MIPIM 2017: Public-private partnerships has already emerged as a buzzword at this year’s event, according to panellists at an EG debate.
“I think it’s generally accepted that that’s the only way we can come together to make things happen,” said Susan Freeman, partner – real estate at Mishcon de Reya, at EG’s “Public private partnerships: the future is innovative” debate. Place-making, local authorities, central government and developers coming together to make things work are becoming the new normal.
Lyn Garner, director of regeneration, planning and development at the London Borough of Haringey, which has just agreed a £2bn development vehicle joint venture with Lendlease, said partnerships were being driven by a lack of resources.
“Reducing resources drives innovation,” she said. “And it drives us to certain solutions, doesn’t it? And to work more collaboratively. For years, in my opinion, the public sector has battled with a multitude of inefficiencies. We’ve funded capital programme works through simply selling sites into the market to build roads and schools and so on. So we were using capital receipts to fund work, not borrowing and not using money intelligently.
“We’re very poor actually at land planning, and we’re very poor at land economics. And those three things are where we can really gain from private sector expertise.”
The desire for innovative funding methods from councils is matched by appetite for collaboration from the private sector, she said.
Working in partnership with local authorities is an advantage, said Renos Booth, Aviva Investor’s head of real estate long income.
“In key locations we will take the strategic decision to regenerate and create place-making, whether that’s directly or working in partnership with local expertise,” he said. “Obviously it helps to be on board with local authorities. We’re there from the masterplanning stage to actually identify and ensure that what we are looking to achieve is right for the longer term.
“It’s got to be sustainable. That is the core side of the business. On the flip side on the long-income side, yes, there’s a lot we’re focused on with the public sector, but we would also look to try and work with the private sector if we can recreate those long-term cash flows.”
Debate panellists included:
■ Lyn Garner, director of regeneration, planning and development, London Borough of Haringey
■ David Partridge, managing partner, Argent
■ Paul Clark, development director, GL Hearn
■ Gordon Moore, chief investment officer, HCA
■ Susan Freeman, partner – real estate, Mishcon de Reya
■ Renos Booth, head of real estate long income, Aviva Investors
LISTEN: What does the private sector need to know about the Homes & Communities Agency’ s shift away from traditional grant funding to joint venture partnerships?
Gordon More, chief investment officer at the HCA, says: “I think historically we’ve always been known as a provider of grant funding into some of the housing associations, but a lot of the funding we’ve had recently is geared more towards working with the private sector. So we launched a new home building fund in October, which is £3bn of recoverable investment funding – basically debt and equity funding.
“The government is looking to support new housing but will expect to get the money back with a return over a period of time. We’re using that in a number of ways. We’re working together with Lloyds Bank to deliver it. We’ve put together £50m with Lloyds Bank, something called the housing growth partnership, that’s putting equity investment into small housebuilders, which is a great way of using their platform and their expertise with government’s funding to actually expand the SME and bring more capacity into the SME sector.
“We’re looking at a number of other channels for investing as well. We see the ability, we’ve got £28bn of land and capital to invest and we need to work with a range of partners with the skills and expertise to deliver faster and smarter. So we’re working with them. We also want to deal with innovators and the housing sector. We need to do things differently, and so we’re looking at innovative ways of construction, people that can innovate and we will take a long-term approach with them in a variety of ways, through corporate joint ventures, collaboration and other partnership arrangements.”
To send feedback, e-mail Louisa.Clarence-Smith@egi.co.uk or tweet @LouisaClarence or @estatesgazette
