The Sage of Market Thaw and Two Other Lessons

From Left to Right: Anna Moore- Founder and CEO at Hestia, Anna Lisa McSweeney- Architect at White Arkitekter, Audrey Nugent- Director of Global Advocacy at World Green Building Council, Jonathan Smales - Founder at Human Nature

“There are early indications within the economy,” said LondonMetric’s Andrew Jones last week, “that we may have passed the moment of maximum pessimism.”

Jones has never been the most visible REIT CEO, but he is among the most listened to. Neither he nor any wise head these days - would do so something so crass as to call the bottom of the market, indeed he said: “The property market is still a long way from functioning normally.” But Jones talked of “an inflection point in interest rates” counter balancing continuing financial volatility driven by geopolitical uncertainty. I hope this Warren Buffet fan won’t mind a suggestion that he may be earning himself a new moniker: The Sage of Market Thaw.

Despite landing on the morning after the autumn statement, there was no mention of government, prime minister or chancellor in LondonMetric’s 57-page half-year results. In truth there was probably little in Jeremy Hunt’s setpiece (or the Treasury’s 120-page accompanying pack) to influence Jones’ outlook – a bit of planning tinkering here, some welcome, though long-term, investment measures there – or that of many others for that matter.

Nevertheless, another political line doing the rounds in recent days should give pause for thought. “Prepare for November, be ready for May” is the political equivalent of this market’s already overused “stay alive ‘til 25”. (And note how quickly comms cut through can become hoary old cliche.)

And given how quickly these things become self-fulfilling prophecies, be ready for political uncertainty to intensify over the next six months nationally - and locally, given mayoral and local elections across much of the country too. Best to prepare for 12 months of drift.

One last, more uplifting line.

We staged another sold-out event in ING’s climate series last week where a great panel focused on collaboration and building a movement across the built environment.

We talked about architects and engineers, developers and lenders, planning authorities and government all working better together to achieve necessary climate goals.

In doing so I was reminded of perhaps the most encouraging line in the recent ULI/PwC investor intentions report, aggregating the views of 1,000 investors across Europe.

The economics of decarbonisation — high construction costs and labour shortages — may be causing headaches for investors but, the authors report, “interviews suggest that more in the industry now understand the value that ESG investment adds, rather than the cost it entails”.

So, there you have it. You may have your own descriptor, but I’ll call it a caution sandwich. We’ve passed peak pessimism (perhaps) but we’re pre-peak political uncertainty (discuss). And despite government inertia, the environmental agenda won’t be derailed.

Two out of three ain’t bad.

Damian Wild
ING Managing Director