Now in its third year, MIPIM (Le marché international des professionnels de l’immobilier or “International Market for Property Professionals”) saw over 3,000 delegates from 45 countries gathered in London’s Olympia to participate in a range of seminars, debates and presentations. Affordable housing, infrastructure, regeneration, devolution, public-private collaborations, crowdfunding, legislation affecting the industry and PropTech were all addressed over course of the 2 ½ day event interspersed with start-up and architectural competitions as well as the Estates Gazette annual awards ceremony. Starting with “What Brexit Really Means for Property”, “Affordable Housing”, “Planning Constraints & Boosting Housebuilding” and “Devolution Revolution: The Midlands Engine & The Northern Powerhouse”, I have split a series of short synopses of the some of my own observations into three blog posts. I also would recommend listening to some of the interview podcasts and MIPIM´s YouTube channel.
What Brexit Really Means for Property
Predictably, the impacts of Brexit on the property industry dominated many of the presentations and discussions with keynote speaker Guy Hands – chairman and chief investment officer at Terra Firma kicking off the event by advising the industry to “accept a hard Brexit and get on with it”.
Amongst growing concerns of domestic inflationary pressures following Sterling´s 18% devaluation (with further shocks expected) alongside visible dips in the commercial and prime residential sectors, the Brexit decision may well have accelerated the country´s position in the economic cycle. However, amongst all the hysteria, a number of foreign opportunistic acquisitions have exemplified the sector´s continued attractiveness (capitalising on the weaker exchange rate and a general lack of concern over short-term volatility).
Guy Hands continued to highlight his own experiences of property market volatility arguing that, whilst there was always an expected degree of slowdown in response to the referendum result, predicting outcomes in the current political climate would be driven by sentiment and not facts. Affirming the need for the industry to take a long-term perspective, he concluded that Brexit decision will not change Britain´s growing population, strong planning laws and chronic shortage of affordable housing.
With the issue of wider housing accessibility remaining at the top of the government´s agenda, it was interesting to observe the presence of initiatives committed to the sustainable growth of affordable / social development space across the event. Notable showcases included Rent Plus (a rent to own initiative working in close partnership with national government, housing associations, local authorities, local enterprise partnerships, developers, house builders and private / institutional investors); the Legacy Foundation (housing and community development with an initial 1,000 unit affordable scheme in Bedfordshire – see a brief video interview filmed at the event here) and the Wayhome (bridging the gap between renting and owning by investing alongside future homeowners).
Planning Constraints & Boosting Housebuilding
An EGi presentation cited Birmingham, Manchester and Leeds as having the highest increases in planning processes (both commercial and residential) with Peterborough, Preston and Derby also demonstrating interesting growth patterns. Planning productivity (based on the number of applications decided divided by the number of full time staff members in planning departments) was highest in Birmingham followed by Cardiff, Oxford, York, Leeds and London.
With research by the Property Foundation and GL Hearn pointing to 80% of planning applicants being dissatisfied with the time it takes for decisions to be made, the industry has been calling for “alternative providers” (private or public) to be more involved in the decision making process. The aim would be to alleviate the ongoing disconnect between Local Planning Authorities and developers. Commonly cited issues include unrealistic s. 106 requirements, tenuous relationships between developers and utility companies, restrictive planning conditions, the over complication of domestic / small-scale applications.
Local Authority cuts and limited resource capacity looks set to create an environment of greater public-private partnerships. Gavin Barwell, during a panel entitled “Infrastructure & the Integral Role of Housing”, referred to the government´s recent announcement of £5 billion of public money to increase housebuilding. £2 billion will be used to fund an “Accelerated Construction Scheme” to make public land with planning permission available to builders with the remainder allocated to provide loans to stimulate new building projects where finances are tight. This funding, it is claimed, will work together with reforms towards a “de facto” presumption in favour of brownfield housebuilding to relieve urban density pressures and provide a targeted 21,000 homes by 2021.
“Devolution Revolution”: The Midlands Engine & The Northern Powerhouse
A number of well-attended seminars and debates demonstrated that concerns that the “Midlands Engine” and “Northern Powerhouse” agendas would get brushed aside post-Brexit were proven to be untrue. Closing the economic gap between the London and the regions should be deemed as a priority. Indeed, Deputy Mayor for Planning in London Jules Pipe commented that, despite needing to confront the ongoing infrastructure and housing needs, central government does not want to be seen as “feather bedding” London.
With an economy bigger than Scotland, the Midlands Engine is responsible for 33% of all industrial investments in the last 12 months and the Northern Powerhouse has accounted for 11% of retail investment during the same period. With investors ultimately looking for “uncongested and underinvested” areas with strong growth prospects – arguments were made for the these regions to aim towards being serious partner in Post-Brexit Europe and the World – particularly as a result of the political autonomy that regional devolution will bring.
The need for sustained economic growth in the regions will depend on not applying a “one size fits all” government policy, said Sir Howard Bernstein (one of the main protagonists of the Northern Powerhouse). Philip Davies, leader of Wirral Council, and Stephen Barker, chairman of real estate advisory at KPMG, argued that Brexit has the opportunity to rebalance the national economy by means of addressing the frustration reflected in the vote.
Despite questions related to over-budgeting and whether tax payer´s money would be better directed to other services such as the NHS, the expected 2017 commencement of High Speed 2 works is expected to accelerate connectivity and national trade links – with benefits flowing throughout the region. However, it was agreed that much more work was needed to improve existing transport corridors and create new infrastructure – whilst simultaneously encouraging skills development and productivity. Concerns were also raised on the effects of decreased migrant workers in the manufacturing industry.
There is also a need for foreign investors to be educated more about the opportunities throughout the region by means of more detailed information regarding demographics, population statistics and market dynamics. Investors may well have to become accustomed to operating in an uncertain environment yet will ultimately want to know that they are investing in areas that people genuinely want to live and work in.