Property Leaders Warn of Brexit Impact on UK Economy and Real Estate in 2019
The proportion of property industry leaders intending to increase development activity in 2019 has fallen by over a third (34%)* according to a survey of the UK’s largest investors, owners, developers and advisors who are members of the British Property Federation (BPF), published today.
- Property leaders’ plans to increase developement activity have slowed in response
- Confidence in the real estate industry, however, is higher over the next five years than over the next 12 months
- The industrial sector is expected to perform best in terms of finanical return in 2019
- Majority of leaders do not believe public trust in the UK’s planning system or real estate industry is ’strong’
- Nearly 50% disagree that UK real estate sector is changing quickly enough to increase social mobility by being more diverse and inclusive
In 2017, 62% of the survey’s respondents said that they planned to increase development activity in 2018. For 2019, this has fallen to 41%.
Data from the latest polling conducted by the BPF and Grosvenor Britain & Ireland, shows that while 91% believe leaving the European Union will be worse for Britain’s economy over the next 12 months, the longer-term outlook is more positive. Almost 60% believe it will be better (41%) or make no difference (16%) to Britain’s economy over the next 10 to 20 years.
Confidence in UK real estate’s performance over the next 12 months has also fallen, with only a quarter (24%) saying they feel confident about 2019. This compares to last year’s results where nearly half (48%) felt confident about the industry’s performance in 2018.
The longer-term outlook is again more positive, and is also improving. Last year, nearly half (48%) felt confident in the industry’s performance over the next five years, but this has now increased to over half (55%).
Over a third (36%) believe the industrial sector will perform best in terms of financial return in the next 12 months, with 17% saying the same about residential. None of the property leaders surveyed felt the retail sector would perform best in the coming year.
The majority of respondents did not believe public trust in the UK’s planning system (85%) or real estate industry (75%) is ’strong’. Almost half (47%) felt that the sector is not changing quickly enough to increase social mobility by being more inclusive or diverse, balanced by 30% who agreed the industry is changing quickly enough.
Melanie Leech, Chief Executive of the BPF said:
“The real estate industry underpins UK productivity, and economic and social wellbeing, by delivering the physical fabric where we all live, work and relax, and so these results should be taken seriously by politicians. They send a clear warning that development activity is at risk, and this will undermine the country’s ability to deliver the high-quality homes, offices and leisure spaces that inspire innovation and regeneration to ensure our town and city centres can thrive.
”Confidence over the long-term in UK real estate remains strong, but the Government must work in partnership with the real estate industry to overcome feelings of mistrust in development among the wider general public if we are to achieve our shared goals of ensuring successful, sustainable communities.”
Craig McWilliam, Chief Executive of Grosvenor Britain & Ireland said:
“The signals from our survey point to a challenging year ahead for the property sector. Macro-economic worries are impacting performance expectations, and with it our industry’s ability to deliver much needed new jobs, homes and better places.
“Whilst business strategy is being reviewed it appears we must also seek ways to recast our contract with the public and civic leaders. Much of the property industry’s ability to operate is founded in the public’s consent for development activity. If industry leaders think we, and the system that defines our work, are distrusted then we must work to rectify this.
“It’s also true to say that the benefits of new places are rarely associated with the actions of developers. So we must also better demonstrate and explain our value to society.
“With public leaders, I think we have an enormous, positive opportunity to transform the debate together – and with it to reset the way great places are created and managed.”
*Since prior year fieldwork for the survey
Kindly shared by British Property Federation (BPF)