Birmingham City Council leader John Clancy has said the city’s £2bn deal with Chinese developer Country Garden could “look more like £5bn” for the city’s economy.
The council signed a joint statement of investment commitment with Country Garden– China’s fifth largest property developer – at the beginning of the month, which it said could be worth up to £2bn for the city’s economy in terms of direct investment into housing and infrastructure.
However, Mr Clancy told Construction News the deal could generate an extra £3bn for Birmingham’s economy.
“In terms of economic growth, the knock-on effects of that [deal] and the actual added value to the economy could look more like £5bn,” he said.
Country Garden flew into Birmingham last week to look at opportunities in the city and has set up a strategic co-operation body with the council, which will help with the planning and the procurement process.
Mr Clancy said the developer was “interested” in High Speed 2 and regeneration opportunities in Birmingham’s Smithfield Market, for which the council set out a £500m masterplan last week.
Five primary areas of regeneration have been identified within the masterplan, including the creation of 2,000 homes, market and leisure facilities, new public spaces, a metro line and a pedestrian boulevard running through the development.
The current wholesales market at Birmingham Smithfield will be relocated three miles north of the city centre to The Hub in Witton.
Mr Clancy said Country Garden’s early investments will be in housing and that the developer is “anxious for the deal to proceed at pace”.
“Housing was something that chairman Yang Guoqiang felt was very important to get involved in,” he said.
“In particular, they were interested in investing into social housing.”
Country Garden’s expertise in delivering large-scale projects quickly was one of the main reasons behind the deal, according to Mr Clancy.
“In the UK and the [West Midlands] region, it could be said that there is a certain level of market failure when it comes to pace and scale of projects, and because of our need to build 50,000 homes in the city over the next 10-12 years, we would not be able to deliver to that demand.
“The deal will be a way to develop our skills base to get us ready with other things, such as the growth that is going to come with HS2.”
The council wants the Chinese company to “partner up with the right people” so that the deal presents opportunities for SMEs, developers and architects in the city as well.
It has flown out to the Far East over the course of this year to seek out potential investment partners and will travel to Hong Kong in November to secure further investment.
Mr Clancy said HS2 had started to “whet the appetite of global capital”.
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Birmingham announced earlier this month that it would be pumping nearly £1bn into regeneration projects located around the proposed HS2 Curzon station.
Greater Birmingham & Solihull LEP (GBSLEP) and the West Midlands Combined Authority are allocating a total of £907m into the Curzon Investment Plan to develop 141 ha of land around the planned HS2 station.
GBSLEP will invest £586.8m and West Midlands Combined Authority £137.2m into providing 4,000 new homes and 600,00 sq m of commercial floor space.
A further £183.3m will be invested into Metro extension projects to connect the east side of the city, central Birmingham, Birmingham International Airport and Solihull, where another HS2 station interchange is planned.
The investment, which is expected to add £1.4bn to the local economy, is the first of its kind made by any local authority to regenerate local areas in preparation for the arrival of HS2.
Prime minister Theresa May has also publicly backed the HS2 regeneration plans, saying the government was “right behind” them.