Britain needs to rebalance its economy if regional cities including Birmingham are to thrive.
Property and economics expert Francis Salway told an audience of more than 400 property professionals in the city that property is now a global business and only global cities will enjoy the spoils.
At the Investment Property Forum’s (IPF) Midlands region annual lunch at the ICC, he said: “Increasingly, wealth funds will only invest in cities with global reach.
“In Germany and the US, for example, there are five or six cities which are economic powerhouses on the world stage.
“They enjoy high levels of political freedom and tax raising powers. In contrast, in the UK, government is very centralised. We need to change that mindset.”
Mr Salway was chief executive of Land Securities, the FTSE 100 listed and largest commercial property company in the UK, from 2004-2012; prior to that he was an investment director at Standard Life Investments. Current posts include non-executive director of Next plc and Cadoagan Estate; and visiting professor at the London School of Economics.
Mr Salway also shared his views on the retail and residential property sectors.
He was in post when Land Securities sold its 33 per cent stake in Birmingham’s Bullring in 2009. He said the retail sector, historically the commercial property sector’s star performer, is now facing a number of challenges. For landlords and investors, the increase in shorter leases was becoming an issue, while the rise in internet sales meant retail property faced competition with diversion of sales to the internet.
Instead, he predicted that the institutions would now look increasingly to residential property for improved returns.
He said: “The residential investment sector is dominated by private individuals. Yet if you look at the returns enjoyed I’m amazed that corporations and institutions haven’t moved into this space. With retail returns under pressure, I expect the spotlight to shine on domestic property.”
The IPF is the UK’s leading membership organisation for property professionals. The Midlands lunch was sponsored by Barclays, DLA Piper and Lloyds Bank.
Tim Hurdiss, chairman of the IPF Midlands, said: “At a time when Birmingham is exploring city-region status and lobbying government for increased powers, Francis Salway’s speech was highly relevant.
“There has been a tangible upturn in activity in the Midlands’ commercial property market since our lunch last year, and a very healthy turnover of our investment stock. This is a good context in which to explore the potential benefits of further devolution of powers and the impact this could have on our sector.”