Today in Numbers

COMING UP SHORT: Bridgewater Associates has amassed $10.5 billion in short positions against 28 EU companies, reports Bloomberg.

France and Germany, the eurozone’s largest economies, reported decreases in both manufacturing output and new orders as pessimism about the eurozone economy deepens.

Bridgewater, which manages about $150 billion, has more than doubled its short bets in the last week.

Political Outlook

The Conservative Party was dealt two by-election blows last night as Wakefield fell to Labour, and Tiverton & Honiton fell to the Lib Dems, BBC News reports.

Labour snatched back Wakefield, a ‘red wall’ seat they unexpectedly lost in 2019, with Labour candidate Simon Lightfoot overturning the Tories’ 4,925 vote majority.

Wakefield is Labour’s first by-election gain since Andy Sawford won Corby in 2012, and brings the total number of Labour MPs to 200.

In Devon, the Lib Dems saw a 30 percent vote swing, overturning the Tories’ near-25,000 vote majority, winning by a margin of 6,144 votes.

The Lib Dem MP, Richard Foord, won 52.9 percent of the vote, using his victory speech to warn that “it’s time for Boris Johnson to go”, and that if the Tories’ did not see the light and displace their leader, “the Lib Dems are coming”.

In a bad night for the Tories, Conservative Party chairman Oliver Dowden resigned over the results.

Dowden submitted his resignation letter little over an hour before he was due to appear on a broadcast round to defend the results.

Economic Outlook

European benchmark gas futures rose by 7.7 percent last week to €137 per megawatt hour, reports Bloomberg.

With supplies from the Nord Stream pipeline still limited to two fifths of full capacity, the potential for a supply crisis deepens.

The UK’s energy price cap may need to be raised to nearly £3000 in October, reports the Guardian.

This figure is £200 above the previous estimate, as supply shocks are felt across the continent.

In response, the German government plans to pay companies for their surplus gas in a bid to incentivise lower usage.

But the weather will also affect energy supplies, with France’s largest nuclear power plant and much of Germany’s coal plants dependent on river levels for cooling and deliveries.

Housing Market

CityAM reports on data which reveals the UK as leading in the European mortgage market – but at the bottom of the pile for home ownership statistics.

At 65.1 percent, the UK comprises the lower tier for the total share of the population that own their own home.

Henry Dannell, Director of Geoff Garrett, argues that despite the fact that property values have spiralled, and there is an acceptance towards long-term renting as a lifestyle choice, stating “the UK mortgage sector is by far the most pivotal and influential in Europe”.

Business Live reports that Brighton will become the first city in the UK to take action against second homes and holiday lets, after pandemic buyers drove house prices above £500,000.

Council members have decided to urge authorities to develop plans that would forbid the construction of new second homes and holiday lets in certain areas of East Sussex.

The news follows the Welsh crackdown on second homes, and the proposals are similar to those in Whitby, where the sale of second homes is limited.

Offices

CRE operators, including office owners, need to prioritise forward thinking data instead of looking at the past, says David Thame in Bisnow.

Matthew Richardson, founder and chief executive of Income Analytics – a firm which provides up to date measures of tenant risk – says that property has become a global asset class but the analytics for it haven’t yet caught up.

A new survey from Lambert Smith Hampton shows that three quarters of businesses are seeking to reduce their office space after adopting a three-day work week or fewer, reports React News.

The property consultancy’s survey showed that only 15% of occupiers require staff to work in the office four days a week or more, prior to the pandemic that figure was at 90%.

Only 8% of participants have any plans to increase their space requirements, while 72% plan to reduce the amount of space they occupy.

Retail, Leisure & Hospitality

After a flurry of market activity, a number of industry experts tell Property Week that shopping centres are ‘back in vogue’ and that the asset class’ fortunes will improve  in the coming six months.

Writing in the magazine’s comment section, Trevor Morriss, Principal at leading London architecture firm SPPARC, argues the prime location of Britain shopping centres means that if they shift away from retail they can be revitalised for the local community and regain popularity.

He argues that re-inventing shopping centres is key to levelling up.

Just yesterday, Ministry of Sound announced their bold plan to convert a 115,000 sq ft former House of Fraser store in Westfield Shopping Centre into a space containing an office, gym and roof-top bar, The Guardian reports.

In the hospitality sector, staff shortages are forcing 45 percent of venues to reduce hours or capacity, costing the industry £21 billion a year, The Evening Standard reports.

The most recent ONS data showed there 174,000 vacancies in the sector, an 83 percent increase compared to the same period in 2019.

Transport & Logistics

According to data from Income Analytics, logistics tenants have a higher projected probability of default than tenants in other sectors, reports React News.

The higher projected default rate for logistics partly reflected the fact that there are many smaller players who are often reliant on single contracts and operating off low margins.

The Times reports that according to unions GMB and Unite, more than 95% of British Airways workers at Heathrow will strike this summer.

The unions say the action is in response to a 10 per cent pay cut imposed on staff during the pandemic and members want their pay reinstated permanently.

Nadine Houghton, national officer at GMB, said: “With grim predictability, holidaymakers face massive disruption thanks to the pig-headedness of British Airways.”

Sustainability

Climate justice groups have joined RMT picket lines across Great Britain to support the rail strikes and campaign for government investment in public transport to combat climate change, The Guardian reports.

Hundreds of activists from several groups including Just Stop Oil, War on Want, Extinction Rebellion [XR] and Friends of the Earth Scotland have joined striking workers.

Well-funded, publicly owned and affordable public transport will be essential to reduce the UK’s dependence on fossil fuels, moving people away from cars to more energy-efficient trains.

Gov.UK reports on the Government’s package of new measures to drive space sustainability, the Science Minister’s measures to show commitment, ambition, and drive to improve the UK’s sustainable use of space.

The UK space sector employs around 47,000 people directly around the UK and supports around 190,000 jobs in the supply chain, contributing almost £7 billion to the UK economy each year.

Construction and Planning

Recent government data shows that the number of new residential housing units completed in Q1 2022 was down 9 percent at 40,720, Construction News reports.

New residential home building starts was down 5 percent and applications down 12 percent suggesting a long-term decline in home building.

Kier Property has formed a JV with Lloyds backed Housing Growth Partnership to build 2,000 homes on brownfield sites in south east England in a deal worth an estimated £80 million, Construction Index reports.

The partnership will acquire sites, both with and without planning permission, and build rental and for sale properties over the next five-years.

Further Reading

Under EU rules, UK birds must now have a signed export health certificate before they can take part in trans-Channel races, pigeon-racers implicated by Brexit have their say in the BBC.

 

LANDMARK REPORT: Radical Capital

Blackstock’s new report mentioned in the Financial Times, The Sunday Times and the BBC.

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PropCast

Our weekly podcast has been running for nearly four years, engineered by broadcast professionals ensuring high-quality audio and top-class conversation. Informal, but highly informed. We partner with Property Week, who run high-quality articles alongside each audio episode.

We feature one-to-one interviews with company chiefs on BossCast and three-way debates on every imaginable topic.

If you would like to take part or chat to us about hosting your events or providing broadcast media training, do get in touch here with Blackstock founder Andrew Teacher.

In the latest episode of BossCast, Samantha Kempe, co-founder of IMMO and recent winner of the Young Property Personality of the Year Award at Property Week’s Property Awards 2022, explains how her company’s data-driven platform is helping institutional investors access the $50 trillion residential sphere, and why the greenest building is the one that already exists.

Listen via Apple Podcasts or Spotify or SoundCloud.

Previously, Christopher Wright, Norges Bank Investment Management’s head of ESG risk monitoring, spoke about how the sovereign wealth fund uses its size and influence to guide its investments – and in particular, why a policy of active ownership is better than divestment for beneficial ESG outcomes.

Listen via Apple Podcasts or Spotify or SoundCloud.