Built environment experts gave an upbeat forecast on London’s growth for this year and beyond, despite ongoing concerns about the labour market, materials and energy costs.

This was State of the Market 2022, a webinar held by NLA last week at which the LSE’s Tony Travers began by saying that the pandemic will have long-term, possibly permanent effects, but that ‘this may be the year when some form of normality really does now return’.

Work done by GLA Economics shows an increase in remote working across the capital that focuses on inner West boroughs where people with relatively high earning, high achieving jobs are based. ‘And I think what that suggests is that many of them will at some point, go back to work, near permanently’, said Travers. Use of public transport is down, with figures similar to the situation in New York, so some taxpayer support or more congestion charging will be necessary to underpin the loss of fares and save it or risk the capital being more road and car dependent, he added. The London economy, though, did not shrink as much as the UK economy, gaining money from the Chancellor’s interventions. ‘These measures have worked really rather well’, Travers said. Property prices will likely pick up, Travers added, and optimism about business activity in London was greater than it has been since 2016, with consumer confidence eclipsing that in the rest of the country, and London’s population also set for growth, albeit not as quickly as in recent decades. 

‘It’s worth remembering London’s recovered from pandemics, fires and wars, many times before’, said Travers. ‘There are opportunities for radical property-led innovation in the economy of inner and central London. And that of course means major opportunities for those who get this changed market’.

Other speakers at the event included Alexandra Notay of PfP Capital, who said that the crunch on materials supply that had been exacerbated by COVID is set to ease over the next six to nine months, but the key concern is around energy and fuel costs affecting both supply and production, as well as consumers. London is also suffering from the loss of key skills in the labour force, post-Brexit, and will continue to be an issue for the whole country, while uncertainty on planning is causing housebuilders to take ‘a different approach to London now’.

Allen Simpson of London and Partners said that economies have recovered from public health crises such as swine flu, SARS and Ebola, with research showing that they last until the public health side is dealt with and then recovery is ‘remarkably swift’. Tourism, travel and investment come back first domestically, but the ‘X factor’ now is that we have Teams and Zoom and other technologies allowing us to do trade remotely. Brexit remains a practical issue and challenge but less of an emotive issue – ‘frankly the world has moved on’. But there are reasons to be positive about London and the medium term, not least that the city was the subject of a higher volume of international investments than any other city in the world, said Simpson, principally because it was seen as ‘blue chip’ and ‘safe’ with ‘good structural underpinnings’. Hybrid working, though, is ‘a social and economic catastrophe’, he added. ‘One in five people in London work in hospitality, leisure, retail and so on. You can’t really do that over Zoom’. Of all the many things that had been said about the infamous social gatherings with or without alcohol at Number 10, Simpson added, he was struck by the number of people who felt they needed to be in work to make the country run. Notay responded that there is a risk of pushing a lot of talent out of the workforce if the city reverts to a ‘full-time culture of “jackets on the back of the chair”.  London is, however, in a good place, Simpson concluded. ‘We think our ability to continue to attract is going to be very highly defined by our ability to remain an everything city’.

Finally, Nicola Herring of Gleeds said there had been a 54% reduction in EU construction workers between April 2017 and April 2020. ‘This has been a huge issue for the London construction market’. Nevertheless, Herring added, ‘as well as a strong pipeline of work related to net zero carbon, the London construction market remains strong across core sectors such as commercial, residential, education, FinTech and hotels’.