Despite warm words on investment, investors and politicians need to bridge their communication gap
“Growth is a cause that binds us together,” the prime minister Sir Keir Starmer told international business leaders at the government’s much-vaunted Investment Summit on Monday. “You have to grow your business, and I have to grow my country.”
On that point, it can be assumed that the audience agreed. But when it comes to real estate investment, agreement, on its own, isn’t enough to make it happen. Investors, developers and politicians need a shared understanding of motivations, risks and the levers that will make change happen – and ING’s latest research shows this is not always the case.
We have tracked conversations among the property sector, the public, and politicians to see where they’re aligned, where there are communications gaps, and how they compare across the 10 most invested-in countries in Europe.
Last month business secretary Jonathan Reynolds told the Financial Times he was “sick” of countries such as France and Spain “coming across as hungrier than we are” for investment.
His evident displeasure reflects the stark numbers in our research: France and Spain have enjoyed the greatest increase in mentions from global investors and developers over the past year – both up 40%. Meanwhile, they are talking about the UK less – down 12%. Have we become less attractive?
The good news is that the UK still had more people talking about it than anywhere else in Europe, with over 19m investment conversations over the year to September.
And it’s great to see that politicians and the public have been talking about real estate far more than in the past. But when it comes to the topic of conversation, investors and politicians are talking about quite different things – and this is a bigger problem.
With policies to sell and elections to win, politicians across the continent put the built world front and centre. Politicians had more to say about every sector – offices (up 31%), retail (up 23.2%), industrial and logistics (up 22.9%), residential (up 14.5%), and real assets and infrastructure (up 22.6%).
Led in this country by Labour’s push to build 1.5 million more homes, and with similar housing pressures in other EU countries, it’s probably no surprise that 34% of politicians’ conversations about real estate focused on residential – more than any other aspect of the built world.
Investors have been talking about residential too (25% of their real estate conversations), but what politicians probably don’t realise is that investors have been more interested in talking about other sectors, particularly retail. Retail’s resurgence, talked about 14% more than last year, made up 27% of their conversations about real estate, compared with just 16% of politicians’.
With increasing construction costs, more expensive land and ongoing difficulties with the planning system, investing in retail – especially assets that already exist – may be more appealing right now than taking a risk on residential. As the cost-of-living crisis has eased and economic conditions have stabilised, the retail market has become a more attractive option. The question is, has this message reached the government? Are politicians thinking about what opportunities there might be – in the Budget or through its Industrial Strategy – to make it easy for investors to fuel growth in the areas they’re most interested in?
Of course, politicians and investors won’t always speak about the same things – they’re talking to different audiences and for different reasons. As Starmer said himself, “I’ll leave it to you to decide if you think voters or shareholders are the more forgiving audience…”.
But it’s valuable – probably essential – for politicians and investors to each understand what the other is talking about and why, and to work out where they might want to mirror or match the other’s topic and tone. Not just for greater mutual understanding but for the realisation of that common cause: growth.
Download our latest report - The Communications Gap: European Investment