The Wealth Scene talks to Rollo Bowden of Lancor International about the Brexit implications for both the UK and the EU property markets.
Rollo Bowden is the co-founder of Lancor International. Rollo was educated at Sherborne Public School and graduated with a BA from University College London. His career began in management at NBJ Leisure (the original holding company for Soho House) and rose to become the operations manager for the Group which at the time was for five sites in the UK. Rollo was also part of the senior management team that launched the Soho House project from it’s inception and obviously Rollo worked on a daily basis with Nick Jones the owner of the Soho House brand. As such Rollo is one of the few founding members of the now world-renowned Soho House.
Rollo subsequently moved to Australia where he married and began a construction company which won tenders with his company MF Construction to build sections of the Olympic Stadium for the Sydney 2000 Olympics. He then returned to the UK and went on to become Business Development Director for a dotcom training company which went public in 2001. After co-authoring Henley Management College’s 2002 report; Digital Learning in the 21st Century, Rollo Bowden Communications Ltd was born. Specialising in digital learning and government communications, the corporate communications business ran conferences in Europe with both ministerial and parliamentary representatives.
After moving to Portugal to enjoy a “semi-retirement”, Rollo has been unable to stay away from the fray. Along with former colleague Jack Lester, Rollo has identified tremendous property opportunities both in Portugal and elsewhere in Europe which can offer far higher returns than banks are currently offering. Thus Lancor International was born.
- What are the aims and goals of Lancor International?
Both my partner Jack Lester and I noticed that many UK property investment companies seem to be solely UK based and did not provide investors with a truly international spread in their investment portfolio’s. As people who have worked in the property market for over 20 years, we saw that using property as an investment vehicle can be very profitable if investors diversify their portfolios and spread their risk. We also noticed that some property developers were also offering assured rental returns for periods of time at over 5 times the current banking interest rates which as we all know are pitifully low. Investors who do not wish to be exposed to the future rollercoaster ride in the markets as a response to Brexit are now seeing property as a safe haven for capital.
We wish to provide investors with an alternative view on more traditional property investments that are currently available in the market. Lancor International has seen, both in Europe and the UK, that due to the current uncertainty that Brexit poses some developers are making very attractive offers to investors to counter these effects. We accordingly have positioned ourselves to reflect this also and as such we like to think that Lancor International is not just an intermediary but also a potential long term partner for our clients.
As Jack and I both live and commute between Portugal and the UK, Lancor International now has offices in both countries so that we can effectively have a foot in both camps. This has enabled us to see the results and attitudes, in business terms, of the Brexit issue on the ground in both the UK and in southern Europe, on a daily basis.
- How do you see UK economic development being affected by Brexit?
I think that the middle road is probably the most likely outcome despite the doom laden predictions that have been banded around by the press. The dire predictions that were mentioned before the Brexit vote have not happened in the UK. The current unemployment, inflation, currency statistics and IMF soothsayers, prove that many were wrong, as the UK has not been as adversely affected as originally thought.
Obviously there are some dangerous waters to navigate such as access to the EU market and the impact of tighter immigration but these issues can be offset by the new found ability for the UK to negotiate it’s own trade deals and perhaps relieving the UK taxpayer of the burden of being a net contributor to the EU budget. It is also worth noting that, in terms of overseas investors, there are effectively, due to the lowering pound, property discounts that are comparatively 16-21% cheaper than this time last year for foreign investors. This is also aided by the fact that at the moment there are no restrictions on foreign ownership of properties in the UK.
There are also plenty of reasons to be optimistic about the UK’s prospects such as current UK trade. The EU accounts for barely one tenth of the UK economy which is the fifth largest in the world. Also the UK balance of payments tilts in the UK’s favour with the EU purchasing substantially more from the UK than in reverse and this is supported by the fact that 9 out of 10 small and medium sized UK companies do not export to the EU.
With The City handling £659trillion of euro, yen and dollar trades every year- more than every eurozone country combined, it means that this will not easily be replaced or taken over by Europe as currently no European market has the technological infrastructure to cope with this level of trading. Therefore the city will remain one of the globe’s foremost financial centres whatever happens. Also with over 70% of the UK’s national income coming from services, which as a sector is largely unaffected by the single market, the UK may be more resilient to the changes to come than many think.
- What about the rest of Europe?
I find it interesting to note that the impact of Brexit on the UK is often discussed but not the impact of the UK leaving the EU. This area is one that Lancor International believes is crucial to painting a picture of what a post Brexit Europe may look like. Interestingly the mostly unreported and rather unedifying spectacle unfolded in the EU parliament last week when there was a power grab by Germany, France and Italy to divide the UK’s vacant parliamentary seats solely among themselves! There is political disarray in Europe as many are still trying to comprehend the ramifications for the EU and it is very notable that while everyone is concentrating on the problems that the UK faces, the EU will have some tough choices to make too in the near future.
It is also worth noting that Brexit will not have the same universal effect in Europe, as northern states such as France, Germany and the Netherlands are more exposed to the economic consequences of Brexit than the southern countries such as Portugal and Spain. While the southern European countries are suffering from the effects of austerity and unemployment, their economies have now, it seems, bottomed out (except Greece). These economies, particularily in the Iberian Peninsula, seem to have come to terms with the “post crisis” realities of modern Europe and will, due to their lack of heavy industry and manufacturing, be less directly affected by Brexit. One of the responses by Portugal has been to aim for a doubling of tourism in the next five years which will mean more flexible planning permission laws to encourage new property developments. Indeed this summer has been one of the best that Portugal has had in recent memory with over 90% of tourism beds occupied during the month of August which is borne out by the fact by personal experience, as when friends have tried to make a last minute break to Portugal last July, they were unable to find accomodation!! Indeed a somewhat surprisingly recent report placed Portugal in the world’s top ten for the most popular second home purchase destination for international property investors. The housing market has also been strengthened by the large expat communities that own properties in Iberia and countries such as Portugal have been benefitting from the current above 7% rise in property values.
Perhaps the area that may have the most to lose are the new “Eastern” EU members such as Bulgaria, Poland and the Czech Republic, as these countries have been big beneficiaries of EU funding and are likely to be very affected if there is no deal with the UK as manufacturing and industry are highly prevalent. This is also compounded by the weather limitations for potential tourism.
- As a company with this take on Brexit, how do you see Lancor International responding to unfolding events?
After purchasing ourselves and conducting comprehensive due dilligence, we have identified opportunities by working with repsected UK developers. One of whom has tailored it’s response to the current uncertainty by offering up to 5 years assured rental income with a minimum of 7% return per year with domestic property developments in the northern regions of the UK, for example. Our portfolio of investment opportunies also include very attractive rates of return for commercial property which include 5* hotels and International airport parking land which provides a minimum 11% annual return.
As for Europe, we are currently focusing on the Iberian Peninsula as our first region to cover, with a rural property development project that is being finalised in the Algarve, which is a very exciting and ambitious concept which we have been involved with since it’s inception. Lancor International will soon be finalising details with one or two developers in Spain, within the next fiscal quarter, who have existing developments that will be availble for an extemely competitive price structure. We are looking forward to rolling out our projects throughout the rest of Europe as time progresses.
The interesting question that nobody seems to want to ask is, in the long term, will the EU project, in it’s current form, be sustainable? However I think the long term macro economic future of the EU perhaps is a discussion for another time but one thing I can assure you is that Lancor International will be around to see it!!
- Thank you for your time today Rollo and good luck with the business!
For more information, please contact Rollo at: www.lancor-invest.com