UK's 'soft power' should not be underestimated when it comes to the property market

By Philip Harvey, senior partner at Property Vision

Listening to a former British ambassador recently talking about the UK’s soft power was reassuring. His well researched assertion was that our credibility on the world stage is robust and not easily diminished by momentary, or even not-so-momentary lapses.

Soft power, or the ability to influence others in reaching desired outcomes, has many layers. Some experts will cite global perception, cultural influence, innovation and quality, as well as ethical and cultural investments as key components - but I think it’s more straightforward than that.

I constantly say to my team ‘people do business with people they like, people they trust and people they find credible’. However, I always point out that ‘like’ is unfortunately the most important element. Why unfortunate? Because it is deeply subjective and can contain some distinctly irrational judgments. The world is littered with deeply flawed business leaders, politicians and celebrities, many of whom seem to exhibit more soft power than they should. There is a bizarre chemistry that draws us to them; however, given a lack of depth and substance any misstep unveiling the truth can swiftly bring a downfall.

Gerald Ratner’s business failed not because his jewellery was (in his words) ‘total crap’ (it actually filled a much-needed spot in the market). The business failed because we suddenly all realised that we didn’t like him, or his ego. Conversely people do like Apple, Virgin and Bitcoin. Not because they make better products, reduce the pain of air travel, or have what many of us would consider the fundamental requirements of a financial investment. We like them because the mere mention of them makes us smile and gives us a warm fuzzy feeling that inspires trust or excitement on a very basic emotional level. They are all aspirational brands.

In a similar (but negative) way Brexit didn’t happen because of promises made on the side of a bus. The foundations were laid and reinforced over nearly 47 years of poison spitting politicians returning from EU summits with not a good word to say about their gravy-train riding Eurocrat contemporaries. Too many who had no vested interest in understanding the benefits of closer ties were subtly brainwashed into being predisposed to independence.

I recently had a first-hand experience seeing the soft power of the UK in motion. On a business trip to Dubai, I had 22 meetings in four days and every one of them followed the same pattern. At first, I was subjected to an all-out assault on the stupidity of UK tax policies driving wealth offshore. Second came the big Middle East sell, the seemingly boundless investment opportunities of the region, mostly in real estate. But lastly, and somewhat reassuringly, an acknowledgement that everyone of certain wealth in Dubai still wants to own property in the UK. It is the one place all family members love to spend time and enjoy a culture confidently curated over many centuries.

For the UK and a few similar locations around the world, this is good news. Soft power is an impression of a person, business or country, often frozen in time. Great Britain is a green and pleasant land, full of culture and history and world-class education. It’s what children around the world are taught at school, it’s there in the movies and it’s exactly what they see when they visit. A glowing image made and imprinted. Who wouldn’t want to live here?

This is a time of mass global wealth relocation - and it is a movement that is gathering pace. We have the pull of different governments offering financial incentives to expats, combined with the push of others seeking to extract more from their wealthy residents. Add in layers of politically induced fear as well as the ever-increasing tide of global job opportunities and individuals and families are choosing new places to live like never before.

All of the self-imposed boundaries to living somewhere else are being broken down and, as so often in life, it was the young who started it by simply feeling less tied-down and more fearless about the practicalities of moving. Governments and tax policies will come and go, but the soft power of a country will equally play an enduring role in where people choose to buy a home.

Real estate is undoubtedly going through a tough time at the moment, and the Autumn statement has done nothing to foreshorten the agony. However, this is a one term government, as just like the Eurocrats before them you cannot alienate huge swathes of the electorate and expect them not to punish you at the very first opportunity.

Ultimately history will show current UK property price softness as a blip. We have been through these cycles before and at some point the bottom feeders will realise they have once again missed out. The UK’s soft power is our unspoken secret weapon and as long as it isn’t weakening, demand for our limited stock of truly special properties will endure.