There is a word (but not necessarily the only word)that I would use to describe the current property market: patchy. The London market has recovered pretty well in the past year or so in terms of both value and demand, particularly in the West End. The City isn't quite so good and out of Central London, well, don't ask.
If your building isn't let to a good covenant on a long lease, you probably would rather that you didn't own it and whereas, not so long ago, if your building was let to the government you were laughing, you might not feel the same way now. There is a lot of uncertainty in the public sector and government bodies are only renewing on short leases.
On the lettings side, residential is booming, with rising rents and demand outstripping supply. I am looking forward to hearing more about the government's plans to relax the regulations on converting commercial buildings to residential. It was exciting when it was announced in the Budget, until it turned out that, for the moment, all they are going to do is consult. If they call me to ask my views I would be happy to give them but I have a feeling things might not change much in the end.
Retail in Central London is good. Despite what they say about technology changing the way we shop, you can't do everything on the internet. You still need to try on shoes and have a haircut.
As a company, we are in management mode and are not buying at the moment but there is a lot of cash out there looking for a home, particularly from overseas.
Buildings in the West End of London are selling like hot cakes
With all the turmoil in the world, people want to keep their money safe and London is a magnet. Buildings worth up to a few million pounds are selling like hot cakes but only if they are in the West End. Values are holding mainly because there is very little development going on and because people aren't selling much. There isn't enough good property to go round.
The City will take a while to recover because there is more development going on. All those shiny new buildings will soak up the demand and some of the elderly buildings will suffer. It's the same old cycle.
Building anything is tough. Once you have made it through the maze that is the planning system and actually get permission, you are faced with a truck load of other hurdles to jump from health-and-safety rules to funding. As an old partner of mine used to say: "It's one thing getting planning. It's another thing being able to build it." Too true.
David Pearl is chairman of The Structadene Group
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