If every dark cloud has a silver lining, then Brexit’s upside will be its ability to shine light on London’s enduring appeal.
At least that was the verdict of the optimistic 400 property professionals that gathered for a Brexit post-mortem at Shakespeare’s Globe, SE1, on 28 June.
“Disruption means opportunities”
At a special edition of EG’s London Question Time, Stephen Down, Savills’ head of central London and international investment, said his phone has been ringing off the hook with Middle Eastern investors looking for a bargain since the EU referendum vote.
While Asian investor Goodwin Gaw, managing principal of Gaw Capital, said a shift in the status quo presented by Brexit was “awesome”.
“Disruption and dislocation means opportunities. So I think whether it is good or not depends on whether there is enough disruption and dislocation to make a difference and enough people who want to sell,” said Gaw.
He said the mixture of low yields and the UK’s own currency meant it had the “best of both worlds” and would see a lot of capital coming over if there was a correction.
But he added that it was “too early to tell” whether the opportunities would present themselves.
Victoria Quinlan, chief operating officer in Europe for Australia-listed Lendlease, said it was clear before the referendum that the market was plateauing and the company was having to reassure its investors that post Brexit the UK was still a resilient market.
“We are back out there, we continue to build, we continue to not let politics overrun everything,” she said.
“Frankfurt has no soul”
On the future of the UK occupational market, the panel batted away suggestions that Brexit had produced additional significant threats from other European capital cities such as Paris and Frankfurt.
“Frankfurt does not have a soul,” said Gaw. “Everything works to German efficiency, but it is not colourful like London.
“I think politics would have to really screw up to take London down that far.”
Down said he did not think London would see tens of thousands of people moving to Frankfurt or Paris or Dublin, as predicted by analysts at PwC.
He said: “London is doing extremely well as a centre for all sorts of businesses. It is not just banking and finance.
“It is about the pharmaceutical industry, it is about the tech industry.
“It has got a hell of a lot going for it and it reinvents itself all the time so I think it will still dominate every one of the major cities going around the world.”
However, Telefonica O2 UK’s head of public affairs Paul James pointed out that before the political uncertainty delivered by Brexit, the UK was already facing threats from European cities such as Berlin in the fintech sector because of its digital infrastructure – something he said the UK needed to prioritise shoring up here.
Quinlan said she could see some financial services firms taking a smaller HQ or moving some staff to Dublin or Frankfurt.
But she said: “I do not think that will mean the market will fall apart here. I think there is still enough resilience and growth across multiple sectors that London will be able to weather the storm.”
Wanted: Political leadership
Political certainty was hailed on the evening as a priority to ensure London’s continued success as a global financial centre. And with that in mind, a straw poll of the audience found 70% supported Theresa May as the next prime minister, with Boris Johnson – before his withdrawal from the premiership race – being the second most popular choice with an underwhelming 16% of the vote.
Charles Staveley, Mills & Reeves partner and head of central London and international investment, said quickly finding a government to lead the debate and activating Article 50 would provide some degree of certainty. How our future relationship with the EU was then negotiated would be important for giving confidence to occupiers and investors, he said.
“We need that business as usual approach,” added O2’s James. “We need to put pressure on government to focus on the machinery in government and where they are trying to go next with Brexit.”
Echoing the call for political certainty, Savills’ Down said: “We need direction, we need a proper game plan, we need leadership.”
His message to government was to focus on how to retain the pool of young talent, creating places where they are can live affordably, cutting red tape and making the planning system easier.
He also said the debate around non-domiciles was scaring talent out of the UK.
Reducing corporation tax or deploying some other tax incentive to boost the economy would give the industry a boost, he added.
Just four days after the result of the vote took the industry by surprise, the crowd was refusing to accept that this was the beginning
of the end for the sector’s boom.
The sentiment was summed up by one 25-year-old graduate after the event:
“It is not 2008. We are still a strong economy and I think people are going to act sensibly. No-one is going to be making any knee-jerk reactions.”
Underlying trends cause concern
Pollsters have had a hard time lately, failing to predict yet another political result.
Presenting at London Question Time Ipsos Mori’s Claire Emes said the referendum was too close to call, but a series of surveys conducted by the polling group could be pointing to some worrying underlying trends.
An April study of other EU countries found many keen to hold their own referendums, with the Italians and French at the front of the queue.
In a separate investigation, seven in 10 Americans said they would like their country to return to “the way it used to be” – part of a growing global trend for what Emes described as “patriotic nostalgia”.
Whether it was Democrats wanting to take back the country from the elites, or Republicans wanting to take back the country from immigrants, the rhetoric was appealing to both sides.
Her US colleagues are telling her that with Trump “all bets are off”. One thing she was clear on was Brexit was likely to be the first in a global political change.
“We could see quite a different look to global politics by the end of the year,” she said.
Watch Emes’ full presentation below
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