James While - Account Director
Recently, I attended a lively debate delivered by Bill Hughes of Legal and General Property Fund. An astute leader within our industry, Bill was passionate about long-term investment and long-term return. He was asked, from the floor; "what, for you, is the absolute key to unlock the latent potential of any given urban site?"
The answer was warming "It’s all about having a sustainable and effective transport infrastructure," he opined. "That gives me long term surety of growth and the ability to maintain and expand the fortunes of the development."
Wise words indeed, but is this a model that works well in the confined spaces of the UK? The method of using private landowners to build infrastructure at a loss to open up land for development is not a new phenomenon. In 1912 private landowners in over 10 US cities built inter-urban rail lines to open up land for development that generated enormous profits, which easily covered investment and operating costs (Source UC Berkeley ITS). This is a process that is heavily used in parts of Asia, but does it work in the UK and can the increase in land values, due to improved infrastructure, be enough to pay for the cost of installing and maintaining the infrastructure?
It is a paradoxical question; indeed the classic chicken and egg conundrum. However, evidentially, the W12 area of London has shown increases in property prices in excess of 28% year on year from 2005 - 2014 (source: Hometrack). Energised by the Shepherd’s Bush Transport exchange and catalysed by the inward investment of Westfield, that enclave of West London life is arguably THE place to be right now, a classic lesson in speculative transport investment netting huge development benefit.
And let’s not denude the strategic planning that showed the foresight to make this work. Duncan Bower, Westfield’s Development Director, was at pains to point out that anything other than a robust public transport system would have created road havoc within Shepherd’s Bush and he proudly points out that 81.3% of all Westfield visitors don’t come by car.
However, is enough being done to catalyse further development?
There are three key questions we need to consider:
- Should the government or developers fund infrastructure on a site prior to developing houses, so that the infrastructure is set up to facilitate the maximum rate of house building?
- The Mayoral CIL and LA CIL goes someway to pay for the cost of infrastructure, but is it enough - do landowners need to take more responsibility to ensure that the infrastructure is in place before new properties are built?
- Can a finance model of providing a developer with an in-kind contribution in the form of a land grant, giving the developer exclusive development rights for the land above and adjacent to the station it has provided, work in the cities of the UK?
We can’t answer those questions ourselves, but they are all key considerations for any developer working within the geographical confines and financial constraints of the UK’s major cities. The absolute key is a joined up approach; thinking, planning, infrastructure, development and, most importantly, common purpose. Only then can we see more of the successes that Bill Hughes has delivered across the Legal and General Portfolio and the community impact of Westfield’s sensational vision for West London.
For more information on Temple's Planning services, please contact Mark Furlonger at email@example.com, alternatively contact James While at firstname.lastname@example.org