Another big week for property. The Cheesegrater opened on Monday. By Friday the prime minister and Chinese president were throwing their weight behind infrastructure and regeneration projects at an event in Manchester.
But before anyone gets carried away, a word of warning: things are seldom as good as they seem. Princes William and Harry were there at the Cheesegrater, adding stardust to the launch. Later that evening a dinner of the great and good in the City of London celebrated the recovery from the global financial crisis, raising £500,000 for the Lord Mayor’s Appeal in the process. At MIPIM UK, and at several concurrent events, Chinese investors were eyeing opportunities; indeed a deal between CITIC and ABP to spur development in the Royal Albert Dock was signed at Mansion House. David Cameron and Xu Weiping were there for that too.
But amid the back slapping and the brouhaha, there is caution too. Here are just 10 areas where it has been evident in the past few days.
1) Bank of England executive director for financial stability, strategy and risk Alex Brazier best summed it up at Monday night’s dinner when he latched on to a danger inherent in the human condition: we have a dreadful habit of repeating the mistakes of
even the recent past. “It will be a battle of nurture against human nature,” he warned. “Yes, the cycle is a force of human nature. But resilience to it can be nurtured. The time to start it is when people most feel like celebrating: when your market is on the up. We have to start now.”
2) This leads to a danger identified by Helical Bar chief executive Mike Slade: if history does repeat itself, the market will switch too easily from famine to feast. Here the challenge is how not to over-develop, he told an Estates Gazette offices debate at MIPIM UK, but asks: “When do you stop?”
3) Chinese investors are serious about putting more money into the UK but may be deterred if they are treated as being “different”. Don’t treat them so.
4) With London looking expensive, there is a risk is that the city overprices itself. There is already evidence of this in certain sub markets. The most important thing is to be a welcoming city and offer value, according to Derwent London chief executive John Burns.
5) In Scotland investors are already being deterred from placing money north of the border ahead of an expected SNP clean sweep in the Holyrood elections. The Scottish government may have said there will be no independence vote until it is winnable, but a rout in next year’s polls will surely bring a referendum back to the table. Institutional investors, already chastened, are likely to withdraw still further. Neverendum indeed.
6) This industry can be inward-looking so don’t assume that if you are dealing all the time with people who went to the same university as you that it will lead to meaningful collaboration. “Comfortable clone syndrome” is the upshot, according to Appear Here founder Ross Bailey.
7) So don’t seek an easy life, Bailey told EG’s collaborators panel at MIPIM UK. Be prepared to hire people who will leave a meeting furious, he urged.
8) PRS may have a reputation for drawing more talk than action, but don’t move too quickly. It may work in the US, but the fledgling UK sector is not yet ready for dog-walking tracks and rooftop pizza ovens.
9) And don’t assume all renters are the same: it is drawing 50-something architects as well as bearded 20-somethings who do “creative”.
10) Don’t underestimate the competition. London – and Cambridge, Manchester and, encouragingly, the likes of Birmingham – may table a compelling offer, but other world cities are getting their act together too.