“London always bounces. I have never known it not to, and we are just beginning the London bounce.”
On an icy morning last December, Galliard founder and executive chairman Stephen Conway was preparing for a pick-up in London resi. It was the morning of the 13 December, a day that would see the Conservative Party voted back in, giving the market the certainty it needed to crack-on, post-Brexit, out of the London slump.
Conway’s interview reflects the tone of optimism at the start of 2020. A flurry of post-election purchases carried well into the new year – with Galliard and others setting their sights on luxury residential and prime central London. As we come to the end of the year, London did actually rise, but not in the way Conway or anyone would have expected, and it was more than just a bumpy ride.
January
Property tycoon CC Land chairman Cheung Chung-kui broke records with the most expensive single-home purchase at £200m for the 45-bedroom stucco building at 2-8a Rutland Gate, overlooking Hyde Park.
A record-breaking month also saw Birmingham millionaire Afzal Alimahomed, founder of Euro Packaging, clinch planning approval for the tallest tower in the city. The developer’s plans for 100 Broad Street would see 61 storeys rising to 193.3m. Back in London, in another optimistic first, resi developer Avanton launched plans for an alligator park inside a listed gasholder on Old Kent Road, SE1.
February
Politics dominated the news cycle. It began with councils and developers striking back against central government plans to restrict local authorities from setting higher energy standards.
A cabinet shuffle in the wake of the election saw foreign office minister Christopher Pincher replace Esther McVey to become the 11th housing minister to serve in the last decade.
But still, developer acquisitions carried on in Birmingham and London. The latter saw Far East Consortium join forces with Sainsbury’s in its first ever partnership with a retailer as FEC ramped up in the capital.
March
More than a year and a half after it hit the market, Dandara’s £400m regional BTR portfolio sold, with German investor ECE swooping on the three schemes, comprising 2,063 flats in Birmingham, Manchester and Leeds. The deal was hailed as the largest acquisition of completed rental housing stock in the UK. It also marked the Otto family’s first foray into the UK market.
Then Covid-19 started to spread across the UK. In the first week of national lockdown, the UK’s largest developers and contractors downed tools, due to unworkable social distancing guidelines on construction sites.
April
With the market frozen, all eyes turned to the planning system to keep development going. Councils found themselves in a limbo of skeleton committees and delegated decisions, awaiting digital upgrades and new legislation to allow online meetings.
In Wandsworth, councillors raised concerns over whether co-living room sizes could harm residents’ health and wellbeing, in light of the pandemic. The committee debated the homes at the Collective’s 182-bed Chatfield Road scheme in Battersea, before voting in favour of the development.
Eyeing distress in the wake of the pandemic, property veterans Robert Whitton and Nick Shattock teamed up to launch modular housing developer Impact Capital, targeting £1bn in opportunities.
May
The post-lockdown return to work was met by major restructuring plans as the resi market braced for a downturn.
Lambert Smith Hampton lost a four-strong insolvency team, including its head of asset and advisory, to Sanderson Weatherall, as the Leeds-based consultancy expanded its restructuring and recovery department. Cushman & Wakefield scrapped its new homes and international project marketing operations in the UK and Asia.
In a further blow to residential, the long-awaited 844-home consented Pentavia Retail Park was sold to Amazon. The online retail giant fought off competition from resi developers for the nine-acre site, with the BTR scheme ditched for a last-mile logistics hub.
June
The Metropolitan Police were called to investigate housing secretary Robert Jenrick, following his handling of Richard Desmond’s £1bn Isle of Dogs plans.
Jenrick approved the 1,500-home development a day before Tower Hamlets introduced a new CIL regime which would have cost the media tycoon £40m. Lord Adonis warned of the worst “sleaze and possible abuse of office” he had witnessed in his career. The department released a series of texts and e-mails between Jenrick and Desmond showing pressure to approve the scheme after their meeting at a Tory fundraiser.
On 26 June, the industry was shaken by the sudden death of Tony Pidgley, founder and chairman of Berkeley Group. Tributes flooded in, remembering his sense of humour, incredible work ethic and enduring legacy.
July
Robert Jenrick reappeared in July, with new radical extensions to permitted development rights, allowing all vacant commercial buildings to be redeveloped as housing. That same day, a government-funded independent report concluded that PDR conversions appear to create “worse quality” homes and raised concerns over the “health, wellbeing and quality of life of future occupiers”.
Under pressure John Lewis Partnership turned to residential development, with plans to convert excess retail space into mixed-use affordable rental housing. “The prospect of rental housing overlooking Birmingham’s Bullring might not sound all that inspiring, but this could be a landmark moment for the industry,” Navana Property Group’s Katherine Rose wrote in a comment on the future of BTR.
August
At 10.30pm on 5 August, the government lifted the lid on a planning reform trailed as the most radical shake-up of the system since the Second World War. Proposals included zoning, new developer levies and a fast-track for beauty, in 100 pages of consultation documents, with further immediate changes to boost development.
But promises of planning deregulation came amid short-term investment uncertainty. Housebuilder Redrow stepped away from the £400m Alton Estate regeneration in a move to scale back London development. And as real estate braced for the worst recession since the great depression, a quarter of BTR investors said they were considering pausing new acquisitions.
September
That fear was quickly assuaged with a string of investments. AXA IM entered the UK rental market with the acquisition of 1,233 flats at Dolphin Square, SW1, from Westbrook Partners for less than the £850m asking price.
This was followed by a £316m investment from Sweden’s EQT Real Estate and Sigma Capital in a new joint venture aiming to develop a £1bn BTR portfolio in Greater London over five years.
Anticipating renewed interest from the private sector, local authorities restarted billions of pounds of regeneration schemes in London, Edinburgh and Birmingham.
October
Back from summer recess, Tory rebels, backbenchers and former prime minister Theresa May set about fighting planning reform.
Opposition to PDR failed to prevent new legislation. But it did achieve one big win – a ban on micro-homes with new size standards. Planners hailed the new rule as “seismic acknowledgement of one of the most grotesque failed housing and planning policies this nation has ever seen”.
Developers continued to hunt down investment – with Parabola marketing a £300m opportunity at Scotland’s largest BTR scheme and a still-confident Stephen Conway exploring the sale of a stake in Galliard.
November
Hot on the heels of Lone Star’s £630m bid to acquire retirement housing developer McCarthy & Stone, charity Wellcome Trust offered £506m for developer Urban&Civic.
M&A activity continued from housebuilders to estate agencies – with Alchemy Partners’ plans for Countrywide thrown into doubt by a bid from rival Connells.
In the same month that Peabody revealed its chief executive Brendan Sarsfield was to step down, EG revealed the housing association was buying a 3,200-home scheme at the former Ford Dagenham site in east London. The Dagenham Docks deal came in a flurry of transactions for the borough.
December
Finally, as the year-end loomed, developer Countryside reported spiralling profits, restructuring and the resignation of its chairman, amid high-profile criticism from activist shareholder Browning West.
Tensions continued in the public sector. A year to the day after Sadiq Khan announced his intention to publish the draft London Plan, he was back with a new draft. Khan said he had had waited months for confirmation from Jenrick despite incorporating changes. The housing secretary was quick to respond this time – calling for a further two changes, on top of the previous 11.
London’s bounce turned out to be a combination of drops, pauses and surges. But as EG went to press, things were looking up, with fresh council acquisitions on the Old Kent Road and a £100m BTR deal finally committed, a year later than anticipated.
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