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13 MAY 2021
I want to make a simple point. The property sector is overwhelmingly a force for good.
Property companies are vital contributors to the UK economy. In many respects, Britain’s ability to bounce back from the pandemic relies on them. Not only do they provide capital assets for income generation by other industries, they are themselves big spenders in the economy, supporting suppliers and wealth generation through construction, technology, finance, professional services and much else besides.
Property companies represent pension investments that offer economic security for millions of families. They are major employers and tax payers, whose employees in turn spend and drive national prosperity. Critically, without a thriving property industry, the Government’s laudable ambition to slash carbon emissions by 78% by 2035 is frankly impossible. And because many commercial property owners also operate in the residential sector, our housing crisis cannot be addressed without their investment and development expertise.
But fundamentally, property companies are not underwriters of the economy. That’s the remit of the financial sector, whose purpose and business models are set up to trade in financial risk. Ultimately, shareholders and owners have to be the funders and backers of their own businesses.
The hard truth is, not all businesses survive even in non-pandemic times. This is not a controlled economy but a market, with safety nets provided by the Government and laws (such as insolvency) applied consistently to all sectors. That is why prolonging market distortions and the suspension of legal rights through the moratorium on commercial rents does not support the UK’s recovery.
No other industry in the supply chain has been so controlled by Government during the pandemic, overriding long-established legal rights. This in turn has put property companies themselves at risk of failure, unable to meet their own financial obligations, including interest payments and banking covenants.
All the while, many parts of the property sector made an outstanding contribution to society while Covid raged. When the first lockdown was announced, Grosvenor and others acted quickly, offering immediate financial and practical support. We waived all rent for hundreds of vulnerable businesses and charities in the second quarter of 2020 and since then have created a fund to invest in retail and hospitality businesses while providing cash donations, physical space and many other resources.
Now, as lockdown recedes, it’s time for the Government to recognise that real estate is central to its plans for recovery, decarbonisation and levelling up, and for our part, we have to do a much better job of selling ourselves. Just 27% of the general public feel favourable towards the property sector and the Government’s attitude inevitably tends to reflect that. But in reality, there’s a lot to shout about. 1 in every 13 jobs in the UK are supported by commercial real estate. Together, we generate £7bn of employment-related tax and an astonishing £116.1bn of economic output each year.
So let’s get on the front foot. Challenge the stereotypes. And tell the story of a sector investing in society, looking to the longer term, working with tenants in good faith to find solutions to the problems we all face.