JLL predicts slowdown in investment market for 2016
LISTEN: JLL is predicting a slowdown in the investment market in 2016 due to national and global political and economic uncertainties. The advisory firm expects the market to be impacted by the debate surrounding Britain’s possible exit from the EU, although it says: “This will be pause in the cycle rather than the beginning of its end.”
Rental growth is forecast to stay strong across all sectors as supply gets tighter, highlighted by a lack of speculative development in the immediate pipeline.
In the West End, take up will increase due to new supply in Victoria, SW1, though the prospect of rising business rates will also encourage occupier migration to locations such as Paddington, W2, and Canary Wharf, E14.
LISTEN: JLL is predicting a slowdown in the investment market in 2016 due to national and global political and economic uncertainties. The advisory firm expects the market to be impacted by the debate surrounding Britain’s possible exit from the EU, although it says: “This will be pause in the cycle rather than the beginning of its end.”
Rental growth is forecast to stay strong across all sectors as supply gets tighter, highlighted by a lack of speculative development in the immediate pipeline.
In the West End, take up will increase due to new supply in Victoria, SW1, though the prospect of rising business rates will also encourage occupier migration to locations such as Paddington, W2, and Canary Wharf, E14.
The housing crisis will also remain high on the political agenda and the issue took centre stage at JLL’s Question Time and 2016 Predictions Debate, as industry heavyweights and BBC broadcaster John Humphrys, who chaired the panel, addressed 200 guests.
Considering whether the new London mayor could solve the issue, Jon Neale, JLL head of UK research, said: “I don’t think he can in a mayoral term, or certainly through the policies that he has leverage over. It is so endemic.
“Ultimately we have to grasp some very difficult nettles; we have to think carefully whether it’s sensible in a city the size of London with such strong growth dynamics to put semi-industrial land or scrubland out of developers’ hands forever.”
He called for a meeting with heads of UK pensions to discuss how to channel their appetite for investment in residential property into build-tolet.
John Duckworth, head of occupier services at JLL, suggested the city should look to New York, where the mayor can spend 50% tax compared to the London mayor’s 7%.
Investing in infrastructure and place-making was also key to housebuilding, according to Katie Kopec, head of development consulting at JLL.
Economics director at CBI, Raine Newton-Smith, agreed. “I think as an economy we are less productive than the US or Germany for example, and at the heart of the UK’s issue is getting people to where jobs are being created.”
Panellists were unanimous that the decision over airport expansion would also dominate the mayoral election, with Heathrow being first choice.
But a curveball from an audience member got panellists thinking about the implications of using Heathrow as a site for housing, and building a brand new airport somewhere like Aylesbury.
Kopec said: “It is actually something that has been looked at; what would you do with Heathrow if it wasn’t there and what a wonderful opportunity to create a part of London.
“But putting it in Aylesbury is a difficult call. It might be a problem with the locals in and around Aylesbury!”
See JLL’s 2016 briefing here.
Read Guy Grainger’s preview of 2016 here.
Shekha.Vyas@estatesgazette.com
