that money will be diverted to other European markets.
Summing up, Stephen again reiterated the key plusses that help maintain London’s international status, coupled with the perceived stability and availability of stock.
Charles Begley, Executive Director of the CPA concluded the event by thanking the guests for supporting this event and, in particular, to the speakers for their hugely informative and entertaining insights.
For further information, please contact Kevin Luckett, Account Executive, Real Estate on +44 (0)20 7558 3612