London Real Estate Forum 2016

21/06/2016 | Rebecca Kent, Estates Gazette

London: How Likely Is It?

London’s failure to prioritise its airport capacity problems is damaging its reputation among international investors, experts said at the London Real Estate Forum last week.

Speaking at Estates Gazette’s keynote session “London: How Likely Is It?”, Linus Forsberg, partner at Trinova Real Estate, said the inability of authorities to take swift action over an expansion had made London a laughing stock.

“For me the airport is more important than Crossrail 2 or 3 at this point. Internationally it is seen as a joke and we need to get on with it. It is damaging to how London is viewed internationally, especially if you are sitting in the airports of Hong Kong, or Shanghai. It is embarrassing.”

His sentiment was echoed by Desmond Taljaard, managing director of hotels at London & Regional Properties, who blamed “red tape and bureaucracy”.

“The French have an ability to get on with things, but we seem to have an infinite number of navels to gaze through.”LREF-debate-how-likely-partnersThe debate, which presented panellists with a number of scenarios, covering housing, infrastructure, retail collapses and more, to debate the probability of their outcomes, also delved into the EU referendum.

Taljaard described it as Brussels’ chance to “lock out” London’s financial services sector.

“There are ides of June and we should be wary,” he said.

Andy Bruce, partner and head of UK real estate at Linklaters, suggested a Brexit would be detrimental to the UK regions. London would thrive, but a vote to leave the EU would not address the “yawning gap” between London and other UK cities, he said.

Moving on to the US election, Dominic Grace, head of London residential development at Savills, said a Donald Trump presidency may not be as bad as widely perceived.

“He would be the first US president to have property assets in UK and it could mean he will keep a beady eye on things.”

Grace compared Trump to former US president Ronald Reagan who became a capable president, despite initial doubts.

On housing, Daniel Mahoney, head of economic research at the Centre for Policy Studies, set the tone with a presentation that cast doubt over London mayor Sadiq Khan’s election manifesto to build 50,000 homes a year.

Mahoney described Khan’s housing proposals as “harmful to London”.

“In answer to the question of how likely is it that Khan will build the 50,000 homes a year needed in London, I would say not very likely, unfortunately.”

While applauding plans to free up public sector assets for development, Mahoney was critical of the mayor’s 50% affordable housing target.

“Not only will this target probably not succeed – as was shown under Ken Livingstone’s mayoralty when the identical target failed miserably – it will probably reduce the prospective supply of homes.

“Affordable housing requirements and development viability need to be carefully balanced and, in my view, Khan has got this balance wrong.

“These stringent targets will likely dissuade many developers from building, which will reduce the supply of homes. Khan does not seem to be too bothered by this. He believes the number of homes built is less important than affordability.”

Mahoney said that the housing crisis could not be addressed with the release of public and private brownfield sites alone, and that the release of green belt land was crucial.

“More than one fifth of London’s land is considered green field, and some of it is far from essential; 7% of London’s green belt is accounted for by golf courses. Some 1,785 acres already have buildings on the land,” he told the audience.

Grace agreed and urged for “dynamism and pragmatism” from James Murray, the newly appointed deputy mayor for housing, and the Homes For London board.

He was also optimistic over the mayor’s powers to use CPO powers with the setting up of the London Land Commission. However, Bruce suggested the powers would be used more as a “stick” before adding that “it is not just a housing crisis but an infrastructure crisis”.

“The lines between real estate and infrastructure are blurred… and that is what we need in London, along with all those brains out there that can make the quasi real estate and infrastructure investment happen.”