Key themes from our property survey
Last month we asked for views in our property survey. Below we have outlined some of the insightful responses we received.
An overwhelming majority of respondents agreed with the key players in the industry and said that London is “a safe haven for capital”. Overseas investment is the driving force, with foreign investors steered from home investment due to economic and political risks.
One respondent succinctly said that “London property is the safe deposit box for international investors”.
The survey showed a range of views regarding how long the current property market boom in London can continue. Whilst most thought that it would continue for more than six months, thereby taking it beyond the General Election in May, there was no strong consensus as to how long the boom would continue. This suggests that, despite considerable uncertainty over the look of the political landscape later this year, London’s property market is more influenced by geo-political issues than national ones.
With the tunnelling for Crossrail due to be completed in the next few months, it was interesting to see that nearly two-thirds of respondents thought that Crossrail would have the biggest impact on future residential property values within the M25. With a fairly even balance in replies between those expecting the West and East parts to benefit more, it looks like areas previously considered unfashionable will be seen in a different light in the years to come.
Three quarters of the replies thought that London’s current and planned transport improvements were inadequate in supporting infrastructure growth until 2030; perhaps not unsurprising for those that face a daily commute into London.
When asked which improvements are most important in maintaining London’s status in the world economy, Heathrow expansion came out clearly on top. Whilst it is unsurprising that air travel is considered to have the biggest impact on London’s world status, it is interesting to note that expanding Heathrow was a clear front runner and that the “Boris Island” estuary airport was preferred to expanding Gatwick. Although airport expansion may be a politically toxic topic, it is clear that our politicians need to stop kicking the tin can down the road and make a decision once and for all as to how the airport capacity required to maintain London’s international status is to be provided.
Behind the expansion of airport capacity, Crossrail 2 was seen as the next important improvement that could be made to maintain London’s status. Although there is an increasing recognition from politicians of the need to build Crossrail 2, maybe it is a forlorn hope that the IP created from the first Crossrail can be preserved by keeping the teams together for a second Crossrail.
Respondents were feeling blue about the future with nearly 90% believing that the Conservatives offered the best opportunities for those in the property industry. The idea of a “mansion” tax was adversely commented upon by a number of you and there were a number of replies that supported the British Property Federation’s call for a reform of business rates.
Consistent with the Organisation for Economic Co-operation and Development’s recent analysis, that showed the UK to have the highest ratio of property taxes to GDP in the developed world, were a number of calls to reduce tax on UK property; calls for a reform of business and residential rates and cuts in stamp duty were all made. However, with a budget deficit to manage and property often being seen as a soft target by politicians, we do not anticipate seeing any widespread cuts in property taxes in the near future. Those hoping for a reform and re-alignment of rates are more likely to get some satisfaction – at least in getting a review, if not the end result!
For many years London has been seen as a safe harbour for overseas money and, with an increasingly unsettled world, there does not appear to be any indication that this will cease in the foreseeable future. Markets do not like uncertainty but there is a strong chance that later this year this is exactly what property people will be facing with a hung parliament. Some respondents expressed a wish for joined up thinking, not flagship projects, in Government policy as well as a long term strategy towards infrastructure. Whilst flagships tend to be very attractive to “here today, gone tomorrow” politicians, whatever the colour of the next Parliament it is hoped that some hard decisions are taken over airport capacity and rail investment. Failure to make such hard decisions will be damaging not just to today’s generation but to future ones as well.
Once again, thank you for participating and we trust you find the feedback useful.
If there are any issues you would like to discuss, or our assistance with, please do not hesitate to contact either your usual haysmacintyre adviser or me.
Ian Daniels, Head of Property, 020 7969 5502, firstname.lastname@example.org