In or out? The need for a decision on the UK’s future in the EU sparked plenty of debate at an event at last week’s Expo Real in Munich
The UK’s position on whether it remains part of the European Union must be determined as soon as possible to avoid damaging investment into the country, according to Manchester city council leader Sir Howard Bernstein.
Bernstein was speaking at a debate hosted by Estates Gazette in partnership with Bilfinger GVA, the British Property Federation, CRS and Hogan Lovells. He said: “Our participation in the EU or not is an issue. I personally think we need to say in. What would be catastrophic, though, would be continuous debate for a couple of years.
“It is the equivalent of putting a sign up saying ‘Out for lunch’. We need to do this sooner rather than later – certainly by autumn next year. If we don’t do that it could have a large negative influence. I worry about uncertainty.”
Prime minister David Cameron has promised an in/out referendum by 2017, but many business leaders would like to see a decision sooner.
Bilfinger GVA senior capital markets director Mark Rawstron added that the referendum for Scottish independence last year had a dramatic impact on investment volumes in the country, and Scotland was still suffering as a result.
“Some overseas investors still won’t go to Scotland because of the devolution discussion. It has been very damaging from that perspective,” he said.
Whether a Brexit, were it to take place, would damage investment was something about which Jackie Newstead, global head of real estate at Hogan Lovells, was sceptical.
“If this actually happened, would it make a difference to the attractiveness of the UK? I’m not sure. One of the reasons people invest in the UK is because it is outside of the euro, so it might not matter,” she said.
Before the debate, Bilfinger GVA chief executive Rob Bould told the audience that UK local authority land would be the biggest source of returns going into 2016 and that the country was about to experience the best investment year since records began, with £70bn of incoming capital and total returns of 15%.
He said there was a lack of prime grade-A space, which was a major opportunity for investors in the UK regions, pointing at there being just two years’ supply in Glasgow and six months in Birmingham.
Birmingham was one of the cities that Chris Taylor, chief executive of Hermes Real Estate and president of the British Property Federation, picked as the most enticing to invest in at present.
Hermes has brought in Canada Pension Plan Investment Board to take a 50% stake in the first phase of its Paradise Circus scheme in the city and Taylor said that Birmingham was increasingly well placed to attract international capital.
“There has been very little grade-A space in Birmingham or confidence from the private sector to invest in Birmingham, but with the upgrade in infrastructure, which is absolutely critical, and with the public realm and public-private partnerships, there is a very important template for attracting long-term and overseas capital,” he said.
In order to entice international investment, local authorities must de-risk the decision as much as possible, said Paul Marsh, head of projects and finance at the Regeneration Investment Organisation.
“Controlling the known unknowns of the planning process and investment in infrastructure locally are absolutely crucial. The final component is leadership and having a strong and competent team that will draw that investment in.”
Such leadership must be innovative, said Bernstein, who is heralded by many as the city leader others should aspire to emulate in order to be successful.
“We [regional cities] have had to work a lot harder and had to be smarter as well. For example, in the North West we have come up with our own investment model – Evergreen – which is designed to leverage private funding for key infrastructure projects. That has meant that we have been able to invest even in the dark times,” he said.
