Savills webinar: Adaptation and evolution of rural estates ...
Transcript of Savills webinar: Adaptation and evolution of rural estates ...
Today’s speakers
Andy Green
Hoare & Co.
Emily Norton
Savills
Charlotte Patterson-Ryan
Womble Bond Dickinson (UK) LLP
Venetia Hoare
Hoare & Co.
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Alexander Dickinson
Womble Bond Dickinson (UK) LLP
Lucian Cook
Savills
Johnny Dudgeon
Savills
The market view on the path of UK interest rates has lowered since March 2020 (Red line) and we are now (Green Line).
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Source: Bloomberg
Key takeaways:
• The UK/world economic outlook is uncertain.
• Unemployment is likely to rise, particularly amongst 16-24-year olds.
• Negative rates are possible.
• Watch for bank bad-debt provisions.
• Low inflation for the next year or two, but what then?
• Watch money supply.
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Important information
The information contained within this document is believed to be correct but cannot be guaranteed. Opinions constitute our judgement as at the date shown and are subject to change. The document is not intended as an offer or solicitation to buy or sell securities or any other investment or banking product, nor does it constitute a personal recommendation.
The research and analysis contained herein have been procured, and may have been acted upon, by C. Hoare & Co. or a connected company for its own purposes, and the results are being made available to you only incidentally. In the unlikely event of C. Hoare & Co. being unable to meet its liabilities, The Financial Services Compensation Scheme will come into operation. C. Hoare & Co. participates in the Financial Ombudsman Service. Further details are available on request.
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Published on 26/10/2020.
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Policy outlook
Emily Norton
Head of Rural Research
3 November 2020
And why now is the right time to make decisions
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Food policy: an English novelty
1. New links between food and health
2. A need to define our status as a trading nation
Coming in Part Two – early 2021
- A comprehensive vision for the future of farming
- A UK land strategy
- and lots more…
- + Govt white paper within 6 months
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“The recent ELMS consultation were explicit that ELMS was not a replacement for the BPS or Countryside Stewardship…”
1.Environment Bill now back in Committee…
2.Environment is about regulation as well as investment
3.DEFRA consultation this autumn on “the best approaches to designing a future regulatory system. As part of this process we should consider the role our agricultural standards play in achieving goals in the 25YEP and net zero.”
Risk: Customers
and markets
Research: best and
highest use
Resilience: diversify up as
well as outRegeneration
How to prepare for ELMS?
Environment Policy
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Why now? Farmland supply
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
£ p
er
he
cta
re
Supply/Turnover (farmland)
Source: Savills research, Defra
Source: Savills Research
Why now? Farmland values and recessions
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
£0
£1,000
£2,000
£3,000
£4,000
£5,000
£6,000
£7,000
£8,000
£9,000
£ p
er a
cre
1973
oil crisis
Global
Financial
Crisis
?
Covid
Interest rates
at 15% &
‘Winter of
discontent’
High interest
rates, ERM,
Gulf War, US
savings & loan
crisis
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Why now? Farmland supply, farmland values and forestry values
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
-
5,000
10,000
15,000
20,000
25,000
Su
pp
ly (
farm
lan
d o
nly
)
£ p
er
he
cta
re
Average GB Farmland Value / ha Forest £/net ha Supply/Turnover (farmland)
Source: Savills research, Defra
womblebonddickinson.com
Charlotte Patterson-Ryan
Building resilience: Making the
most of your advisors and
innovative work practices to
navigate Covid-19
Innovation
Solar
Retirement Lifestyle Villages
Vineyards
Residential Developments
Re-financing
Residential Property
Disposals
Real time examples
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Putting the recent events in context
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65
70
75
80
85
90
95
100
105
Index of Monthly Economic Output Low price growth coming
into lockdown
Low interest ratesSwift
action to protect
jobs andhousehold finances
Changing lifestyles
and property needs
Stamp duty
holiday
Source: ONS
Source: Nationwide: RICS, TwentyCI 32
A remarkable recovery in the housing market
-100
-80
-60
-40
-20
0
20
40
60
80
100
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Oct-
15
Feb
-16
Jun
-16
Oct-
16
Feb
-17
Jun
-17
Oct-
17
Feb
-18
Jun
-18
Oct-
18
Feb
-19
Jun
-19
Oct-
19
Feb
-20
Jun
-20
Oct-
20
RIC
S –
Bala
nce o
f O
pin
ion
Ann
ua
l H
ou
se P
rice G
row
th
Nationwide House Price Growth RICS New Buyer Enquiries
0%
25%
50%
75%
100%
125%
150%
175%
200%
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20
Co
mp
are
d to
sa
me
pe
rio
d la
st ye
ar
Key market metrics
Agreed Sales New Instructions Price Reductions
Source: Savills Client Survey 33
56%more inclined to work from home more regularly in the
future
62%said the amount of garden
or outside space had become more important
74%said the experience of Covidhad caused them to reassess
their work-life balance
39% significantly so
Village
location
More attractive to 48%(39% in April)
increasing to 54% for those with school age children(46% in April)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
A growing backlog of agreed deals
Deals Agreed Mortgage Approvals* Completed Transactions
Source: TwentyCI, HMRC, BoE 34
Distribution of market activity
The geographical spread of deal activity
Looking forward
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Stamp duty holidays & surcharges will distort buyer behaviour in the next 9 months
2nd lockdown will reaffirm changing housing needs & priorities
The wider tax environment may act as a drag on future price growth
Interest rates are expected to be lower for much longer
Lifestyle changes will ultimately depend on the search for a vaccine
Economic pressures & Brexit will make it difficult to sustain current momentum
Forecasting in an uncertain world
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Average UK House Price to rise by 4.0%
this year
Transactions to exceed 1m
over the course of the year
With a lot of agreed sales delayed until early 2021
Next year will be a year in
three parts with no net price
growth
Activity will be primarily driven
by home movers and cash buyers
over the next 2 years
Overall price growth of 20% expected over
5 years primarily due to
low interest rates
Q&A’s
Andy Green
Emily Norton
Charlotte Patterson-Ryan
Venetia Hoare
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Alexander Dickinson
Lucian Cook
Johnny Dudgeon