Friday property news update - 20 August
Lloyds the landlord, net zero and how many of Britain's high earners have moved to the EU?
4 minutes to read
High earners
As the clock ticked down to Britain's official withdrawal from the EU at the end of January 2020, much remained uncertain as to how many of UK banking's 3,614 "high earners" - those earning at least 1 million euros a year - were in the process of packing up and moving to the mainland. Those high earners formed about 70% of European banking's total and were one of many metrics being monitored for clues as to the success or failure of Brexit. They also form a meaningful slice of demand in London's prime sales and lettings markets.
Thanks to a European Banking Authority survey published yesterday we now know 95 high earners left the UK during 2019, taking the total to 3,519. We'll have to wait for 2020 data, but the release is another piece of evidence suggesting predictions of 100,000 financial services job losses as a result of Brexit will fall wide of the mark.
High earners are only part of the picture and Britain had lost between 5,000 and 7,000 financial services jobs as of January, according to Bank of England governor Andrew Bailey. EY, after conducting a study of 222 firms, put that at 7,600. That compares with the 190,000 financial-services jobs in the City, the 67,000 in Canary Wharf, and 1.1m in the sector as a whole.
Net Zero
A report by Tony Blair’s think tank covered in this morning's Times suggests climate change can be tackled with small reductions in flying and driving and we can continue eating meat and dairy.
As the Times notes, that is a rebuttal of claims that meeting the UK’s legally binding target of net zero by 2050 will require a “total transformation” of people’s daily lives. The report does, however, suggest 40% of homes should move to low-carbon heating systems by 2035 - either hydrogen or heat pumps - and readers of these notes will know what a challenge that poses.
This is an urgent and complex problem. To better understand how it's likely to be solved, Anna Ward speaks to two leading voices on the issue - Graham Cooley, CEO of hydrogen specialist ITM Power and David Goatman, head of energy and sustainability across EMEA at Knight Frank. For the new edition of Intelligence Talks they cover everything from lessons we can take from the early days of solar and wind and the reality of what it's all going to cost to uncertainty over the tech and the sector's skills gap. Listen here, or wherever you get your podcasts.
Amazon
Amazon will begin opening department stores across the US selling a mixture of clothing, gadgets and other goods that shoppers are increasingly buying online. The news comes days after new data emerged that revealed Amazon had eclipsed Walmart to become the world's largest retailer outside China.
With incomes at department stores under pressure - at least in part due to purchases moving online - Amazon's move will be watched closely as to what it's able to do differently.
For some useful context I recommend Stephen Springham's analysis of Amazon's roll out of grocery business Fresh, published earlier this month. As Stephen notes, when Amazon plays, it tends to play to win and, crucially, it operates to a different financial model than established retail businesses in that it seemingly doesn’t need to turn a profit in the same way - and this doesn’t seem to matter, even to shareholders.
Lloyds the landlord
Lloyds Banking Group is aiming to purchase 50,000 homes in the next 10 years, according to the contents of a job advertisement published by the Financial Times.
That would make it one of the UK's largest residential landlords and is among the most significant commitments to the UK's rapidly expanding Build to Rent (BTR) sector in recent years. According to the FT, the bank plans to build most of its portfolio by developing new sites from scratch. Earlier this month it agreed a partnership with FTSE 100 housebuilder Barratt.
Earlier this month Oliver Knight revealed that investment into the UK’s BTR market topped £2 billion in the first half of 2021. Over the last 18 months, we’ve seen a significant uptick in both existing investors looking to deploy more capital into the BTR space and new entrants entering the market, particularly from overseas. More than 60% of the capital deployed in the first half of the year originated outside of the UK.
In other news...
In the third instalment of a three-part Hotel series: “Steering a route to a successful recovery”, Philippa Goldstein considers the themes of Creativity and Change as the final two themes when navigating the seven C’s. How will the sector adapt to a period where living with Covid-19 becomes the new norm?
Elsewhere - economists trim forecasts and investors feel jitters over Delta variant, UK consumer confidence rises above pre-pandemic levels, UK job ads well above pre Covid levels, Wall Street has reason to worry about working from home, and finally, US second quarter growth is likely to be revised higher.
Photo by Wicked Monday on Unsplash