Mipim 2019: Brexit uncertainty puts deals in the shade as big-hitters wait and see on London propertyComments Off on Mipim 2019: Brexit uncertainty puts deals in the shade as big-hitters wait and see on London property
On Cannes’ La Croisette on Wednesday morning, thousands of people looked a little rough after an evening of party-hopping across yachts, hotels and pubs. It’s nothing new for the wealthy town in March, when the world’s property industry congregates for the Mipim festival. But this year the hangovers felt worse for many of the 5900 Brits in attendance. They woke up to hear that MPs last night rejected Theresa May’s latest Brexit deal: quelle horreur!
The vote adds further uncertainty to the UK property market, which has suffered since the 2016 referendum, with central London house prices plunging and would-be office tenants taking longer to sign leases. As veteran housebuilder Bob Weston puts it: “Uncertainty is not doing UK businesses a favour.”
Slouched back into a mustard-coloured sofa on his yacht in the south of France, the boss of Weston Homes has a message for the Government: “For God’s sake, just get on with it.”
Weston is one of a number of chiefs who has attended numerous Mipims (he has been to 18), and watched it change. Known for its conferences, deal-making, networking and champagne-soaked parties, the male-dominated industry get-together has seen less excess in recent years.
Banks and estate agents have trimmed hospitality spending, and some exhibitors were worried about Mipim being in the spotlight last year for potential sexism in the wake of the notorious Presidents Club dinner (where property firms sponsored a number of tables). Now Mipim attendees are wondering if the jamboree could get even more tame once Britain leaves the bloc.
For some investors, now does not feel like a time to celebrate. Vendors have seen slower demand for West End and City office blocks this quarter. Experts insist there are scores of buyers from Asia, the US and Europe waiting to spend in London and take advantage of the weaker pound. But, as one fund manager puts it, they are “pissed off” with the way Brexit is being handled.
Property tycoon and chairman of Consensus Business Group Vincent Tchenguiz recalls the Mipim “glory days”, agreeing a deal on a yacht in 2000 to buy a £110 million office building in Victoria. Today he says: “Don’t expect big transactions to be announced this week from me.” Like rivals, Tchenguiz is watching closely to see if prices will fall after March.
Another firm which is deciding to wait and see is Ho Bee Land of Singapore. Executive director Ong Chong Hua warns: “Until there is certainty and clarity, we will postpone our decision to invest further in the UK as there are very serious negative financial consequences if the UK were to crash out of the EU without a deal.”
However, Julian Sandbach, head of central London capital markets at JLL says that this uncertainty has benefited some deal-makers: “There are many investors who recognise the reduced liquidity levels and competition for assets right now, and are capitalising on it.”
Joanne McNamara, Oxford Properties’ vice-president of investments, Europe, says there could be “interesting near-term opportunities if investor sentiment is muted for a period”.
Steven Skinner, UK boss at property developer HB Reavis, is more upbeat: “Available office supply has decreased at a rapid rate given the record level of pre-leasing of new buildings.”
Apache Capital Partners’ managing director Richard Jackson thinks “London is still a good place to do business”. He points to occupiers being attracted to the capital’s “global finance centre, transparent legal system, and convenient time zone”.
Expect more Brits to be on the sauce tonight as they contemplate what the industry will look like when Britain imminently says au revoir to the EU.
What international investors think about London amid Brexit uncertainty
Ahead of the Mipim property festival in Cannes this week, Liam Fox, the secretary of state for international trade, said “the UK is open for business”, writes Joanna Bourke in Cannes.
Fox said the event in the South of France “provides the opportunity to attract essential investment into our world-class real estate sector to create new jobs and homes across the UK”.
Here, overseas companies that have previously invested in London property, share some thoughts about the market…
Steven Skinner is the UK boss of Slovakian developer HB Reavis which is constructing a £120 million office block in Farringdon. He notes the size of leasing transactions has increased since the Brexit vote. Skinner adds: “We are on the look-out for more opportunities.”
Ho Bee Land last year spent £650 million on multi-let City office block Ropemaker Place. But the firm’s executive director Ong Chong Hua doesn’t expect any more buys to be imminent. He warns: “Until there is certainty and clarity, we will postpone our decision to invest further in the UK as there are very serious negative financial consequences if the UK were to crash out of the EU without a deal.”
Qatari Diar, which is redeveloping the Chelsea Barracks, says: “Not only are we confident and committed to London and the UK property market – both commercially and residentially – but we will continue to look at locations to invest in for the future.”
Property investor Hines’ UK head Ross Blair thinks overseas buyers will continue to be attracted here thanks to London’s “legal system, quality of physical real estate, length of occupational leases and diversity of occupier base”. The company recently bought an Oxford Street redevelopment site.
Oxford Properties admits Brexit uncertainty is far from ideal. But Joanne McNamara, the firm’s vice president of investments, Europe, adds: “It could also provide interesting near-term opportunities if investor sentiment is muted for a period.”