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CN Briefing: SMEs; housebuilding; Starter Homes; Brian Berry

In his recently adapted dystopian novel High-Rise, JG Ballard imagined a world in which the solution to the problem of where to house a city’s growing populous was simply to build higher and higher into the sky.

Written more than 40 years ago, elements of Ballard’s satirical vision of an increasingly atomised vertical village rising out of London’s docklands are eerily prescient.

Indeed, at times over the past decade or so, as glistening glass and steel monoliths began to crowd the capital’s skyline from the City right out to Stratford and beyond, housing ever wealthier residents in their upper floors, it may even have seemed like the author was a time-travelling soothsayer.

Yet recent news suggests the era of the luxury tower block could be, if not coming to an end, at least taking a break.

Research published today from Arcadis suggests that, although the pipeline for prime residential property in London is booming, demand has slowed as the super-rich seem to have begun turning their backs on the big smoke.

Not only that, but as CN has reported on numerous occasions over the past 12 months, construction costs have skyrocketed.

None of which is likely to encourage either developers or main contractors to go long on those big shiny skyscrapers.

Instead, at least according to FMB chief executive Brian Berry, the widening gap between supply and demand in the housing market could be bridged not by volume housebuilders or major contractors, but by SMEs.

The introduction of Starter Homes, while politically controversial, could reignite the fortunes of SME housebuilders as the focus shifts from huge redevelopment projects to smaller and more varied infill sites and brownfield developments.

The timing is useful, given that one particular £5.5bn framework, supposedly revamped to allow greater competition between firms, has still managed to exclude the majority of SMEs (see below).

Starter Homes are set to make up a significant part of developments that build 10 or more houses, so opportunities may not, for a change, be few and far between. 

This won’t be the last hurrah for the skyscraper, but while the government needs to think big in terms its housing targets, it might need to turn to the little guys to help realise them.

In the news

While Tata formally launched its search for a buyer for its UK business today, there was a slither of good news for the British steel industry after the Indian conglomerate announced it had agreed a deal that will keep its Scunthorpe mill open.

Another long-running story took a further twist today, as an investment adviser who just happens to be a Lakehouse shareholder urged fellow investors to vote for Steve Rawling’s boardroom overhaul at the embattled contractor.

In case you missed it

Last week, it emerged that SMEs are none too pleased with how Scape is going about procuring its mammoth new £5.5bn framework.

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