We are using cookies to give you the best experience on our site. To find out more see our Cookies Policy. By continuing to use our website without changing the settings, you are agreeing to our use of cookies.

Smart Cities, Beating Brexit and Future UK Property Trends

Emerging strategies and plans at MIPIM 2017, the world’s leading property event.

‘Frogs not fog’ was the mantra on French stands at the MIPIM property conference this week, as host attendants in Cannes sought to lure British property occupiers to Paris with Britain’s departure from the European Union now inevitable. The UK Government, for its part, was fighting back with its own dedicated MIPIM pavilion for the first time, supporting a highly visible presence from Manchester, the `Midlands Engine’ and the City of London Corporation. The Brexit debate was the overarching backstory at MIPIM, with most delegates still only anticipating a limited level of movement of property industry business to continental Europe from the UK once Brexit is achieved. But five other themes emerged:

Housebuilding
The construction of new homes was one of the key discussion points. “It has never been higher up the political agenda, and so it was at MIPIM,” says Steven Cook, responsible for new business origination within structured property finance at Investec Private Bank.
“Historically, whenever governments have cut back, housing has been one of the first sectors hit. But now, it’s seen as politically unacceptable for governments not to be tackling the problem of housing shortage.” Housing Minister Gavin Barwell was at MIPIM, and there were intense debates on solutions to the problem, such as increased density and the plan to build ‘garden villages’ in England – new developments of 1,500 to 10,000 properties, for which 14 locations were announced in January 2017.

New Tech Neighbourhoods
Historically, tech occupiers in London fit neatly into clusters in fringe areas around central London –Shoreditch, Clerkenwell and Hackney. Now the City of London Corporation has thrown itself headlong into the pursuit of tech occupiers for the heart of the Square Mile itself.
The Corporation, in partnership with the City Property Association, KPMG and agents Cushman & Wakefield, launched Tech X The City, a report which called for a wave of actions to retain and attract tech businesses to the Square Mile, including better alfresco and co-working facilities and `grow-on’ expansion space, as well as the establishment of an accelerator body to foster tech start-ups.
The report said that while there are 40 tech accelerator initiatives in London, very few are in the City itself. The view at MIPIM was that the City needs to do more to promote spaces of up to 10,000 square feet for companies that employ 10 people, and that these organisations typically need to be able to `scale’ up to 20,000 square feet.

Smart Cities
Alongside the push to attracting tech companies to the heart of London, there was also a focus on making the operation of cities smarter overall. One well-attended session was `How to Think in Advance of the Cities of Tomorrow’, where Chris Fannin, director of planning at global design, architecture, engineering and planning firm HOK, painted a picture of modern cities designed and planned with people more at their heart. “We’ve found that happiness is not affected by better public realm spaces or architectural elements, but rather things like employment and shorter commutes. That suggests that designers need to be more proactive in general, rather than waiting for policy and then speaking out,” Fannin said. The FTSE-100 listed property development company British Land announced the results of its Smart Buildings research at MIPIM. A survey of 1,093 office workers, it found that 88 per cent of respondents expressing a wish to control their work environment better. Furthermore, 88 per cent agreed that office buildings should be adapted to better reflect human behaviours.

Switching Strategies
Everyone at MIPIM is jockeying for position. Global agents were keen to emphasise that the complex political situation around the world leaves them best placed to manage capital flows. The UK’s developers are moving ever more rapidly into build-to-rent housing, with the asset class named `living’ seen as far more attractive than the office sector (hampered by Brexit) and retail (under fire due to the rise of e-commerce). One of the most striking presentations came from UK fund management giant Aviva, whose global real estate head Ed Casal outlined its strategy of aiming to develop and own properties in “clusters” that Aviva believes will be valuable locations for a specific reason. Casal said that in 2017 Aviva plans to sell 200 properties worth £1.5 billion, and will be re-investing substantially in its favoured clusters.
For example, with its focus on technology business and investment, Aviva sees Cambridge as an important cluster. This strategy is far removed from the fund managers’ typical approach of choosing broad asset classes as stock picks while paying less attention to their location.

Rise of the Regions
All at MIPIM felt the reverberations from Scotland First Minister Nicola Sturgeon’s increasing efforts to secure a second independence referendum three years after the first. Scottish delegates were fiercely opposed to independence because they see the economic case as weak. Intriguingly, some who voted `Yes’ in 2014 are now opposed to Scottish independence because they would rather avoid having the Euro as currency. With more devolution seen as inevitable, not just in Scotland but also the English regions, Birmingham (where almost 25 per cent of the population is aged under 15) and Manchester (due to have a central city population of 600,000 by 2027) were also pressing their case.

The overall mood at MIPIM in 2017 was upbeat, with the full implications of the Brexit referendum still to be felt – that will not be the case at MIPIM next year, in 2019 and 2020. Attendees were more focussed on honest endeavour than the event’s social opportunities, and there was more jockeying for position than usual. For now, the mood among the British property industry community continues to be confident.

Giles Barrie is Managing Director, Strategic Communications of FTI Consulting, and a former Editor-In-Chief of Property Week. Photograph courtesy of Greenwich Peninsula.

Where do you stand?

Your email address will not be published. Required fields are marked *.