Monday property news update 6 September
Overseas buyers, ESG woes and is the global rebound at risk?
3 minutes to read
ESG
One of the biggest questions facing proponents of ESG-themed investing is whether you can accurately measure non-financial outcomes. It's theme we've been returning to since The Wealth Report 2020, when it was becoming very clear that the new altruism would be held to account.
Indeed, over the course of the last year the biggest money managers have come under increasing pressure from regulators to ensure they aren't exaggerating the benefits of their investing, also known as "green washing". Last year, the Financial Reporting Council beefed up its decade-old stewardship code after Sir John Kingman, chairman of Legal & General, said it had become a driver of "boilerplate" reporting.
The big change to the code - which virtually all asset managers and pension funds sign up to - was a requirement not just to write a satisfactory ESG-compliant investing policy, but to provide evidence showing the outcomes of their actions.
All 300 asset managers who were signatories to the old code had to reapply and so far, 189 have done so. The FRC this morning published a list of firms that have been endorsed by the new code and 64 - or about a third - have failed to make the grade, all at least in part due to an inability to provide proper evidence on outcomes.
Overseas buyers
The number of international buyers and tenants searching for UK property has reached its highest level since before the pandemic.
Almost a quarter of all web users looking at sales and lettings properties were based overseas in August, the highest figure since January 2020, according to Tom Bill's analysis of web traffic data. The average figure in the 18 months to June was 17%.
Uncertainty over the relaxation of travel rules means the precise timing of the large-scale return of international buyers is uncertain. While the number of arrivals at Heathrow in July was the highest since the start of the pandemic, it was still more than 80% below the figure for the same month in 2019.
As Tom notes: "It’s more web traffic than air traffic at the moment but international demand is undoubtedly building."
Growth
Several key economic indicators published in recent days have added to a growing body of evidence suggesting the Delta variant is weighing heavily on global growth prospects. Employers in the US added just 235,000 jobs during August, far below economists' expectations of 725,000.
That follows the release of Germany's key measure of business confidence, which showed a sharp fall in August due to a mixture of chaos in supply chains and concerns over the spread of infections. Meanwhile China's services sector just slumped into a sharp contraction.
“From a slide in China services to a plunge in US job gains, the delta variant is putting a dent in the global recovery. Looking forward, even as China exits its latest outbreak, a broadening crackdown on entrepreneurs - part of President Xi’s ‘common prosperity’ agenda - adds uncertainty to the global outlook,” says Tom Orlik, chief economist at Bloomberg Economics.
UK jobs
Shortages of staff gripping the UK labour market could last another two years, according to the CBI.
While many had hoped the wind down of the furlough scheme would bring workers back into the fold en masse, Tony Danker, director general of the CBI, said the UK's immigration system would need to be relaxed if shortfalls are likely to be met in any meaningful sense.
The construction industry has been hit by shortages of both materials and key tradespeople. In a trading update published Friday, Berkeley Group became the latest housebuilder to say it is experiencing inflationary pressures, though mostly through materials costs.
In other news...
The Bank of England's latest comments on inflation, the BOE drops policy on staff returning to the office a day a week, the great divide over living with the virus, economic losses from extreme weather to hit £3.6tn over five decades, Argent says build it and they will come, and finally, the UAE eases residency rules.