The inaugural MIPIM UK was disrupted by protestors calling for ‘homes for people, not profit’. But after negotiating her way through the protest, Construction News property correspondent Robyn Wilson found affordable housing one of the many topics at the forefront of developers’ minds.
- Carrot or stick to deliver more homes?
- Future development cycles targeted
- At the private rented sector vanguard
- Asian investment ‘just the beginning’
The first MIPIM UK got off to an inauspicious start as protestors led by the Radical Housing Network launched a ‘block Boris’ campaign against London’s mayor as he got set to deliver the opening keynote speech.
The great and good were waiting to set out their future pipelines in the commercial and residential space, but the ‘homes for people, not for profit’ message from those outside the Kensington Olympia was not lost on those inside, with discussions both on and off stage often focused on London’s lack of affordable homes.
Labour’s shadow housing minister Emma Reynolds was keen to press home the party’s message of increasing pressure on local authorities that are failing to create local plans, while Legal and General managing director Bill Hughes reiterated his firm’s interest in the private rented sector.
Developers discussed the impact of overseas investment in the UK’s property sector, while Lambeth council leader Lib Peck described the protestors as “naïve” to think affordable homes could be delivered without the private sector.
Carrot or stick to deliver more homes?
Home Builders Federation planning director Andrew Whitaker described the government’s National Planning Policy Framework as “a powerful stick” for local authorities in delivering local plans.
He was speaking on a panel with Ms Reynolds, who said her party would give planning inspectorates powers to intervene when local authorities did not have a local plan.
Taylor Wimpey chief executive Peter Redfern said a ‘stick’ approach to planning made him “nervous”, as it could lead to poor decisions being made.
“Frankly there is a small group of local authorities that aren’t making any decisions at all… under our plans, local authorities will have to take their responsibilities more seriously”
Emma Reynolds MP
The Labour-backed Lyons Housing Review was published last week, which gave further details on the party’s plan to reinforce local plans.
But speaking after the launch of the review, Ms Reynolds told Construction News: “Local authorities do need time to come to a decent decision and we don’t want them to take poor decisions.
“But frankly there is a small group of local authorities that aren’t making any decisions at all and they are actually using the stick the government has given them as the planning inspectorate as an excuse to do nothing… so under our plans, local authorities will have to take their responsibilities more seriously.”
PRS was a hot topic at the property event, but Mr Redfern also raised concerns over looking to the sector as an answer to the UK’s housing crisis.
He insisted that PRS was “not going to be the solution” for the current housing shortage in the UK, with demand for the product still low.
Future development cycles targeted
With UK clients deep in the “execution phase” of their development cycle, many are preparing for their future cycles as they prepare to de-risk their pipelines in the short to medium term.
“We are already looking at sites that we want to stack up for the next cycle,” Land Securities chief executive Robert Noel told Construction News. “We have got some very exciting prospects.”
“Land Securities will remain a developer but not to the degree that we have been doing speculatively to date”
Robert Noel, Land Securities
But he said that over the course of the next two years the company will be building less than it is today.
“Land Securities will remain a developer but not to the degree that we have been doing speculatively to date,” Mr Noel said.
British Land executive director and head of offices Tim Roberts said his team will be progressing with two schemes over the coming months.
“We have said to our shareholders that we are trying to get our ducks in a row to commit at Christmas to 4 Kingdom Street,” he said.
Wise words: five things we learned at MIPIM UK
- MIPIM, aka Le marché international des professionnels de l’immobilier, does not stand for ‘Men In Property In the Mediterranean’ or ‘Meet me In the Pool In a Minute’, as mayor of London Boris Johnson helpfully pointed out as he opened the first MIPIM UK.
- “If you are an inefficient domestic player make sure your mortgage is paid off” – British Land’s chief executive Chris Grigg warned that overseas investment will lead to UK developers being squeezed.
- The private rented sector should represent around 30 per cent of all forms of tenure in the future, according to Legal and General Property general manager Bill Hughes.
- Dalian Wanda is looking to create a global ‘Wanda’ brand and hotel management company as part of its strategy to expand into key cities across the world including leading European, American and Asian locations.
- The retail landscape is changing, with major players such as Tesco pulling out of larger schemes in favour of smaller inner-city projects, posing interesting questions about what these retailers will do with their consented land.
The client will be appointing a contractor to the 150,000 sq ft office development imminently, with a further 320,000 sq ft mixed-use scheme planned next year on Shoreditch’s Blossom Street.
Henderson Real Estate development director Martin Perry told Construction News his team had around eight retail-led development projects on its books at present.
He said the team had an external development manager working at Festival Place shopping centre in Basingstoke, with work “coming up shortly” in Milton Keynes.
The developer’s mixed-use St James scheme in Edinburgh – now its only major project in Scotland – will go out to tender next year.
Henderson Real Estate completed a land swap on its Buchanan Galleries scheme in Scotland with Land Securities earlier this month.
“Our chairman’s stated ambition is that he wants to grow the group’s revenues from about $30bn in 2013 to $100bn in revenue by 2020”
Michael Purefoy, Dalian Wanda
The team exchanged its 50 per cent stake in the Glasgow scheme for Land Securities’ share in the Princesshay shopping centre in Exeter, which saw Henderson Real Estate entering a new partnership with The Crown Estate.
Mr Perry said “there was too much development exposure” on Buchanan Galleries, coupled with a lack of resources to cover both that project and St James in Edinburgh, so it was appropriate to break away.
Land Securities chief executive Mr Noel said his company would look to appoint a main contractor to the Buchanan Galleries scheme in early 2015.
Mr Perry said Henderson Real Estate had continued its procurement of a main contractor for the Central Retail Park on Great Ancoats Street, despite the project’s main anchor tenant pulling out.
“My feeling is that PRS is principally an urban phenomenon and L&G would absolutely expect to be in the vanguard of investment”
Bill Hughes, Legal and General Property
He added that the supermarket landscape was changing, with the major food retailers preferring smaller shops to larger sites outside city centres.
Chinese property developer Dalian Wanda’s deputy general manager Michael Purefoy said his team had ambitions to rival developers in the UK and on a global stage.
“Our chairman’s stated ambition is that he wants to grow the group’s revenues from about $30bn in 2013 to $100bn in revenue by 2020.
“He’s made it very clear that we can only do that by having a very significant contribution from overseas.”
At the private rented sector vanguard
Back in the residential sector, Legal and General Property general managing director Bill Hughes said PRS was underdeveloped in the UK but added that it should be representing around 30 per cent of all forms of tenure in the future.
“My feeling is that it is principally an urban phenomenon and L&G would absolutely expect to be in the vanguard of investment in that sector,” he said.
He was talking on a morning panel on PRS, where speakers said the sector needed to form a “brand” to be successful in the UK as it had in North America.
International Realstar Group vice-chairman Ryan Prince said: “Brands come from delivery, which come with time and success.”
“If you are an inefficient domestic player, make sure your mortgage is paid off”
Chris Grigg, British Land
Mr Hughes said L&G may consider having its own PRS brand in future, but only if and when the team successfully and repeatedly delivers cost-effective, quality PRS units for the long term.
He was responding to a question on whether his team would be creating a £1bn PRS development arm, as revealed last week by Construction News.
Mr Hughes declined to confirm details of L&G’s plans but reiterated the firm’s commitment to the sector.
He said the Labour Party was wrong to use the phrase ‘rent control’ in proposals set out earlier this year, but was right to consider aspects of the policy to ensure rent levels were affordable.
Asian investment ‘just the beginning’
British Land chief executive Chris Grigg warned globalisation will squeeze marginal and domestic players out of the market as quality and competition increases.
“If you are an inefficient domestic player, make sure your mortgage is paid off,” he warned.
“When a major locomotive [such as China] goes into slowdown that will have knock-on effects on other countries”
Jose Pellicer, Rockspring
Rockspring head of research Jose Pellicer said China was seeing a slowdown in housing investment.
He said: “When a major locomotive [such as China] goes into slowdown that will have knock-on effects on other countries.”
But speaking on another panel, Residential Land chief executive and founder Bruce Ritchie said interest among Asian investors in the UK to date was “just the beginning” and that money would continue to enter the UK market.
The majority of delegates viewed international entrants to the market as a positive for property industry across the UK.
It was left to Manchester City Council chief executive Sir Howard Bernstein to sum up the conference in four words: “We’re open for business.”