UK general election impacts London property market
On the heels of a failed snap election in an effort to build a bigger majority and a personal mandate, Theresa May, the British Prime Minister, now faces the though job of trying to forge a coalition deal to stay in power.
In reference to how the UK General Election results now impact London’s property markets, Chris Ireland, CEO of JLL UK tells The World Property Journal, “The UK has faced political uncertainty in very recent history and, notwithstanding the dramas that immediately followed the Brexit vote, the UK economy and property market remained very resilient. The IPD benchmarking index has regained almost all of the losses it sustained in August over the past few months.
Investors in real estate look over the medium to long term. London sees by far the most cross-border investment of any city globally, and the UK is rated by JLL as the most transparent real estate market in the world. This is a result of liquidity, the history of political stability over the long term and respect for the law, as well as factors such as the strong economic fundamentals, long lease terms and the comprehensive professional and legal framework.
“The result suggests that the hard Brexit that many were assuming would now definitely occur looks somewhat less likely. That could be a longer term positive for the UK market.
“Sectors with long-term structural support, such as Logistics and Alternatives, will remain strong. If the pound remains weak, Retail and Hotels will benefit – alongside UK manufacturing. But as before, JLL continues to believe the UK offers significant opportunities for medium and long term investors.”
On the loss of Housing Minister Gavin Barwell’s seat, Jon Neale, Head of Research of JLL UK further added, “With Gavin Barwell’s departure from Parliament, we are now facing the prospect of yet another Minister for Housing, the fourth in five years.
“Given the huge role that a high youth turnout has had in changing the political landscape, it must now surely be time for all parties to prioritize an issue that has had more negative impacts on young people than any other, and increasingly erodes the competitiveness of the British economy.
“The next housing minister must be an experienced and hard hitting political figure, and the role must be inside the cabinet. They must help develop a genuinely radical housing policy. Indeed, this should be seen as an electoral priority by all parties if the young continue to become more active at the ballot box.”
Miles Gibson, Head of UK Research at CBRE also commented, “While the Government might look weakened in the light of today’s result, the overall shape of Brexit isn’t obviously changed by it, nor are the UK’s strong economic fundamentals – which underpin its commercial real estate market.
Inevitable heightened uncertainty while the political landscape stabilises, may cause the market to be slightly cautious in the very short term. However, most will ‘see through’ this uncertainty and focus on the fundamentals, implying that the current transactional activity will be largely unaffected.
The decision to hold the general election at all comes with the benefit of a two-year extension to the PM’s political capital. For trading businesses in the UK, particularly financial services businesses, this extra time will help them plan for the consequences of Brexit.
This uncertain outcome also means that not much other than Brexit will occupy Ministers’ minds for some time, implying a welcome (if unintended) stability on real estate policy. Some of the more ambitious or expensive policies look likely to stay on the back burner purely because of a lack of capacity to implement them.”