Martin's Mailbox: London calling

Martin's Mailbox: London calling




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Some years ago and far too long ago to admit to (OK, it was the late 80s), I was having a drink with some friends on a Saturday night in central London. We got chatting to a group of lads from Mansfield who had come down to London for a friend’s stag night. The usual banter developed about the North/South divide (I know some will say that Mansfield is in Nottinghamshire, and therefore the East Midlands – but, if you’d heard those accents and seen the facial hair, it was the North, trust me). Their biggest gripe, as it turned out, was that the price of a pint in London was far more than they were used to at home. I remember my somewhat indignant reply being along the lines of “London is a world city – it’s like going to New York and complaining about the price, instead of enjoying the experience”. I have reflected on that encounter a few times since, particularly in recent months, as London has certainly changed much between then and now. 

It's status as a truly global hub has seen London become the subject of many articles and news reports this year, with the completion of Europe’s tallest building - the Shard - as well as the successful hosting of the Olympics and Paralympics, London has never had more column inches than in 2012.

These have understandably focused on the far reaching consequences - socially, culturally and politically of the re-emergence of London as a truly world city, and also the effect this has already had and will continue to have on the rest of the country. 

The impact has been felt closer to home in the lending policy of some bridging lenders, with Omni no exception. It was raised during a discussion at the AOBP Roadshow in Southampton on Friday (more of which later).The question was clear, “Why are so many bridging lenders so much more comfortable in London in particular and the South-East in general?”

The answer is influenced to a certain extent in the oft used term "global economy” – it’s not usually a phrase I like because, as we have seen, globalisation has a downside as well as an upside. The interlocking of global fragility was a key driver during the implosion of the wholesale money market in 2007 and the collapse of Lehman Brothers in 2008. However, it is precisely this global uncertainty that has seen London emerge triumphant - the real winner in the post-Lehman, post- credit crunch environment. Real Estate has developed a status as a 'wealth preserver' and London has reaped the reward as foreign investors look to residential property as one of the more attractive solutions to the challenge of investing in a low growth environment.

Could it all go wrong for London? Well, there is certainly resentment about the City's status as the world's financial centre in both Brussels and New York, with hostile EU regulation a future possibility. This and the lack of flights to emerging markets (please just make a decision on a third runway, Cameron) don't help. For me though, there are compelling reasons to retain real confidence in the London property market. 

A Savills report earlier this year highlighted the fact that London and the South East accounts for 26 per cent of the UK's housing stock, but at £1.55 trillion, 36 per cent of its value. That, I think, makes a convincing case for looking at London from the short term lending perspective, as a special case - with due respect to the rest of the country, of course.

Now back to the aforementioned AOBP seminar in Southampton last week… It was great to see some old faces and meet some new ones in what was an enjoyable morning session. Many subjects were covered, one of the most interesting being about how the AOBP can work in a practical way to promote and protect standards in the bridging sector. What I found encouraging is that this desire to promote high standards comes from the grass roots and credit to Caron Schreuder and the AOBP for 'getting on their bike' to give introducers from different areas of the country, the opportunity to listen and to debate the burning issues in the sector.

I'm looking forward to more of the same in some new and exciting locations - I hear Mayfair is up and coming these days…

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