Property has welcomed new market certainty following a Conservative win in the General Election, which saw the party secure an 80-seat majority – its largest since 1987.
But although real estate leaders have breathed a sigh of relief over the stability they hope the result brings to the market, some voiced worries about the effect a divided country and Brexit could have on the sector.
Gordon Aitchison, director of real estate at LGIM Real Assets, said although new-found political stability could encourage investment, the prospect of another referendum on Scottish independence given SNP gains could hit real estate. The SNP won 48 seats, leading first minister Nicola Sturgeon to claim the vote “renews, reinforces and strengthens” the mandate for a second independence referendum.
See more: Real estate reacts to Johnson landslide
“I think this is bad news for the Scottish property market,” Aitchison said. “I think the risk of Scottish independence will mean that investors will be wary to invest there.”
However, he welcomed the greater market certainty the election outcome brings to property as a whole.
“Most overseas buyers have been sat on their hands waiting to see what happens with Brexit. For better or worse, Brexit is now happening and at least once it happens investors can see the impact of Brexit and make decisions after that because this has been in limbo for so long.”
The resulting political stability has given some EU-based property companies, such as Slovakian developer JTRE, a confidence boost in regards to expanding further into the UK market.
JTRE executive director Pavel Pelikan said: “JTRE, by nature, is a large-scale property developer and takes a long-term view with every market in which we invest. This is the view we took when JTRE entered the London market, a decision which was taken before the European Union membership referendum.
“We welcome the election result, which will bring an end to the uncertainty that has dogged the market, and believe that it will lift confidence in the UK, lead to an increase in deal activity and encourage increased overseas investment. Our commitment to establishing a presence in the UK remains unchanged.”
Regional developers and agents spoke with relief about the election result, including JLL’s head of offices in Leeds, Jeff Pearey. “While Brexit might not have been top of our agenda, the fact there is now a governing majority is now a positive step in the right direction so we can actually make decisions relative to Brexit,” he said. “Ultimately a deal is better than a no deal, so having a structured and sensible exit has got to be a good thing.”
He added: “I think [Boris Johnson has] got to prove he is definitely interested in the UK regions. It would be really helpful to hear this message from him.”
David Topham, chief executive of Manchester-based developer CTP, said he expects a flurry of tenant requirements to hit the market following the Tory landslide. “Occupiers looking for relocation, consolidation, expansion or contraction have sat on their hands as they haven’t known what to expect,” he said. “Political persuasions aside, it is welcome because we now have market stability.”
Caddick Group director Johnny Caddick said that while Johnson is still to follow through with infrastructure investments in the North such as HS2 and Northern Powerhouse Rail, he expects to see real estate bounce back after a lack of investment this year.
“What we’ve seen is that investment, especially foreign investment, has been waiting and watching,” he said. “What we’ve got now, for the first time in nine years, is a parliament which isn’t hung.
“We have some visibility, stability and less uncertainty and most sectors might experience a Boris bounce […] It’s definitely the shot in the arm that the industry needed.”
Savills’ compulsory purchase development director Richard Asher echoed Caddick’s comments. “The talk on infrastructure spend is certainly helpful for our industry but [Johnson’s] statements on HS2 seem to be ambiguous,” he said. “It remains to be seen how much money is actually available for infrastructure, but obviously this is vital to improving property delivery and funding.”
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