Take the Bull by the Horns
In post-Referendum Britain, occupational London continues to be out of step and now more so than ever. According to a recent RICS overview of the Q3 2016 period, expectations have improved in most parts of the UK, but London remains very cautious and hesitant.
The threat of a ‘Passporting’-led exodus from the City and determined wooing by Euroland cities is draining Central London of its confidence (particularly the City): this is not currently shown in the regularly available take-up and availability statistics. Although vacancy rates are historically low the market is currently driven by apprehension. Findings from a quarterly survey compiled by the Matthews & Goodman Market Watch Unit show headline rents stagnating, while the pan-London market view concluded that annual rental growth (to Q4 2016) was 0.63%, with Clerkenwell* boasting the highest annual growth at 3.08%.
But let’s put it all into context. London has been a bull market for almost 10 years, therefore is what we are witnessing simply a ‘market correction’? Perhaps Brexit and the rates revaluation are just an excuse for what would have happened anyway?
The rest of the world is an even more uncertain place with the impact of Trump's victory in the US and with the forthcoming elections across Euroland. Will this actually make the UK and Central London, with its stable political regime and a government with a favourable corporate perspective, as well as a long-established tradition of trading (be it financial services, cars or white goods) a more attractive prospect?
In the season of fogs, uncertainty fuels anxiety: all markets are driven by sentiment and the bears currently have it.
The last word must go to a very clever economist I recently met. His take was “London will take care of itself – it always has.” The fog will eventually clear.
*London's former industrial heartland where unused warehouses are now at the heart of the Silicon roundabout, derelict factories have been converted into exclusive offices and restaurants, and unfashionable former slum houses turned into exclusive flats for professional millennials.