Cuddly capitalism, the property market heats up and we reveal London’s leafiest suburbs

Feel good investing

The various levers being pulled by companies and regulators to make business more environmentally friendly or socially conscious will be a defining feature of this economic cycle – see our coverage of Green Mortgages earlier this week.

Staying with the theme, Bloomberg’s Matt Levine covers a deal Blackrock struck with its lenders that links its lending costs to achieving certain goals, like meeting targets for women in senior leadership, recruiting Black and Latino employees and progress on growing assets in funds focused on companies with high ESG ratings.

The market for green bonds is already growing – Germany’s debut green government bond yields about 0.05% lower than its conventional “twin”, an indication that investors are willing to pay more to hold “environmentally friendly“ debt, according to the FT. But the diversity aspect of Blackrock’s deal is novel, as is the fact Blackrock inverts the usual ESG proposition by pushing banks for restrictions on its own debt in a clear effort to set a precedent.

As Mr Levine notes: “this is not a case of investors pushing companies to be more sustainable and diverse; this is a company (albeit a big investing company) pushing its investors to push it to be more sustainable and diverse.”

The finance industry is evolving more rapidly than the real estate sector on ESG so it’s worth taking note of all this. Lending based on green benchmarks is already growing, but it feels inevitable that favourable lending terms benchmarked against (harder to measure) societal benefits becomes part of the mainstream.

The UK property outlook

The latest RICS survey for March confirms much of Tom Bill’s analysis from earlier this week; that March saw a sharp uptick in property market activity, with indicators on enquiries, sales and new instructions all improving noticeably.

A net balance of +60% of contributors nationally anticipate higher prices in a year’s time (a sharp increase on the +46% reading last month) and expectations now pointing to significant growth across all parts of the UK, led by particularly elevated readings in Wales, Scotland, and Northern Ireland.

There is still a lot of uncertainty as the UK prepares for the first significant easing of the third national lockdown. For this week’s episode of the Intelligence Talks podcast, Tom joins senior research analyst Chris Druce and host Anna Ward to discuss how the market will evolve over the next few months, what’s driving activity at the moment and what some of the challenges are likely to be later in the year. The team also look at what’s happening in Tel Aviv, whether the “flight to the country” trend is slowing and the significance of London’s recent sharp drop in population. Listen here, or wherever you get your podcasts.

Tracking the rebound

Various data points published this week provide further evidence of a significant upwards shift in economic sentiment and activity. These point to a milder Q1 economic contraction than economists had anticipated.

UK construction activity expanded at the fastest pace in more than six years in March with housebuilding the best performing category. Separate ONS data showed the proportion of businesses that were open in late March was 75%, up 4 percentage points compared with early January.

Meanwhile, employers hired permanent staff at the fastest rate in six years last month, and spending on credit and debit cards rose to 88% of its pre-pandemic average in the week to April 1, its highest since the week before Christmas.

Who believes the Fed, continued….

Last week we talked about scepticism amongst investors that the US Federal Reserve would stick to its stated intention of no interest rate rises until 2024 amid an increasingly hot economy. Well, markets are now pricing in a rate rise as soon as next year.

Federal Reserve Chair Jerome Powell is sticking to his position that prices will notch higher this year, but would not result in the kind of year after year price rises that would lead to inflation concerns. US states, meanwhile, are pumping up revenue forecasts amid higher tax collections that reflect improving economic conditions.

The Bank of England echoed the Fed last month by indicating it would allow the economy to heat up further before raising the base rate, adding that there is “spare capacity” for growth without inflation overshooting the 2% target.

Leafy suburbs

London’s leafy suburbs have become popular during the pandemic as buyers look for more space and greenery. However, some areas are leafier than the rest, and Tom Bill has run the numbers.

The HA7 postcode, which covers the area of Stranmore, has 85.7 trees per hectare. It is the highest figure of any London postcode. TW9, which covers the centre of Richmond and Kew Gardens is in second place, with 82 trees per hectare. In third place is NW3 (75.2), which covers Belsize Park, Hampstead and Hampstead Heath. Click through to see the full map and results.

Average prices in some prime outer London locations have grown by more than 2% over the last six months, including Wimbledon (6%), (Dulwich (4.8%), Belsize Park (3.6%) and Richmond (2.5%), as demand has grown in London’s greener suburbs during successive lockdowns. Average prices in prime central London have been flat over the same period.

Read the original post here.