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The Covid-19 pandemic is continuing to cause major disruption to the UK’s economy and businesses. Our aim during this time is to support our clients and contacts by sharing relevant updates, together with our insights into how the real estate industry will be impacted.
Follow us on Twitter or LinkedIn for regular updates and please get in touch if you would like to discuss anything with our team. We’re here to support you on any PR, business strategy or corporate communications needs you may have.
Andrew Teacher and the Blackstock Consulting Team
DAILY BRIEFING, WEDNESDAY 21st APRIL, 2021
In the first episode of our new BossCast series, Landsec’s chief executive Mark Allan explains why he thinks the pandemic will serve as a catalyst for positive change in the commercial real estate sector.
Speaking to Blackstock Consulting founder Andrew Teacher, Allan argues that the West End will remain a hive of activity — despite major insolvencies — and how Covid-19 has shifted the dynamic of the landlord-tenant relationship.
“There are challenges and of course a few high profile failures linked directly to big spaces on Oxford Street. But do people want to be in that part of London? Absolutely. The scarcity of the West End means it will evolve and change,” Allen argues.
In our BossCast series, we will meet some of the real estate sector’s most prominent business chiefs to discuss the biggest issues of the day. Stay tuned for more episodes over the coming weeks.
UK Government Response
Vaccine passports are to be made available “as soon as possible” in a boost for Britons’ prospects of booking a foreign holiday this summer.
Under the government’s roadmap for easing restrictions, foreign holidays for people living in England could be allowed as early as 17 May.
A Department for Transport spokesperson said: “We are working on a solution to enable residents to prove their Covid-19 status, including vaccination status, to other countries on the outbound leg.
“We are working on this as a priority and intend to have the solution ready as soon as possible.”
It comes after The Telegraph reported that a government official had told travel industry leads that “we aim to give people the ability to prove their vaccine status by the time international travel restarts where other countries require it.”
Spain’s tourism minister, Fernando Valdes, said that the country is “desperate to welcome” Britons to its shore this summer.
Britain reported a further 18 Covid-19-related deaths and a further 2,729 new cases in the latest 24-hour period.
Yesterday’s figures compare with Wednesday’s 2,396 new cases and 22 deaths.
Brussels is in “no rush” to grant the City of London renewed, post-Brexit access to its financial markets, according to City AM.
Mairead McGuinness, the European Commissioner for financial services, said yesterday that the EU would “not be recreating access to the single market for the UK as they have chosen to move out”.
Britain’s financial services sector lost its wide-ranging access to European markets when the Brexit transition period ended on 31 December.
The City can only maintain its pre-Brexit access to the bloc if Brussels unilaterally grants regulatory equivalence. However, the EU believes that Britain is destined to diverge from its financial services regulations and has withheld the designation.
Bank of England governor Andrew Bailey recently said equivalence was the best-case scenario for the financial services sector but that it would not be worth it if the UK had to be a regulatory rule-taker.
Towns and cities in the north of England are recovering far quicker from the economic effects of the Coronavirus than their counterparts in the south, reports The Telegraph.
According to research from jobs site Indeed and analysts at the Centre for Cities, Barnsley, Mansfield and Stoke are reporting 20 percent more job postings than in February 2020, according to research from jobs site Indeed and analysts at the Centre for Cities.
In the south, Crawley, Southend, Slough and Luton have far less demand for workers owing to the closure of major airports in the region.
Elena Magrini, an economist at the Centre for Cities, put it down to the greater reliance on consumer services and tourism in the south of England.
She said: “[Northern] economies are much more reliant on manufacturing, or warehousing and production. These jobs were able to continue throughout the pandemic, so workers didn’t need to be put on furlough, so the activity has continued.”
Jaguar Land Rover (JLR) is shutting two main car factories temporarily due to a shortage of computer chips, BBC News reports.
The difficulties at Britain’s biggest carmaker echo similar problems at other manufacturers, including Ford, who have been hit by a global shortage of chips.
JLR said there would be a “limited period” of closure at its Halewood and Castle Bromwich sites from Monday.
A mixture of strong demand and Covid shutdowns at chipmakers has also hit phone, TV and video games companies.
Wirecard employees hauled millions of euros of cash out of the defunct firm’s Munich headquarters in plastic bags over a period of years, according to the FT.
The ex-fin-tech — which at its peak was worth €24 billion — went bust last summer in one of Germany’s biggest accounting frauds. It collapsed after discovering that €1.9 billion of corporate cash did not exist and that chunks of its Asia business were a sham.
Now, former employees have told Munich police investigating the fraud that staff repeatedly removed large amounts of cash from Wirecard’s head office. The practice started as early as 2012, with six-digit hauls of banknotes often moved in Aldi and Lidl plastic bags.
The FTSE 100 closed in the green on Thursday as trader optimism bounced back, reports Proactive Investors.
The UK premier share index gained almost 43 points, or 0.62 percent, at 6,938, not far off the intra-day high of 6,941.
FTSE 250 also headed north, adding over 279 points, or 1.26 percent to 22,364.
“The losses of earlier in the week appear to be a distant memory, particularly in the US, where indices have been busily clawing back the ground ceded on Monday and Tuesday,” said Chris Beauchamp, chief market analyst at online trading firm IG, in a note.
“Earnings season appears to be providing sufficient good news to keep indices at their elevated levels, with few unpleasant surprises thus far. 2021 continues to surprise in its lack of volatility, marking a sharp contrast to the madness of 2020.”
Owners of retirement flats have found they have to pay thousands of pounds in council tax depending on the postcode, reports The Telegraph.
Local councils can charge additional tax on empty homes, meaning that owners unable to sell the flats, which are often inherited, have received annual council tax bills as high as £6,000.
Because the tax rules have not been applied evenly across the country, whether or not owners pay the extra tax is down to a postcode lottery.
According to the UK House Price Index, UK house prices increased by 8.6 percent in the year to February 2021, up from 8.0 percent in January 2021.
On a non-seasonally adjusted basis, average house prices in the UK were unchanged between January and February 2021, compared with a decrease of 0.6 percent during the same period a year earlier (January and February 2020).
House price growth was most substantial in the North West, where prices increased by 11.9 percent in the year to February 2021. The lowest annual growth was in London, where prices increased by 4.6 percent in the year to February 2021.
Retail, Leisure & Hospitality
John Lewis has handed a £1.5 million payoff to the great-grandson of its founder ahead of his departure from the retailer in June, reports The Telegraph.
Finance director Patrick Lewis, the last remaining family member linked to the department store chain, has pocketed the sum after stepping back from his role last year.
The move comes after the John Lewis Partnership scrapped staff bonuses for the first time since 1953 last year and sunk to a £517 million loss last month.
Lewis has been with the organisation for more than a quarter of a century. He was replaced by customer service director Bérangère Michel in December and has been on leave since then.
The amount covers payment for loss of office, salary, car, pension, and contribution to his legal fees.
Dame Sharon White, the chairman, was paid £1.1 million, including a £947,000 salary and £ 115,000 pension for the year to January 30.
That was less than her predecessor Sir Charlie Mayfield, who earned £1.4 million for the year to January 2020.
In March, John Lewis said it would shut four department stores in Aberdeen, Peterborough, Sheffield and York and “At Home” shops in Ashford, Basingstoke, Chester and Tunbridge Wells, putting almost 1,500 jobs at risk.
Morgan Sindall has seen strong trading in its ‘fit out’ business, which handles everything from putting in electrics and air conditioning in offices to painting walls reports the Evening Standard.
The FTSE 250’s firm’s chief executive John Morgan said the Overbury division, which works with tenants and landlords doing up offices, has had a busy start to the year, including London.
He said some jobs are in buildings that were pre-let two or three years back, and occupiers are nearing move-in dates, and other work is with businesses that want to upgrade their existing offices for when people are ready to return to them.
Many companies had office-based staff working from home since last March when the first lockdown started.
In an update on trading and the outlook for 2021, Morgan Sindall said: “Fit-out has had a very strong trading period, and its secured order book at the end of March was 18 percent higher than at the year-end.”
The company added: “In addition, it has in excess of £400 million of work currently at preferred bidder stage. Taken together, fit-out is expected to deliver a result for the year which is materially ahead of its medium-term target.”
Total group pretax profits for 2021 are expected to be ahead of the £94 million that analysts had pencilled in. House broker Numis now forecasts profits of around £109 million.
Heritage campaigners have condemned a proposed development that would block a celebrated view to St Paul’s Cathedral, reports The Telegraph.
The City of London Corporation, both the applicant and the decision-maker, is recommending planning permission be approved for a new “justice quarter”.
Historic England, SAVE Britain’s Heritage, the Twentieth Century Society and the Victorian Society have all objected.
The plans to build courts, a police headquarters and offices would involve demolishing eight buildings in the Fleet Street and Whitefriars conservation areas.
The corporation’s planners say the proposal would result in “less than substantial” harm to the area.
An independent panel has been created to promote an integrated, digitally-informed approach to town and country planning, reports The Planner.
The Digital Task Force for Planners will be chaired by Professor Michael Batty, chairman of the Centre for Advanced Spatial Analysis at the Bartlett School, University College London.
The panel intends to recommend how the planning profession can embrace digital methods.
Professor Batty said: “The planning profession needs to engage deeply with new digital technologies that are changing not only how we think about our cities and regions and their futures, but also how computers themselves are changing the very cities that we wish to plan for through automation.”
The regeneration firm Places for People and developer Countryside Properties have signed a development agreement in the first stage of their plan to deliver 10,000 homes over the next decade.
As reported in The Planner, the first development will comprise 800 homes in Lower Herne Village in Kent. According to the plans, the first homes will be delivered in 2023.
David Cowans, group chief executive at Places for People, said of the development: “Lower Herne Village means we can continue with our plans of delivering quality homes which provide choice and meet people’s needs.”
Transport & Logistics
According to the rail industry, more railway lines must be electrified if the UK is to meet its targets to cut carbon emissions.
Fifteen industry, business and campaign groups, have written to Transport Secretary Grant Shapps urging him to launch a “no regret” scheme of electrification work, reports The Railway Hub.
The letter stated that claims about the cost of electrification focused on “a few past projects”.
It insisted the industry had “learnt clear lessons” and called for “a consistent pipeline of work, rather than the boom and bust profiles seen in the past”.
Signatories included the Railway Industry Association (RIA), Rail Delivery Group, Logistics UK and Institution of Mechanical Engineers.
RIA chief executive Darren Caplan said: “The rail industry will be unable to decarbonise the network without a rolling programme of electrification.
“As RIA has demonstrated in recent work, electrification in the UK can be delivered affordably, at up to 50 percent the cost of some past projects, if there is a long-term, consistent profile of work rather than the current situation of boom and bust.”
Trains on Britain’s railways rely mainly on diesel traction, with some 38 percent of the network electrified.
Plans in South Wales, the Midlands and the Lake District were axed or downgraded in July 2017 by then-transport secretary Chris Grayling.
A two-day climate summit to commemorate Earth Day has begun in America, reports The Independent.
Before the virtual gathering, the US announced a plan to cut emissions by at least 50 percent by 2030.
Boris Johnson similarly announced Britain’s pledge to cut the UK’s emissions by 78 percent by 2035.
Climate activist Greta Thunberg told the House Oversight Committee in Washington, DC, that fossil fuel subsidies are “a disgrace” and that “common sense” is needed to tackle the crisis.
Building on greenfield sites has doubled in areas of natural beauty as a result of the growth of developments of large homes, reports The Telegraph.
Permission was granted for development on an average of 294 acres of greenfield land each year within England’s 34 Areas of Outstanding Natural Beauty (AONBs) since 2017.
The figure has risen from 128 acres per year for the five previous years, according to research commissioned by the Campaign to Preserve Rural England.
Overall, only 16 percent of the homes met the government’s definition of affordable, and twice as much land as the national average was used per new home in developments in AONBs.
The High Weald AONB faces the most intense rate of development, with 932 houses approved since 2017.
Severfield, Britain’s biggest steelwork contractor, has sped up its commitment to reducing carbon emissions by signing up to SteelZero, reports The Construction Enquirer.
SteelZero aims to drive a major shift in the global market for the responsible sourcing and production of net-zero carbon steel.
Commenting on specific targets, a spokesperson for Severfield said: “We are making a public commitment to transition to procuring, specifying, or stocking 100 percent net zero steel by 2050.”
Morgan Sindall has upgraded its profit forecast for the year after revealing that the construction and infrastructure firm is trading significantly ahead of expectations, reports The Construction Enquirer.
The company predicted strong results in 2021, but the first four months have outperformed predictions.
Chief executive John Morgan explained the growth as being the result of demand for “affordable housing, urban regeneration and infrastructure and construction investment.”
The company has over £400 million of work currently at preferred bidder stage.
Ibstock plans to build a new £60 million factory in the West Midlands ahead of predicted soaring demand for bricks in the construction industry.
As reported in The Construction Enquirer, the plans, which were initially shelved in 2020 due to the Coronavirus pandemic’s onset, were revived and upgraded following improved trading conditions.
The facilities will deliver 115 million bricks annually, a net increase in the current capacity of 75 million bricks.
Financial Reporting Council and civil service veteran Sir Jon Thompson has been appointed as a new non-executive director of HS2, reports Construction News.
His appointment by Transport Secretary Grant Schapps was to “represent the government’s interests” on the board, the Department for Transport stated.
HS2 minister Andrew Stephenson said of the appointment: “Sir Jon will be an invaluable asset to the board of HS2 Ltd and will strengthen oversight and accountability as this vital project is delivered.”
One in five government Covid contracts awarded between February and November 2020 contained one or more red flags for possible corruption and require urgent further investigation, reports The Guardian.
The head of MI5 has ushered in a new era of openness, laying out a blueprint for the intelligence agency for the next decade that includes joining social media for the first time, reports The Telegraph.
Priti Patel is drawing up league tables ranking police forces on their success in cutting serious crime in a move that chief constables warned was a return to targets, reports The Times.
McVitie’s is set to release blackcurrant-flavoured Jaffa Cakes in the coming weeks, reports The Independent.
A Surrey-based computer scientist who claims he is the true creator of Bitcoin is taking the website Bitcoin.org to court in London over claims of copyright infringement, reports The Telegraph.
The Mail reports that Bay City Rollers singer Les McKeown has died at the age of 65.