On the likely eve of the last global real estate gathering, MIPIM, as part of the EU, JLL UK CEO Chris Ireland reflects on the positive outlook for UK’s real estate market.
Advocating a milestone mentality
I like a milestone. To me they’re a helpful reminder to reflect on what’s gone before and the opportunity to plan ahead. With so much background Brexit noise, there’s a great deal to be said for adopting a long-term strategy, evaluating it at regular intervals and having a milestone mentality.
MIPIM, our sector’s international property gathering, is celebrating its own milestone – 30 years – this month. I’ve attended many, representing not only the UK but the wider global JLL team. I welcome the chance to meet with clients and contacts, to do business and discuss the most pressing opportunities and challenges facing our sector.
A new chapter for the UK
This year will be the last MIPIM before we in the UK probably leave the EU later this month. I remain positive in the medium and longer term about our prominent position in the global real estate market and also strongly believe that there is always opportunity in change. Here’s why UK real estate is still in good shape:
- Global allocations to real estate are increasing – in excess of 10% compared to 9% five years ago, which represents a huge step up in the amount of equity flowing in the sector
- The UK’s fundamental attractions remain intact – and we have the strongest cross border inflows of any market
- 2018 was a record year for London – investment hit £30.9bn across Greater London in 2018 the highest total ever seen in the Capital, 13% up on 2017
- Prime product is the target but it’s in short supply – so expect greater interest in the ‘Big Six’ of Manchester, Birmingham, Leeds, Bristol, Edinburgh and Glasgow who combined to total the highest ever office take-up in 2018 at 6.1 million sq ft
- Short supply will drive change – investors may look at alternative ways to access the market – M&A, platform acquisitions or debt funds
- We’re benefitting from other sector success stories – the growth of investment and learning, alternatives and life sciences are all having a positive impact on UK real estate
The ‘Big Six’ cities on the rise
Our own ‘Big Six’event earlier this month, highlighted the potential of this grouping as a force to be reckoned with on a global scale. Manchester for example, is set to outperform Munich in terms of employment growth, 4.6% to 3.7%. City centre living is on the up and we’ve seen the population of many regional urban centres double since 2002, while the UK’s population increased by just 10% over the same period according to Centre for Cities. Likewise, many of the ‘Big Six’ regeneration projects underway are enabling these cities to refresh their image and reposition themselves.
Those representing these dynamic hubs will be at MIPIM in force and given a global platform to bang the regional UK drum, and they have every reason to be making a lot of noise.
Real Estate is part of the talent solution
The other factor that makes me hopeful about Real Estate’s future is because we’ve made it onto the boardroom agenda – and this time not just as an investment class. I’ve met many more CEOs in 2018 than I did previously. Why’s this? I can’t say for sure but when they meet they all want to talk about talent – not only where it will come from in terms of employment growth but a more long-term view of how they retain it.
While McKinsey were championing the fundamentals of the ‘war on talent’ before the turn of the century, it’s now reality. Today’s business leaders are addressing how the space and technology they provide their people is linked to their culture and understand it can be a point of difference when trying to retain their most precious asset.
The ability to create an office environment where people are engaged and can flourish benefits everyone and drives productivity. Because this has an impact on an organisation’s bottom line, everyone understands the importance. One such example is how marketing agency Havas used their new HQ in London to accelerate great work across 24 different agencies under one roof and one culture.
So let’s celebrate MIPIM’s milestone birthday, I’ll be there championing the UK and trying to convince everyone of the benefits of real estate as a regular item on the boardroom agenda.