The generation game
The writing was on the wall with regard to a cultural shift in
the way we view our homes, to the way people did 50 or 60 years
ago. The post war generation viewed their homes as somewhere to
live, probably for life, and because they invariably had a job for
life it created a very steady and predictable demographic. The
subsequent generation (30 - 40 years ago) were not guaranteed a job
for life. In a lot of instances they had to go searching around the
UK for where the work was and viewed their homes as not only
somewhere to live but also an investment.
The current generation see the world as a relatively small place
with an abundance of opportunity. It is not unusual to be seconded
to different parts of the world with your job and therefore ‘home’
is viewed differently. This is a major cultural change for our
country which could drive different ways of living and tenure
models.
Long term asset ownership by large financial institutions may
become the norm, as experienced in places like Germany and the USA.
The opportunity for large retail organisations who are able to
offer a whole life style solution (e.g., fully furnished apartment
with food, insurance, travel, etc., all being provided as part of
the package), is beginning to gain momentum.
An innovative approach
In recognising a cultural shift in the way we are viewing
residential, could create the platform for innovative delivery
structures. PPP initiatives tend to drive scale, they encourage
participation from a whole spectrum of local and central
stakeholders and provide the opportunity to create a vision and
value that a more insular and fragmented approach could never hope
to provide.
The public sector, driven by Central Government to become more
efficient and effective in its operations, is recognising that this
drive can provide an opportunity to deliver housing. Although
generally cash-strapped, these bodies do own a number of assets
that quite often are underutilised. By unlocking this latent value
the public sector has the opportunity to attract match funding from
the private sector to regenerate areas not considered feasible
under a more traditional model.
The power of partnerships
These innovative models have a lot of potential in terms of
driving viability and community benefit. The size, term, vision and
holistic approach to urban regeneration allows Joint Ventures to
phase and programme works in-line with market conditions, which in
turn provides a robust risk management strategy. Recognising the
need and demand is essential and therefore the mantra of ‘right
place, right location’ has never been so important.
Joint Venture Partnerships need to create a ‘virtual development
organisation’ if they are to achieve their true potential. They
need to optimise the abundance of skills that they will have
available and create an environment of trust and single entity
approach. The structure and working of the Joint Venture will need
to incentivise all of the stakeholders to perform.
For residentially led regeneration, the key partners of the
Public Private Partnership would be the developer, the Local
Authority and the registered social landlord.
Why is this approach so compelling to stakeholders?
Developers are often the route to land, together with commercial
and technical expertise. Developers need to achieve a higher
margin, create cash flow and reduce their cost bases, whilst
maximising the regeneration premium.
Local Authoritys are able to act as a regeneration facilitator
and attract central Government funding as well as produce scale and
credibility. Local authorities need is to facilitate the creation
of communities where people want to live and work, establish
efficiency in working practices and identify land supply.
Housing Associations are able to provide community consultation
and planning expertise, along with estate management and
stewardship.
RSLs need routes to land, to consistently work towards reduction
in their cost base together with driving affordability and
sustainability.
It is not difficult to see that by blending these abilities and
needs, a compelling business model can be created to deliver
housing. We’re now living in a different world in terms of
residential development - the market has changed - so the industry
must change with it.
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