U.K. Homebuilders See Olympic Distractions Hurting Summer Sales
London’s Olympic Games are likely to stifle home purchases in the next quarter as the competition disrupts the city and distracts potential buyers, according to executives at Britain’s biggest homebuilders.
Persimmon Plc (PSN) and Barratt Developments Plc, Britain’s largest and third-largest homebuilders by volume, expect sales to fall below their averages for the season in the run up to and duration of the event. The Games start July 27 and finishes with the close of the Paralympics on Sept. 9.
“I wouldn’t be surprised to see our sales rates slow over the next few weeks as people get engrossed in the Olympics,” Persimmon Chief Executive Officer Mike Farley said in an interview.
Homebuilders typically generate the most property reservations during the spring selling season, which runs from February to June. Home values fell in June as the U.K.’s slide back into recession and the expiration of a tax break weighed on demand.
Barratt is relocating workers from its office in east London to Rainham about 11 miles (18 kilometers) to the east, to avoid congestion around the Olympic Park in Stratford, east London, Barratt spokesman Patrick Law said by telephone.
“There may be some short-term disruption,” Law said. “There’s an argument to say it does affect sales and there’s also an argument that it just displaces them.”
London 2012 will attract more visitors than any of Europe’s past Olympic Games, according to a study by Oxford Economics. As many as 320,000 are expected to come to the U.K. capital, compared with about 250,000 for the 1992 Games in Barcelona and 150,000 visitors to Athens, the research company said. About 8.8 million tickets are available.
Much of London faces disruptions as the city hosts the Olympics for the third time after the 1908 and 1948 Games. Financial-services firms in Canary Wharf said they expect as many as a third of their employees to stay home or travel outside peak hours when visitors begin piling on to east London’s transport network.
Berkeley Group Holdings Plc, (BKG) the U.K.’s largest homebuilder by market value, has developments near the Olympic Park in east London’s Bow neighborhood. The company, which reported a 66 percent increase in full-year profit on June 29, also sees a possible sales disruption during the Games.
“Will people not buy during the events? It could be a slowdown,” Managing Director Rob Perrins said in an interview. “If you look at a six-month average we’re very similar year on year.”
To contact the reporter on this story: Chris Spillane in London at firstname.lastname@example.org.