The real estate’s confidence in investor and developer finance from overseas has plummeted in the last six months in the face of global economic and political uncertainty.
In the autumn edition of its London Development Barometer survey, M3 consulting found that 42% of real estate professionals in the capital think inward investment levels will increase or remain level in the capital, compared to 64% six months ago.
Of the 150 real estate professionals surveyed for the report, 63% thought the global economy would have a negative impact on development, while 57% believed global politics would also have an adverse effect. Six months ago these figures stood at 52% and 48% respectively.
Brexit remained a concern with 76% citing it as a major barrier to construction activity; however this figure has dropped from 80% when the London Development Barometer was launched two years ago.
The UK government also remained out of favour. While the number of people that stated it should be doing more for development fell slightly from 83% to 80%, the survey marks two years of at least 80% of the industry being dissatisfied with government.
The survey also turned up an increased expectation from the industry for more social/ affordable housing in the capital; 85% of people said they expect to see more of it being built, compared to 74% earlier this year.
Retail continued to decline in the industry’s expectations. Some 86% of those surveyed anticipate a decrease in development in this area, down from 79% in the spring and 41% two years ago.
Richard Hollingworth, director at M3 Consulting: “London has enjoyed a sustained if somewhat unexpected level of investment and market demand for a couple of years. That confidence is wavering with persisting Brexit uncertainty.
“The results again show the industry wants certainty - whether that’s within the EU or some form of a new normal – and for the governments to return their attention to practicalities like improving town planning processes.”