Brexit uncertainties in 2016 stalled both the economy and property market, but growth has now returned and confidence is rising.
Leading property consultancy Bidwells hosted a Property Trends seminar in Cambridge in which a trio of experts gave their insight on the economy and property market and what the future may hold.
With Article 50 being exercised the day after the Bidwells event, one of the key messages from the seminar was that the Cambridge-London-Oxford Golden Triangle continues to experience strong growth and is well placed to weather the uncertainties with Brexit.
The seminar was held in Cambridge and focussed on the future economic and property market conditions which will affect the country both nationally and closer to home. Also included were the latest findings of the review of the Greater Cambridge Greater Peterborough Local Enterprise Partnership (GCGP) Strategic Economic Plan and its impact for public investment in the region.
Steve Mallen, Economist and Market Analyst opened the event and gave a full overview of the current economic issues and the property market trends.
Key themes included:
- The UK economy stalled in 2016 in the face of Brexit uncertainties but has now recovered with economic growth predictions now being revised upwards. In 2017, the UK economy is projected to grow by 2%, in line with the nation’s 30 year average and despite concerns over Brexit.
- The UK property market also paused last year with investment returns slowing and new investment and development projects put on ice. However, especially with the South and East, transaction volumes are now rising again and investment volumes are gradually rising.
- Inflationary pressures, driven by energy and food prices, will temper economic growth to a degree in 2017/18 and also dampen consumer expenditure.
- The investment returns on UK property are forecast to rise against a backdrop of reduced volatility and superior performance in comparison with the stock market and other investment options.
- Six of the top ten most productive cities in the UK in 2017 are projected to fall within the Golden Triangle and Eastern region. In order, productivity will be strongest in Cambridge, Oxford, Milton Keynes, Ipswich, Norwich and London.
- The Golden Triangle is especially well placed to take advantage of the rising digital economy with the Cambridge-Milton Keynes-Oxford Brain Belt growth corridor offering substantial commercial and property investment potential.
Adrian Cannard, Director of Strategy the GCGP LEP outlined the extensive economic opportunities presented by the Greater Cambridge Greater Peterborough area. The area is not just successful in growth terms, but will be increasingly productive relative to other UK regions in the post-Brexit economy.
Key points included:
- The GCGP area is within the top ten most productive Local Enterprise Partnerships in the country with regard to economic growth and productivity.
- Growth in employment has been especially strong in the service, professional and technology sectors with more than 150,000 new jobs created since 2003.
- Manufacturing and public services are the only sectors to have experienced employment contraction over the past 10-15 years.
- The Cambridge technology cluster now contains more than 1,500 companies employing nearly 60,000 people with a combined annual revenue of £13 billion.
- Cambridge remains a magnet for new companies and jobs, bringing both prosperity and challenges, most especially in relation to infrastructure and housing.
- Multiple infrastructure projects around Cambridge, including the A14 upgrade, Cambridge North Station, improvements to the A10 and A428 and enhanced rail services to the city, will however, help reduce the stresses associated with rapid growth in coming years.
- Similarly, multiple housing projects, including Waterbeach, Northstowe, the North West Quadrant and Bourne Airfield, will significantly increase housing supply – which is essential to sustainable economic growth.
- The LEP has capital funding available to unlock barriers to growth and is keen to work with developers and companies in creating new projects and creating employment.
In concluding the seminar, Bidwells Partner Nick Pettit gave an overview of the local construction and development sector.
Key comments included:
- Brexit had created uncertainty within the construction sector, leaving contractors keen to secure new projects on competitive terms.
- Whilst rising oil prices and a weakening Pound are leading to increases in construction costs and materials, reduced project opportunities still mean that 2017 will be a good time to procure new developments.
- Aside from key development projects like CB1 and the rail station, significant medium term growth remains at Cambridge Science Park, CB4, together with hinterland projects at the Biomedical Campus, Babraham Research Campus and Granta Park.
In commenting on the seminar proceedings, Steve Mallen stated:
Cambridge, the Golden Triangle and the rest of the UK held its breath last year because of Brexit. However, Brexit will take many years to resolve and you can’t hold your breath forever. The economic and property market fundamentals of both the Golden Triangle and the LEP area remain very strong with positive growth still much in evidence.