LREF 2018: ‘Good growth’ still needs funding

LREF 2018: “Everything starts with funding,” says Investec’s Simon Brooks. “You need it to get things off the ground but, by the same token, you need to convince funding it is going to get its money back.”

Sitting on a London Real Estate Forum panel with deputy London mayor Jules Pipe, Mt Anvil’s Killian Hurley and U+I’s Richard Upton, Brooks was playing the banker in a session exploring good growth in the capital.

Panellists Keynote: The catalysts for successful placemaking

■ Jules Pipe, deputy mayor for planning, regeneration and skills, GLA

■ Katy Warrick, director residential research, Savills

■ Richard Upton, deputy chief executive, U+I

■ Killian Hurley, chief executive, Mount Anvil

■ Simon Brooks, structured property finances, Investec

“To get schemes off the ground it starts with developers collaborating with local authorities, boroughs and users but then it comes to the funding community to respond in a similar way,” he said.

“The more additional use classes and placemaking you bring to a project, theoretically the more difficult it is to fund.

“Funders or capital are notoriously fickle and very narrow. They like to de-risk projects with quiet, single-source areas of de-risking.

“If a funder is minded to a commercial project, they want to prelet it; if it’s residential, they want to pre-sell it.”

A year to the day since the Grenfell Tower disaster, the session was looking at whether good growth was more than just a buzzword and what can be done to encourage better, more inclusive development.

Hurley said the sector is failing badly in terms of promoting good growth and that there is “too much greed in our industry”

“Fundamentally, we need to change the way we approach development. We need to be driven as an industry to a strong sense of responsibility,” said Upton, deputy chief executive at U+I.

Mixed-use and more inclusive schemes were pointed to around the capital as better examples of good growth, but it was Brooks who said financiers also needed to be collaborated with.

“The way we unlock that is better collaboration across the funding community with developers and local authorities,” he said.

“Not everything needs to be Battersea or King’s Cross. That’s when we need the smaller pockets of capital to get better at joining forces and understanding each other.”

Is “better growth” more than just a buzzword?

Upton said the danger at the moment is housing provision being too focused on numbers, while developers risk losing their license to operate through a failure to promote good growth.

“My biggest concern is good growth just becomes another two buzzwords but fundamentally it’s a necessity,” he said.

“The mayor’s vision is great but developer must deliver good growth or they are going to risk losing their license to operate.”

Pipe said the GLA’s intention was for “development that is economically and socially inclusive.”

“The anniversary of Grenfell highlights more than ever the need to get that right,” he added.

“It’s about ensuring local people have more of a say in what is visited on them: it’s got to make sure development contributes something to a locality, rather than just exploit it.”

Pipe said recent engagement from the sector had been good and he was “gratified” by the input taken with the London Plan.

“We are at a turning point,” he said.

Measuring good growth

Despite this, measuring good growth was still seen a far from simple process, as without some form of measurement there can be no judgment of success.

Upton said while there are a thousand variables “on the spreadsheet… spiritually, it’s a happy place, it’s for everyone, it’s a viable sensible development… And typically there are very few objections to the local plan process.”

Hurley said: “The litmus test once we have finished a scheme is the people in the affordable housing docket. What do they score us at? Have we created a community or just a ghetto again?”

Pipe was more pragmatic, reflecting the ongoing objectives of the GLA: growing a greener, more social integrated city with a focus on the public realm and digital connectivity, and development not just being about profit.

“It means more genuinely affordable homes. The days of 80% of market rates are over,” he said.

Savills director of residential research Katy Warrick said the alternative to place making and good growth is London loses out.

“We need to keep thinking about where London is going, and where London is progressing,” she said

“When we talk about place making and development it’s important to be enhancing this, to keep London ahead of its competitors.”