A new government often sparks a period of change. While the recent Labour victory was expected, the size of the majority offers the prospect of a much-needed level of stability and certainty that the real estate industry and wider economy has been desperately seeking.
The early signs are encouraging. Recently the pound hit its highest level against dollar since July 2023. At the same time, a closely watched Bank of America survey of fund managers revealed that London-listed companies are back in favour with investors ahead of their European rivals.
Another positive was Labour doubling down on the Planning and Infrastructure Bill in the recent King’s Speech. It will “play a key role in addressing [planning] constraint, unlocking more housing and infrastructure across the country and supporting sustained economic growth. The planning system must be an enabler of growth.” New homes – of which Labour has promised to build 1.5 million – and infrastructure projects are key to UK economic prosperity, and the current system has been a major barrier to achieving this.
Closer to home, last month we launched our second Future Property report. Its findings revealed that despite the recent period of macroeconomic volatility, private clients with exposure to UK real estate are more optimistic about the market than they were two years ago when our inaugural survey was undertaken.
Its findings revealed that despite the recent period of macroeconomic volatility, private clients with exposure to UK real estate are more optimistic about the market than they were two years ago when our inaugural survey was undertaken.
Other themes included a growing positivity for the office sector’s prospects, and increasing appetite for development, in particular the repurposing of older office assets, reflecting strong rental growth outlook for best-in-class assets against what has been a period of limited new development.
Additionally, respondents now view EPC ratings as a key investment criteria. As a lender, we have a key role to play in the transition to a low-carbon economy and a more sustainable built environment. Over the coming months and years, more of our lending will be focused on supporting property owners to upgrade, retrofit, or repurpose their buildings, helping them reduce their carbon emissions, comply with green regulations, and avoid the risk of obsolescence.
Over the coming months and years, more of our lending will be focused on supporting property owners to upgrade, retrofit, or repurpose their buildings, helping them reduce their carbon emissions, comply with green regulations, and avoid the risk of obsolescence.
Despite the above, the litmus test for Labour will be implementing their reforms. And while there has been much talk of interest rate cuts this year, inflation is proving stickier than hoped. The odds now look like the BoE won’t act until the Autumn at the earliest, with this delayed horizon likely to weigh on debt costs and sponsor sentiment.