Real Estate Marketing & Beyond
As we loom at the tipping point of the Brexit saga, the economic consequences of which are still not fully apparent, the sector at the intersection of London’s tech scene and property market may have some unexpected gains.
London is Europe’s leading city for Proptech in terms of adoption and the city, with a historically strong real estate market, has a booming Proptech start-up scene. As a Dutch proptech entrepreneur operating with an office in London, navigating my business through these murky waters is tricky business.
In preparation for the big day (October 31st), I get asked a lot; “how is OfficeApp preparing for a no-deal Brexit?”. “What will become of this growing multi-billion dollar industry in the wake of a Brexit no-deal?”. And; “how will it affect the de facto European capital of Proptech?”. Below are my key predictions:
London’s property prices and Brexit
Prices in the UK’s capital reflect the state of the marketplace; sky-high. London is one of the world’s most expensive cities and has been extremely successful in attracting investment in property and has seen continuous developing through the years.
However, in the three years since the historic referendum which saw the UK withdraw from the European Union, the city’s property market has dropped to its lowest point since the global financial crisis. Spurred on by the insecurity of the market, London has seen the largest drop in prices after years of rapid inflation.
And as Mark Stansfield from CoStar – a global leader in commercial real estate information – pointed out in ft.com this month; “Brexit uncertainty is dampening trading, causing some inertia in the market. The number of deals has fallen to the lowest level since the first quarter of 2013, so churn across the whole market has slowed.”
In addition, over a third of tech companies in the UK are considering a move abroad as a result of Brexit. My home country of The Netherlands has received about 100 such companies to date, including Bloomberg, AMBest, Discovery, and Japanese bank Norinchukin. This phenomenon is only predicted to accelerate in the event of a no-deal exit.
However, much is dependent on the way in which the divorce takes place. Although many of the dire predictions have failed to materialize, the risks remains real. In the event of a no-deal Brexit, London’s commercial real estate landlords will have to up their game to retain tenants at London’s traditionally sky-high prices.
What will happen to London’s start-up ecosystem in a no-deal scenario?
Whilst we as business leaders cannot foresee the true implications of Brexit, we can however predict in the lead up to October 31st, that the uncertainty which Brexit has caused will have knock-on effect on tech’s ability to attract investment and talent.
The ability to attract or retain top talent is paramount to London’s competitive edge. Many of the UK’s business leaders worried about post-Brexit brain drain according to a recent survey by Salesforce UK. Their worries are by no means misguided. Whilst the UK’s tech sector is less exposed to a no-deal Brexit than other parts of the economy, over a third of the UK’s tech talent comes from abroad. Naturally, they’re worried about their status in a post-Brexit UK as are others considering taking jobs which require island-side relocation.
For the vast majority of start-up businesses, access to capital injection is as essential as access to talent. Whilst today, London is the European capital which attracts the most VC funds – roughly doubling that of its closest rival; Berlin – Brexit has changed the funding landscape.
The blow to business confidence may also lead to a recession in 2020. Global consultancy KPMG have recently predicted that a no-deal will see the UK’s GDP shrinking by 1.5% next year. In the event of a recession, investors will undoubtedly be looking at their options in a more secure landscape than that which the UK is currently providing.
“This month’s dramatic fall in confidence is a very worrying event,” says said BDO’s Corporate Finance Partner, Peter Hemington motioning to the ramping up of no-deal Brexit preparations. “Pessimistic companies don’t invest or hire, which is how recessions start.”
Whilst, the UK’s tech leaders are still no closer to knowing the full extent of Brexit’s effects, we can however predict retaining talent and attracting investment will become increasingly important in such an unpredictable landscape.
Proptech: The intersection of real estate and technology
The unstable climate that Brexit has caused means that keeping employees happy and engaged will be more important than ever. At the end of the day, a building is only as successful as the company who sits inside it. And every company is built on people who make it thrive.
Ultimately whilst Brexit may negatively affect companies and the economy, its individuals that will weather the storm. As a result, whether it’s through creating a sense of belonging, building communities or simply making the workplace a more satisfying physical environment, many see the creating an office which acts as a safe-haven in the uncertainty as a priority.
Employers are aware of this and as a result, decision-makers are actively demanding solutions which give them the upper hand. And, here comes the full circle, landlords are using Proptech to fill the void.
At Office App, we’ve seen a significant rise in interest from the UK over the past year and we expect this trend to continue. Both landlords and corporate real estate proprietors are particularly interested in features which accentuate the human and community aspects of offices. Features which integrate directly into their existing framework as to keep the financial burden down in this unpredictable environment.
So, with all the chaos which Brexit has caused trans-Channel businesses, and all the uncertainty the UK’s unsubtle departure from the EU has created, businesses may be becoming more personable with their employees as a result. Perhaps it’s just a silver lining, but creating a working space with a sense of security in these troubled times goes a long way.
