Confidence in the UK economy has dropped significantly, a survey of real estate leaders who are members of the British Property Federation (BPF) has revealed.
Data from the latest sentiment survey of some of the country’s biggest real estate companies, conducted by BPF and Grosvenor Britain & Ireland, suggests uncertainty around EU exit negotiations could be the most significant factor causing the drop in confidence since last year.
A third of real estate industry leaders surveyed (33%) expressed confidence in the UK’s economic prospects in the next 12 months, compared to 88% of those polled in last year’s survey.
Confidence for the real estate sector’s own performance in the coming year has similarly fallen, from 88% last survey to 40% this time round.
The uncertainty caused by EU exit negotiations is believed to pose the greatest challenge to the health of the real estate sector in the next 12 months. More than four fifths (87%) of property industry advisors polled believe this uncertainty will be the top challenge to the sector as a whole.
While plans for new investment in 2017 remain comparable to last year’s with similar levels of gearing, a smaller proportion of those polled believe their company’s financial performance will be better in 2017 than 2016 (45% compared to 66% last year). Appetite to expand development activity is also significantly lower (42% plan to increase development activity compared to 60% the last time the survey was conducted).
However, an increased proportion of BPF members surveyed (59%) remain confident about the UK property sector’s prospects for the coming five years, arguably offering hope that clarity over the direction of travel on Brexit that will encourage the sector to continue to pump the investment pipeline, and build the conditions for growth and prosperity.
Melanie Leech, Chief Executive of the BPF said, “Our sector invests for the long term to create the great places where people live work and relax. Developments are planned and delivered over many years so it’s not surprising that the current uncertainties are impacting on the appetite for development.
“The decisions that will ensure the infrastructure for a strong UK economy in the future need to be taken now. There is much the government can do to give confidence to investors – by demonstrating its commitment to working with us in partnership, by maintaining a fair and stable tax system and ensuring an efficient planning system.”
Craig McWilliam, Chief Executive of Grosvenor Britain & Ireland said, “In a period of uncertainty for the UK, these findings indicate the real estate sector’s willingness to maintain investment to drive jobs and growth. That confidence to invest will require strong signals from Government in the short term that the UK remains open for business. In London the Mayor should renew his focus on releasing developable public land for housing and unleashing a thriving build-to-rent sector that delivers new homes for Londoners.”