The Results are in… and the Winner is…


Ping Pong: Round 1  Earlier this week, Amber Rudd wrote a letter to every peer seeking to assuage concerns over the rights of EU citizens currently living in the UK, so as to win support for the ‘Brexit Bill’. However, clearly unconvinced by this position, the Lords have voted in favour of an amendment to the ‘Brexit Bill’ by 358 to 256. The amendment reads: ‘Within three months of exercising the power under section 1(1), Ministers of the Crown must bring forward proposals to ensure that citizens of another European Union or European Economic Area country and their family members, who are legally resident in the United Kingdom on the day on which this Act is passed, continue to be treated in the same way with regards to their EU derived-right and, in the case of residency, their potential to acquire such rights in the future.’ The Bill now goes back to the House of Commons, where MPs can either approve or reject the changes. A month remains until Theresa May’s deadline to invoke Article 50… the clock is ticking.

The results are in…  It’s the time of the year that a number of property companies release their annual results for 2016 and their thoughts for the year ahead. Here are a few picks for the outlook. Intu see retail trends including: upsizing, reinvention, and ‘the rise of the day out’. Capco see challenges of: macro-economic uncertainty and challenging market conditions. Persimmon hope for: disciplined mortgage growth and the release of more land. Taylor Wimpey point to labour driven increases in build costs. Hammerson see the opportunity in differentiated destinations and growing cities, whilst Segro welcomed Heathrow’s third runway and saw low interest rates as casting warehouse yields in a good light. The key word coming out of these reports was ‘uncertainty’, which was mentioned an average of 8 times by each organisation.

Warren Buffet  In his annual letter to the shareholders of Berkshire Hathaway, the investment guru let loose on actively managed funds. In 2005, he had offered a $500,000 bet that no basket of five fund-of-funds could beat the S&P Index over the long run. Nine years on, the evidence suggests that he was right, with the benchmark index fund returning some 5% better than the fund-of-funds. ‘A number of smart people are running hedge funds’ says Buffet, ‘But to a great extent their efforts are self-neutralising. And their IQ will not overcome the cost they impose on investors.’ Not one to mince his words, Buffet was also bullish on the US economy, ‘Ever-present naysayers may prosper by marketing their gloomy forecasts. But heaven help them if they act upon the nonsense that they peddle’, and on the future of his business: ‘Today I would rather prep for a colonoscopy than issue Berkshire shares’. As well he might – they have returned an average 19% pa for 52 years.

Les sept tours  Paris has ramped up its efforts to capture outmovers from the UK in the wake of Brexit, by promising to deliver up to 4m sq ft of new offices in La Défense by 2021 to cater for relocations. The space would be delivered in the form of seven towers situated outside the city’s strict height limits, which would amount to a 10% increase of stock in the business district.  Does this feel ambitious? A report commissioned by TheCityUK suggested that up to 35,000 finance jobs might relocate to the EU in the event of a Hard Brexit, which in turn might translate to a new EU requirement for say, 3.5m sq ft. They must have read the report…









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Richard Pickering, Head of UK Research & Insight.

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