London’s Square Mile is “primed” for the money international investors want to put into real estate, says the planning chair of the City of London Corporation – but he and his team are increasingly aware of their responsibilities in making sure those investors know there is more to the UK than London offices.
“There is a lot of capital on the table,” says Shravan Joshi, speaking with EG at the Expo Real conference in Munich. “It’s about unlocking where products are and where the uptick is. I think the City is really well primed for that. We’ve got the right sort of transparency in our policies and our strategies, there is line of sight as to where schemes are and future employment growth in the City.
“We are starting to get the feeling that we are going to get projects off the ground now. We had a nervous pause for the past couple of years, partly because of unsteadiness in Westminster politics but also interest rates and inflation. We are now starting to see inflation starting to settle and markets are responding well.”
The money Joshi and the team see on the horizon is European, he says, as well as American, Canadian and Australian. He points out that new number crunching from the City Corporation shows wealth funds that have opened UK offices and put boots on the ground have seen their investments in the country double in the past five years. That accounts for £13bn in investment over that period, he adds.
“Encouraging those people to set up shop locally is absolutely critical if we are going to get them to invest in commercial real estate,” he says. “And it’s not just real estate – it’s infrastructure, technology, life sciences, it’s across the spectrum. To add to the UK economy like that, they have to be on the ground.”
That makes attraction and retention of capital important issues for Joshi, the City Corporation and the other parties involved in the UK Cities & Partners delegation at Expo Real, which brings together parties including Invest Manchester, Invest Newcastle, the West Midlands Growth Company, Avison Young, the British Property Federation and Opportunity London.
“What Opportunity London does is wonderful,” Joshi says, highlighting the work of the public-private initiative that has now published two prospectuses of UK real estate and infrastructure projects that international investors can back. “Having that money in London de-risks the market.”
But for these efforts to equal growth, political certainty is needed too.
“We have to give return on investment,” Joshi says. “That’s around having confidence in policies from Westminster that are going to say, ‘Your money is good, our money is safe and your money will grow.’ We have been pushing hard on the government to give predictability to the market. If you give that predictability, patient capital will flow. People aren’t going to put money down for 20, 30, 40, 50 years if they don’t think the government is on a certain trajectory.”
The clearest message from the UK Cities & Partners initiative, Joshi says, is one of collaboration between cities and regions.
“We are not in competition,” he says of London’s position when it comes to other cities around the UK. “This has to be a coalition of willing partners that comes together and says, ‘What’s best for one of us is best for all of us.’ We’ve got some of the biggest banks in the world in the UK doing infrastructure projects globally. How do we get them to pivot inwardly and do infrastructure projects in Scotland, Northern Ireland, Wales or England? Those are the narratives we need to be building up, and so having this coalition is really valuable. We’ve all got the same problems. We all need more housing, we all need more infrastructure, we all need more investment.”
He hopes the City of London Corporation can be an inspiration in that regard.
“Government isn’t going to pay for it all. So having the City of London here saying, ‘we know how to unlock private capital, all our investment is speculative, all our investment is private capital’ – this is how you do it, this is the formula.”
He continues: “We are the second largest global market for assets under management. Some of that is going to end up in places like Liverpool, Manchester, Bath, Bristol. Part of what we have to do in the City of London is, when we talk to investors, say, ‘The UK is de-risked. The risk story of London and the South East is the same elsewhere. If you look at the Metro mayors coming through now, with really strong voices, attracting capital and investment should be easy.’”
Photo © Vuk Valcic/SOPA Images/Shutterstock
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