With the sword of Damocles dangling over everyone’s heads, confidence in the resi sector was muted at best in Cannes, reports Nicky Richmond…
It’s always really quiet, the flight back to Blighty. It doesn’t help that it’s the 8.15 flight; that’s 8:15 in the morning, which necessitates a 5:30am start. Punishing. There have, I confess, been years when I would have just pushed through from the night before, but those days are behind me now.
These days, I can mostly be found doing the grown-up and sensible version of MIPIM, which means a structured diary and back-to-back meetings, all in two and a half days. Whilst the idea of a truncated MIPIM is attractive, it means that all your meetings are concertina’ed into a shorter timeframe, which means that you are just as tired as if you had gone the full four days.
And the mood at this year’s MIPIM was an odd one. No one I spoke to in the prime residential sector was particularly confident about the coming year and the sword of Damocles, otherwise known as the referendum, is clearly dangling over everyone’s heads. Interestingly, I was told of a transaction directly affected by possible Brexit; a contract has been exchanged conditionally on “Remain” winning the day – I suspect there is more of that come as valuers sit on their hands when asked to predict the likely effects of a vote to leave. And if the people I spoke to were representative of the electorate in general, Brexit would be a dead cert.
The SDLT changes merely added to the feelings of uncertainty and in an industry which, it has to be said, is traditionally Tory there is a feeling that George Osborne has gone too far. There is still a disconnect between what people are saying privately and what is seen as fit for public consumption: a number of people I spoke to felt that the market and in particular the central London residential market was in a perilous place. In some cases that is because developers are only now coming to terms with the new reality and there is much talk of altering existing schemes or even mothballing them, until the situation is slightly more certain.
Everybody is singing from the same hymn sheet. No large houses outside London. Large houses inside London only in certain areas. No new build prime residential central London. Manchester maybe, other northern cities perhaps, M25 towns, yes please.
But it is not all doom and gloom. Every market is an opportunity for somebody and it would appear that some overseas funds are again talking about London as an opportunity, just as they were in 2008/2009 when currency fluctuations suddenly gave them a massive price reduction without even having to ask for one. I suspect that if there is a further currency drop we might well see an increase in overseas investment, looking to pick up bargains in central London, still seen as desirable compared to many other major cities, notwithstanding the hike in SDLT.
I’m looking forward to next year’s MIPIM, when the referendum is behind us so we can try to focus on what we know rather than what we can only guess at. No-one really likes uncertainty, although a vote for Brexit will surely mean that uncertainty will be with us for some time yet.