A succinct weekly take on the London property market and a roundup of headlines from market observer John Lim. Subscribe to the Friday Roundup here: http://pbra.in/pb-signup
- Shortly after the referendum, co-working provider WeWork pulled out of their discussions to take up 45,000 sq ft of space in Canary Wharf.
- This was the first time the $16bn company had pulled out of a deal, following an aggressive expansion plan that has seen them take up 11 locations in the City with plans to add another 10 by 2017.
- WeWork have stated that the Brexit vote was not the main reason for pulling out, but that move now looks prescient. Brexit and its potential effects on the financial services sector have put severe pressure on office rents in the financial district.
- According to broker Carter Jonas, landlords are now offering longer rent-free periods to attract occupiers and will cause rents in the Docklands to fall 10 percent to 12 percent over the next two years.
- Two large banks, Barclays and Citigroup, are now seeking to sublease their office space in Canary Wharf. Barclays, which has instituted a hiring freeze, is looking to sublease about 5,000 desks of space to the government, while Citigroup has also offered to rent about 300,000 sq ft to Her Majesty’s Revenue & Customs.
- We can expect more of such moves from banks and financial services firms if PM Theresa May manages to implement a ‘hard’ Brexit, a scenario which would likely deny the UK the ability to passport financial services to the European Union.
- The reduced take-up of office space in Canary Wharf is set to have knock-on effects on the residential market, because of the close intertwining of offices and housing in the area: many people live there for the main reason of being walking distance to work.
Here’s a roundup of on what we think are the big news stories this week:
- The High Court ruled on Thursday that the British government does not have the authority to proceed with the UK’s exit from the European Union without the approval of parliament, raising hopes of a ‘soft’ Brexit and sending the pound surging to a four-week high.
- The biggest property deal since Brexit completed this week, with the official transferral of the former New Scotland Yard headquarters from the government to an investment firm headquartered in Abu Dhabi, for £370m.
- Evergrande Group, China’s second biggest property developer, is in talks to acquire upmarket UK housebuilder Cala Homes.
- Following similar decisions by other major estate agencies JLL and Knight Frank, CBRE has announced the opening of a Battersea and Nine Elms office.
- Housebuilder Persimmon is to build a new brick factory early next year as it reports ‘encouraging trading conditions’, with a 19pc growth in private sales rate ahead of the same period last year.
- Property group JLL has forecast that house price growth will be “subdued” and largely flat until 2019, with a slowdown in the number of new homes built, due to uncertainty over Brexit negotiations.
- InvestUK and Gaw Capital Partners have launched a £1bn bond that will invest in real estate-backed debt and is aimed at international students who will be able to use their investment to gain permanent residence in the UK.
- PM Theresa May suggested (albeit jokingly) that Boris Johnson was being lined up for political euthanasia during a political awards ceremony this week. In her own words: “Boris, the dog was put down when its master decided it wasn’t needed any more.”