Glasgow will have City Deal cash to spend on infrastructure, but experts at EG’s Question Time differed on what projects should get priority. And with a possible second independence referendum looming, will overseas investors keep funding sectors such as offices and PRS?
Glasgow has a challenging year ahead – the spectre of a second Scotland independence referendum and a dearth of speculative development being just two – but with it come opportunities such as the City Deal and the PRS sector.
Glasgow has secured the second-biggest City Deal in the UK, which will help the city to unlock areas of growth by investing in infrastructure. But the experts at EG’s latest Question Time debate at SECC had differing opinions on where best to spend the money.
Airports and cycling both had their backers. Leah Hutcheon, founder of tech company Appointedd, said anything that could get the city moving was a good thing. Clare Kemsley, director of Hoskins Architects, added: “Glasgow is way behind cities with safe cycle routes such as Bristol and London and I think spending on that would be welcome.”
But Paul Curran, managing director of Quartermile and chairman of the Scottish Property Federation, said the priority should be with the airport.
“You’re looking at international funds investing in offices. You have to complete these major projects to show off the benefits of investing in Glasgow. What are cycleways adding to economic development?
“Glasgow and Edinburgh airports are growing and compared with the connectivity of Manchester airport it is night and day.”
For Bruce Patrick, director of UK development at Savills, visible investment was key. He said: “We like the idea of improvements to the streetscape and infrastructure in peripheral parts of the city core. Our hope is that the money spent on these areas is seen by the public and for that to happen we have to engage with nearby owners so they can improve their properties at the same time.
“The tramlink is a great idea and my greatest wish is that it has some sort of impact on Paisley town centre, because it needs a helping hand.”
Where the money from the city deal goes has been decided after an extensive consultation, said Richard Brown, executive director, development and regeneration services, at Glasgow City Council. Affordable housing and improved public realm are on the list.
But while Brown said there was also a target to secure public-private partnerships, Curran said it may be too late.
“Infrastructure investment has to be in the right location and requires consultation with the private sector. That is questionable on city deals in terms of the process Glasgow went through. It’s the pet projects that come off the shelf where they have been for 10 or 20 years that have been resurrected,” he said.
Brown conceded that more could always be done. “The Glasgow City Deal was first of its kind in Scotland, so we were trying to secure something that didn’t exist. In building that case we didn’t have time to engage with the business community – we tried to design schemes that were modelled in a way that would engage them. I’m sure there are parts of it we could have done differently, had we more time. But the projects have been through consultation or have been things the business community was saying to us.”
Is it a moot point, with indyref2 possibly on the horizon and the impact political uncertainty has on decision making? Potentially, according to some panellists, who said regeneration commitments would be harder to secure.
Kemsley praised one of the biggest regeneration projects in the city, Commonwealth Village, but added that the area still felt like a “no-man’s land”.
And Curran added: “Indyref2 causes uncertainty. Some 70% of funding in Scotland currently comes from overseas but it is fluid and if something gets too difficult, it will go elsewhere.
“As a city we have to look at how we keep ourselves competitive. We don’t sell ourselves in a joined-up way for such a small country.”
Other barriers to getting development moving need to be overcome, panellists said. PRS could help to increase housing stock while offering investors longer-term returns than sales can provide.
But, as Curran highlighted, Scottish policies such as the Private Housing (Tenancies) Act, which allows tenancies to continue indefinitely unless landlords can furnish specific criteria to end them, meant major investors would still rather go to Manchester or Liverpool.
Empty rates are also seen as a hindrance to development, particularly for speculative schemes. Stephen Lewis, managing director at HFD Property Group, said: “They are not the only barrier but if you look at our 177 [Bothwell Street] scheme, the void rates in the first three years would be £7m.”
Curran’s solution was a vacant rates exemption period on new builds.
Hutcheon added that withdrawing rates relief for small businesses would damage Glasgow’s SME community and stop organic growth.
Despite the challenges, there were plenty of positives for the city. Patrick tipped student housing as a potential winner for investors. For Hutcheon it was the tech sector – the city had the potential to overtake the Northern Powerhouse in that area, she said.
“We have some fantastic universities producing some amazing developer talent,” she said. “If Scotland can harness its technical prowess, we can fight back.
“Glasgow is quite like Manchester. It has the same swagger and I would love to see Glasgow make the most of the boom that is happening in this industry.”
>>> Click here to listen to the event in full
Overheard at Question Time
Richard Blair, AHR Architects: “We need to get the workforce easily connected to the city.”
Alan MacBeth, MacBeth Property Consultants: “I was disappointed in the panel for not addressing indyref2 in a more forward way. I’m finding it is the big elephant in the room.”
John Boyle, director of research, Rettie & Co: “PRS is potentially the big game changer, particularly if we can get build to rent moving in the city centre. The advantage is that you can get units up and occupied quickly.”
Richard Smith, partner, Brodies: “Some of the panellists, because of the organisations they work for, weren’t able to express their frustrations. What they did pick up on is that we need to bring more development and investment into the city centre.”
The view from Twitter
We shouldn’t get so hung up on #brexit and #Indyref2. So much opportunity in tech and massive investment in Uni’s in Scotland #EGQTGlasgow
— GVA Scotland (@GVAScotland) January 12, 2017
.@ScotPropFed‘s Paul Curran: prop investment into Glasgow most likely to focus on resi in 2017; less so speculative offices… #EGQTGlasgow
— Roland Smyth (@rolandsmythcms) January 12, 2017
City deals high on the agenda at #EGQTGlasgow tonight. Must be more visibilty and more engagement with private sector #glasgow
— GVA Scotland (@GVAScotland) January 12, 2017
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