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JLL: Devolution, looming EU referendum and London Mayoral election will make 2016 a year to remember

JLL today unveiled their predictions for the property sector in 2016, hosting a panel session to discuss the key political and economic trends that will shape the coming year.

The panel was chaired by Radio 4 Today programme presenter John Humphrys who was joined by  Rain Newton Smith, director of Economics of the CBI, Katie Kopec, head of Development Consulting at JLL, John Duckworth, head of Occupier Services at JLL and Jon Neale, head of UK research at JLL.

On the London mayoral election the panel discussed the centrality of the housing shortage to the election campaign and the constraints of the role of mayor.

Katie Kopec said that investment in the Private Rented Sector would be a real opportunity for London and that the new mayor should facilitate "denser and higher buildings."

Rain Newton-Smith added: "Focusing on planning permission issues and encouraging the release of more public land would be one way that the new mayor could make inroads."

On the devolution agenda, the panel focused on the fundamental importance of transport and infrastructure to harnessing real regional growth.

Katie Kopec articulated that new transport infrastructure undoubtedly gives a platform for growth, with increased access to talent and mobility opening up new markets and places.

John Duckworth said: "We have heard good political statements but this needs to be backed up by reform and investment. The recent mayoral decisions in Liverpool and Sheffield together with commitments on levied business rates being allocated for local spending are encouraging. However it is crucial local infrastructure investment decisions linking cities within regions such as between Leeds and Manchester accelerate. These will have a big impact on regional economies and will mean the devolution strategy is built on real spending and reform commitments."

Rain Newton-Smith argued that better transport links will unlock sluggish UK productivity. "At the heart of the UK's productivity challenges is the failure of people being able to get to where they need to be working easily. Investment in transport links east to west is just as important as connecting London to the rest of the country."

Jon Neale added: "Devolving power to local authorities is not just about enabling them to deliver the policies that local people and businesses need. It is also about incentivising them to deliver growth in areas such as housing and inward investment. However, it remains to be seen how far the Treasury will allow genuine fiscal autonomy – it does not have a strong record on letting go of purse strings."

A straw poll of the predictions audience revealed that a large majority believed that the UK would vote to stay in the EU. The panel talked about the likelihood of a 'Brexit' and what it would mean for UK PLC.

Jon Neale said: "If there was a vote to leave, the UK could prosper outside the EU. Already we are outside Schengen or the Euro, but there would be five years of uncertainty as we work out what the alternative relationship would be."

Rain Newton Smith added: "We could survive outside the EU but would we thrive? A vote to leave the EU would have a longer term impact on our trade relationships and on foreign direct investment levels."

John Duckworth said: "Being in the EU helps the property industry. An example is in the construction industry where the UK is suffering from a severe skills shortage. A positive immigration policy undoubtedly helps resolve this. However it is clear that being out of the EU Is likely to hinder the UK property industry. The implications of a Brexit are so important to the UK economy that even the rising prospect of a Brexit vote in the referendum will lead to nervousness in the short term across investors in UK property who have enjoyed the UK market's 'safe haven' dynamics during the last few years. An EU exit will shake this confidence and whilst the impact on the property market in the short term is unlikely to be dramatic, it will raise real long term question marks about the UK's economic stability and prosperity." 

Katie Kopec, whilst advocating staying in the EU, said that: "The red tape around public sector development procurement processes is a real deterrent to the private sector. Clarity and relaxation of its use would be a real fillip to getting more development through faster."

You can read JLL's full sector 2016 predictions HERE

Key predictions include:

•                      2016 will be the birth year for the modern private rented sector as an asset class

•                      A potential 'Brexit,' uncertainty over when an interest base rate will happen, a shortage of supply and a perception that pricing may have become too keen for non-prime stock, means that commercial investment volumes will slow slightly over the year

•                      2016 is the year that Millennials come of age, which makes it an extremely important year for retailers. It is the year that true Millennials will start making spending decisions, and the retail industry needs to satisfy their appetite for change

•                      With corporate disposals of owned assets at multi-year highs, 2016 will see more companies re-evaluate their decisions to own or lease. After an eight year wait, companies will also need to absorb the impact of lease accounting changes on their portfolios in 2016