Just as Newcastle Central won the race to be the first constituency to declare at 11pm last night, so Investec beat rivals to supply the first meaningful post-election real estate commentary – at 6.45am.
“Volatility and uncertainty may return to the sector,” ran the house view. “We expect sterling to initially fall sharply… a number of proposed new projects may indeed be put on hold as the property sector takes stock of this result. Banks are likely to be cautious about financing new developments. Real estate as an asset class will lose favour with institutional and overseas investors as doubts hang over the UK real estate sector.”
But while the result may have surprised, many of the likely consequences of a poll that Theresa May will forever regret have been apparent for some weeks.
What the Past seven weeks have shown is that politics is shifting. To be clear, the surge in Jeremy Corbyn’s popularity came about because of his manifesto, not despite it. Those that said something needed to change after the EU referendum were right. And something has changed.
I wrote yesterday how core voter concerns had altered in the two years since David Cameron proved surprisingly successful at the ballot box. Putting Brexit to one side (not a factor even two years ago and the single biggest one today), priorities have shifted from the economy to the NHS. Education and housing have risen up the agenda, too. In short personal financial issues have been trumped by social concerns.
That is a profound change, which will have an impact on real estate.
Good and bad is on the cards. Yes, as Investec said, uncertainty won’t help. But the hammering of the SNP means a second independence referendum is all but impossible. A further weakening of the pound won’t harm inward investment. And the defeat of Gavin Barwell in Croydon Central means the all-too-familiar hunt for a new housing minister begins.
Barwell will be feeling justifiably aggrieved by a lacklustre national campaign this morning. This industry will feel robbed of perhaps the best housing minister for some years.
But there is something more profound at play. Reputation matters and this industry’s isn’t great. More than ever it needs to find a new way of reaching the man and woman on the street. Real estate achieves so many fine things, but too often they are lost on the wider public. Establishing connections doesn’t just mean real estate mean doing more, it means finding a more effective way of conveying what it delivers. It needs to stand up to government as much as work alongside it.
Here are few initial thoughts on how this might be achieved.
Battles with local authorities over section 106 payments have to become a thing of the past. A better way of negotiating has to be found – by both sides. Corporate social responsibility policies must be meaningful, not a box-ticking exercise.
And investment decisions driven by tax structures should be resisted – there will be fewer opportunities anyway as Conservative policies inch closer to Labour’s position in many areas.
Being part of the solution in providing healthcare, education and social housing is a real opportunity too. For business and for reputational redemption.
But if the markets hold up, if Brexit negotiations can be conducted more constructively than we have seen so far and a functioning government can be formed (and led) there are plenty of grounds for optimism.
Public trust in politicians is low – and will be lower as a result of this latest shambolic episode. There is an opportunity for business – and for real estate – to capitalise and be seen as a force for good.
■ Bookmark www.egi.co.uk/news/election2017 to find out the property fallout after this morning’s hung parliament announcement.