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Heathrows third runway - winners and losers

Published on Tuesday, 01 November 2016

The commercial property sector could well be one of the winners if the controversial decision to approve a third runway at Heathrow is realised.

 

It’s difficult, if not impossible, to discuss the government’s decision to give the go-ahead to Heathrow expansion without finding yourself entrenched in the politics surrounding the controversial decision.

 

The third runway was given the thumbs up at a cabinet committee meeting last week 3rd runway cleared for take off and since then it has barely been out of the headlines.

 

Zac Goldsmith promptly resigned as the Conservative MP for Richmond Park although he will fight the by-election as an independent candidate. Condemnation swiftly followed from Education Secretary and MP for Putney Justine Greening and Foreign Secretary Boris Johnson, the MP for Uxbridge and South Ruislip in west London, branded the decision as ‘undeliverable’. In neighbouring Twickenham, Tory MP Dr Tania Mathias is vehemently opposed to Heathrow expansion. Sadiq Khan, the mayor of London, also added his concerns citing it as the wrong decision for both London and the UK.

 

Inevitably, any controversial decision, particularly if it involves massive infrastructure change, has its strong armies of dissenters and backers.

 

According to a report in Property Week, office and industrial markets are set to gain as demand for offices and industrial units are predicted to increase with business parks such as Stockley Park, Chiswick Park and Bedfont Lakes set to benefit most.

 

The Department for Transport says Heathrow expansion will bring economic benefits to the tune of £61bn. whilst 77,000 additional local jobs are predicted to be created over the next 14 years.

 

The Property Week report highlighted a fairly lack lustre market for commercial property in the Thames Valley after Heathrow expansion plans were initially dropped in 2010. Annual take-up in the past five years has been around 1.81m sq ft compared to the 20-year average of 2.66m sq ft suggesting a reluctance to invest in work space until the Heathrow decision was taken. Now that the decision has been made, it is thought occupier demand for office space could lead to increased demand particularly in the Bath Road area. Some property commentators even predict lower grade-B office space could be revamped into grade-A premises by developers looking to benefit from the decision. Whilst commercial property values won’t increase immediately, they are predicted to rise over the long term.

 

However, whilst it could be good news for the area’s commercial landlords and the commercial property sector in general, homeowners are unlikely to reap the same rewards with predictions of private property values dropping by around 20% with values in Hillingdon, Hounslow, Windsor and Maidenhead likely to be the hardest hit.

 


Further dissent has come from a number of quarters resulting in some unlikely alliances with solicitors jointly appointed by Hillingdon, Richmond, Wandsworth, Windsor and Maidenhead councils and Greenpeace UK scrutinising the detail with a view to mounting legal opposition to the decision Government could be sued for its airport decision.

 

Meanwhile, both unions and industry bodies welcomed the news with both the TUC and CBI believing it would provide an economic boost and create more jobs.

 

A third runway at Heathrow is by no means in the bag. In addition to the opposition from predominantly Tory constituencies affected by the expansion, questions have also been raised over environmental commitments. The UK is a signatory to the Paris Agreement pledging to limit global average temperature increases to well below 2C and not more than 1.5C above pre-industrial levels and further expansion could further breach air pollution laws. Keith Taylor, the Green MEP for the South East Region, sets out the environmental arguments against Heathrow in his article in the New Statesman where he also underlines the political divisions as he sees them created by the decision.

 

All huge infrastructure projects have their winners and losers, their backers and dissenters. Whether Heathrow expansion will definitely go ahead remains to be seen, but if it does, commercial property landlords could well be one of the winners along with businesses and those whose jobs are either secured or created should the development go ahead. The question environmentalists, local councils, MPs and local residents will continue to ask is ‘at what cost?’.

 

A public consultation will now take place before MPs vote on the decision next winter. If the new runway goes ahead, construction is not likely to start until 2020-21 it is unlikely to be in operation before 2025.


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