Trevor Abrahmsohn, Managing Director and Founder of Glentree Estates, a residential property company based in north-west London, fears for his industry after 2014’s market slowdown.
But, with President Trump now in office, he see’s a renewed hope for a better trading agreement and a resurgence in market values.
“Since the tax changes metered out by the former Chancellor, in Autumn 2014, there has been a cataclysmic slow-down in market activity, with illiquidity increasing and values dropping,” says Abrahmsohn.
Abrahmsohn cites this as leading to a ‘DIY recession’ in parts of the residential property market.
He tells Pound Sterling Live:
“Already business activity is 50% down and in the super-prime sector we have been hit substantially where underlying values have reduced by 30-35% from the former highs of 2014. I’m not sure how much lower things will go if there is a real slow down in the rest of the economy.”
But Abrahmsohn believes the ascendency of Donald Trump to the White House could prove beneficial to the sector:
“We have a friend indeed in the US, particularly now that President Obama has gone and the arch-anglophile, Donald Trump, is President. Not only will we have an excellent trading relationship with the US, even more so than today, where they are our single largest trading partner.
“If we can arrange a speedy trade agreement with them that will hopefully embarrass the EU leaders into being slightly less obdurate in their economic trading negotiations with the UK.”
Outlook for UK PLC is Bright
Trump’s arrival, and the appointment of a new Chancellor, is behind this renewed faith in UK PLC.
“At the moment the weaker Pound is a ‘panacea’ for our economy and just what we need after the apocalyptic ‘fear campaign’ that has fallen out from the unexpected Brexit result,” says Abrahmsohn.
He goes on, “As long as inflation can be kept under control, then a weaker currency is no bad thing. Remember, that by Germany remaining in the Euro, devalues what would otherwise be a strong Deutsche Mark.”
Transaction Costs Strangling the Market
As a company Glentree Estates boasts 40 years trading, with part of its history spent as a noted Public Listed Company.
Today, they are privately run with a value of £200m as they manage properties in all price ranges from cottages to Castles down the north-west London corridor.
For Abrahmsohn, moving his company to Europe is not an option and he see’s the UK as having a much stronger position; “apart from Germany, Europe is an economic basket case”.
Looking to the future Abrahmsohn has his eye much closer to home, the Chancellor.
He says, “Our future depends on our transaction costs i.e. Stamp Duty, which is in the hands of the Chancellor. His predecessor’s draconian increases in these levels, have had a damning effect on the market and this was done in concert with tax changes to Non-Doms.
“Together they have had a ‘strangle hold’ on certain sectors of the market. If these were re-set then this would give the markets a real fillip.”
“We’re just trying to survive at the minute to fight another day.
“A slow down in world economies, particularly in Europe where we do 42% of our exports, will be a challenge for us. But President Trump will set the American economy alight and this may be good not only for the UK, but for the rest of the world.”
So what would he advise the Government here in the UK to do?
He says, “The government needs to make the business culture in the UK as attractive and as enticing as possible for international investment. This should include lower Corporation Tax, Stamp Duty on property purchases, personal taxation, less regulation and smaller government.”
Whether the special relationship will continue remains to be seen but higher earnings from America would only be good news for the FTSE Index.
And, Is it time to say goodbye to Europe?
Abrahmsohn thinks so:
“The economic profile across Europe is dire, with average growth being 1% and unemployment rates double that of the UK, i.e. 9%, or the USA. Europe needs to ape the UK economic miracle and not the other way around. With the restrictive labour laws, why on earth would anyone want to relocate to Europe?”