How are we driving inward investment?

LISTEN: Four industry leaders discuss how the UK can drive investment into the UK in turbulent times. How does the UK continue to drive inward investment at a time of unprecedented uncertainty? It’s a big question, and one that will currently be on many people’s minds. As four industry leaders joined forces to discuss this very subject in one of EG’s “Not at MIPIM” podcasts, there was, thankfully, some reassurance amid the valid concerns. (Listen to the full discussion below.) After Will Matthews, head of commercial research at Knight Frank, kicked off proceedings with a relatively stark presentation, he was quick to add that it is not all doom and gloom. “You could make the point that, actually, in times of economic uncertainty, like now, where some of the traditional trade flows are slowing in the wider economy, it makes a lot of sense to diversify through things like real estate.” He did concede that in the face of practical restrictions, such as people being unable to move around as freely as they are used to, he was expecting to see a short-term focus on regional trade flows. “That’s certainly what we’re starting to see in terms of investor behaviour at the moment, and while these are tough times, stable markets will typically survive well through all sorts of difficult economic environments.” Positive signs Emily Relf, director of capital markets at Knight Frank, dialled in to the podcast from Singapore, and she was able to offer some further reassurance based on the state of play just over two weeks ago. “Things do feel a little bit more positive over here,” she said. “We have already been through the panic that the West is starting to see now, and it feels like we’re coming out the other side. There is generally more positivity here now, and investment appetite is still strong. “To build on what Will said, we are definitely seeing a flight to safety. So, the investors we’ve met throughout the region over the last month or so have indicated that long-term, core assets in gateway cities are what they are looking for at the moment. “I think we’ll start to see a move into alternative sectors, and particularly from the Singaporean government-linked companies which are looking for alternatives to drive up their return. Student accommodation and senior housing are sectors that could become an investment trend this year.” “We are seeing a lot of that already,” added Jackie Newstead, partner and global head of real estate at Hogan Lovells. “There is clearly keen interest, both in the UK and certainly across Europe, for student housing and other bed-related assets. “Whatever happens with some of the other businesses around the world, people need somewhere to live. Whether it’s as a student, a young person starting out trying to find somewhere to live for their first job, a family or an elderly person who’s looking for some sort of assisted living. And that, as a sector, is the area that I think has potential for the best growth.” It’ll be a rough ride but we’ll get through it – we always do Jackie Newstead | Hogan Lovells Infrastructure can lead the way On the subject of how the wider regional cities beyond London can remain attractive to overseas and domestic investors, our panellists agreed that infrastructure is king. “Increased investment in infrastructure, which the government is certainly talking about, is how we really open up the potential across the whole country,” said Newstead. “We’ve got the potential Oxford-Cambridge tech corridor, and there are cities across the UK, such as Manchester and Birmingham, which are every bit as vibrant as London in their own way. “So, how do we attract an investor to these cities? Time after time, we talk to international investors and say, ‘Have you looked at Manchester? Have you looked at Birmingham?’ And time after time they say, ‘Well, we might have gone there, but we just want the West End or the City.’ I think better infrastructure would help address this issue.” Alex Price, UK chief executive of Fiera Real Estate, was quick to jump in here: “We have very specifically said to our Middle East, US and Asian clients, ‘Guys, there’s great value to be had out of London.’ And we have found a lot of client appetite. That’s not to say they’re going to small towns in the middle of nowhere, but they are very happy to invest in Edinburgh, Glasgow, Leeds, Bristol, Manchester, Birmingham – and long may that continue.” Firepower in waiting Talk turned quickly to how the UK can make itself as attractive to inward investment as possible during tough times. “I think it’s a case of just taking stock of where we are in the medium term,” said Price. “We have liquidity in the market that I’ve never seen before in my life, with literally hundreds of trillions of dry powder for real estate sitting on the sidelines, so I think that in the medium term we’re pretty confident that, actually, we have an asset class that can react well to what’s happening. “What I’m suggesting to our clients, and indeed to our customers, is that they should be prepared for the short-term impacts. And those short-term impacts will likely be severe.” Severe but hopefully not insurmountable? “It would be good if we could maintain our focus on the medium- to longer-term outlook,” said Newstead. “There is no doubt that we are going to have a bit of a rough ride for the next few months, but we’ll get through it. We always do. “And looking longer-term, I think the UK presents a very stable environment still in which to invest. We still have a very transparent legal system. Our tax system, much as we may moan about it and its complexities, is actually reasonably transparent to investors. So, I think we’ve got a lot going for us.” Click here to listen to the other sessions that EG recreated in the studio during the postponed MIPIM week. The panel Will Matthews, head of commercial research, Knight Frank Emily Relf, director of capital markets, Knight Frank Jackie Newstead, partner and global head of real estate, Hogan Lovells Alex Price, UK chief executive, Fiera Real Estate Chair: Emily Wright, head of special projects and tech editor, EG In partnership with             To send feedback, e-mail emily.wright@egi.co.uk or tweet @EmilyW_9 or @estatesgazette Photo: Planet Observer/UIG/Shutterstock