Monday property news update
Brexit knife edge, property during lockdown 2.0, financial market consensus and wealthy millennials embrace impact investing
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Brexit - the final days
Late last night, the Guardian reported a major breakthrough had been made in Brexit negotiations on the rights of European fleets to fish in UK waters, leaving the so-called level playing field as the final hurdle.
Boris Johnson and Ursula von der Leyen, president of the European Commission, will speak today after another two days of negotiations that both sides had billed as the final push.
EU leaders want a deal wrapped up before a European Council meeting starting on Thursday.
The property market during lockdown 2.0
In some ways, the second national lockdown had parallels with the first. In other respects, it felt very different.
Strong demand for country living continued, and the top London areas for viewings were Chiswick, Barnes and Dulwich, all locations with a predominance of family houses and green space, according to a new UK Property Market Outlook from Tom Bill. If this trend begins to unwind in 2021 as the vaccine roll-out programme gathers pace, the sustained level of demand suggests the reversal will be gradual.
While prices dipped during the first national lockdown, there was no such effect in November. In fact, the average exchange price as a percentage of the asking price in the country rose to 96.6% in November from 93.9% in October. In London, the ratio was flat over the same period.
Business sentiment tracks higher
Confidence among UK business leaders has grown to its highest level since March as the arrival of Covid-19 vaccines fuel expectations of higher profits during the year ahead.
Sentiments about the economy have also improved significantly, but remain firmly in the red, according to the survey from the Institute of Directors. Net investment and employment intentions for the year ahead also remained subdued, though have improved markedly.
Naturally, directors picked Covid-19 as the most significant concern, followed by uncertainty over the UK’s trading status with the EU and global economic conditions.
Consensus in markets
Strategists from firms including JPMorgan, Goldman Sachs Group and Morgan Stanley expect investors to increase appetite for risk through 2021 as the global economy recovers from the pandemic. That's creating "crowded trades" as huge numbers of investors reach a consensus.
Impending stimulus from central banks intended to counter the impact of the pandemic will add momentum to this trend, which in turn is likely to fuel demand for alternative investments including real estate.
Last month's updated Active Capital report explored where that investment is most likely to settle, whether it be core, ‘safe-haven’ income-producing real estate, geographically resilient locations that are rich in innovation, or government-backed green hotspots.
Wealthy millennials and the growth of ESG
One of the key questions in ESG investing that I explored here last week has been who is likely to drive change: whether it's market participants themselves, particularly the giant fund managers with ambitious investment criterias, or regulators like the EU, which has been setting the pace in this area, particularly when it comes to defining what constitutes a 'green' investment.
The FT this morning looks at the impending handover of trillions of dollars in family wealth to millennials who are leading the charge for impact investments and those that meet ESG criteria.
A UBS survey of 121 of the world’s largest single family offices found that almost two-thirds of families regard sustainable investing as important for their legacies and, according to the FT piece, the young and wealthy are seeking to bring in specialist advisers to funnel capital into investments that fit their worldview.
In other news...
Catch up with the Capital Markets webinar: how European real estate markets have been impacted by the pandemic in 2020 and what the future holds as we approach 2021. Watch on demand.
Plus, is faster house price growth in London down to interest rates or supply? Offices evolve beyond the 9 to 5, capital gains at Berkeley defy fears of shire exodus, going negative ‘could be a positive’, Trump officials push ambitious vaccine timeline, investors bet ECB will do what it takes to keep borrowing costs low, China's exports surge on hot demand for PPE, remote working tech and finally, water futures to start trading amid growing fears of scarcity.