MIPIM 2014: Boris promises homes for Londoners as eyes looked beyond
In London protestors marched on City Hall complaining that mayor Boris Johnson was using MIPIM to sell off developments to profit-hungry, non-resident overseas investors, fuelling the capital’s housing crisis
Meanwhile in Cannes, Johnson was telling the 20,000 delegates at the international property fair he wanted the opposite. On the opening day of the trade show, he urged developers to sign up to a ‘new deal’ to sell London homes to Londoners first.
‘This voluntary pledge,’ he said, ‘recognises your commitment to market new homes first, or first-equal, to Londoners.’
Setting the tone for the remainder of the property fair, Johnson told the industry he wanted 42,000 new homes a year.
Then, bold as brass, the man who scrapped the capital’s 50 per cent affordable housing target in 2008, went on to tell developers to increase the number of low-cost homes in their projects.
But Boris’ calls received a muted response, and whether he will be listened to is up for debate.
‘Foreign and domestic investors view London property as a safe haven,’ said Hal Currey of Arup Associates. ‘Off-plan schemes are being purchased and then flipped as values continue to rise.
‘David Morley Architects’ Plimsoll apartment building in King’s Cross was being launched with one-beds and studios selling quicker than tickets for a Beyoncé gig.’
Developers are keen to get to market, which is good news for architects and consultants, but presents wider issues for London.
Constanze Leibrock of Proctor and Matthews agreed: ‘While the increase in overseas funding creates opportunities for exciting developments, there remains the risk that control over how this money is spent is shifting away from local stakeholders.
‘It will be very interesting to see how the provision of general needs housing and emerging sectors like the private rented market can be sustainably integrated and supported by the property industry.’
Mentions of the housing market, the private rental sector (PRS) and the new Housing Zones cropped up repeatedly throughout the week.
Among the sessions offered to those in Cannes included ‘Delivering homes for London’, ‘Manchester at MIPIM: meeting the residential growth challenge’ and ‘Residential in Germany: assets for value’.
Refreshingly, the focus was not just on central London.
Jo Negrini, executive director of development and environment at the Croydon Council, said: ‘[There was] strong interest in overseas investors looking outside the traditional prime London market and new emerging hotspots, like Croydon.’
Many big cities and city regions were in attendance and clearly enjoying the trickledown effect of what many are perceiving as an ‘over-heated’ London market.
David King Smith of 5plus Architects said: ‘Manchester is very much the next city. I heard that 80 per cent of all residential investment in the UK is currently in either London or Manchester.’
Talk in Manchester was partly about the rebirth of the Old Granada studios as a new city quarter. Gordon Tero of Stride Treglown said: ‘This [scheme] will have a strong residential core.
‘[There has been] quite a lot of discussion about how we create community, and a feeling of place within the city. This may lead to a range of housing typologies – not just apartment towers.’
Also on people’s lips was the re-use of public land to make way for a new wave of affordable homes.
Shahriar Nasser of Belsize Architects said: ‘While we heard lots of talk about expanding affordable housing, we heard much less about how it could be achieved.’
Polly Damen, associate director of Assael Architecture, said: ‘A recurring discussion this year was that housing associations are acting more and more like private developers and want a product akin to private units. They have been allocated a lot of government money and should be targeted as potential clients.’
Colin Bone, Kettle Collective Architects
‘It was another very positive MIPIM. It felt like the old days coming back again with a bang.
‘While busy, it felt very focused and the discussion around international investment into the UK was evident. Whatever the protesters said before Boris left for Cannes, he gets the town talking and this can only be a great thing for London, and indeed the wider UK. He does it very well indeed.
‘There were good vibes coming from Russia, even with the problems in the region and they were there talking about some more major projects. The Middle East continues to run at pace, typically still following Dubai, but definitely at record-breaking speed.’
Peter Stewart, Peter Stewart Consultancy
‘Normally the boosterism on show at MIPIM, on the part of the public sector – ‘come and invest in Drabley, we’re open for business and up for shiny new towers’ – is in stark contrast to what you find when you take them at their word and tip up at the planning office a few weeks later – ‘Who on earth gave you that idea?’ But with Boris as boosterist and potential decision-maker both, and with Eddie Lister appearing a very straight-talking and effective deputy, there is a sense that for big projects at least, everything may be getting joined up at last. There is a strong sense of more power to the mayor’s elbow – in respect of the post, not just the present incumbent.’
Alan Tovey, managing partner of Jackson Coles
‘Most people reported increased workload with optimism for the future. From the consultants there was a general feeling of optimism but fees remain competitive and margins needs to improve.
There was talk of regional growth
‘There was talk of regional growth - not just a London driven thing but re-starting of previously moth-balled schemes - but is commercial development outside London recovering in the same way as retail appears to be?London and the South East is clearly still fairing far better than elsewhere.
‘Increased workload is creating skills shortages. Clients are altering how they procure work, the tendering boot seems to be moving to the other foot and after five or six years of a buyer’s market contractors are now beginning to turn the screw, pick and choose the work they bid for and increase prices. There is also clear concern that after a significant downturn many have left the industry and fewer have been coming through the universities, colleges and training schemes. How will the industry address this issue to replace those lost. Good people remain hard to find.
My measure of MIPIM’s success is how far drinkers at Café Roma spill out across the road
The organisers reported it was one of the best ever. I’ve my own personal measure which is how far drinkers at Café Roma spill out across the road towards the Palais at 10:30pm on the Wednesday evening of MIPIM week. This year it was almost into the 2nd traffic lane – levels not seen since 2008.
John Prevc, partner at Make
‘Boris Johnson’s plea to developers to give Londoners first pick of new London homes was well received at MIPIM. Both at his London stand talk and later during his keynote speech at the Grand Auditorium, he wanted developers to pledge to not forward sell to solely foreign investors. Many developers have indeed made their pledge but as I found out later when bumping into a representative of a major development company, forward “marketing” to foreign investors seems likely to continue.”
Michael Clark, principal director of RHWL Architects
‘I had a specific discussion with a local authority director of development on the subject of institutionally funded, built to let residential properties and how that was something they felt was key to regeneration. The model is funded by the institutions but are let rather than sold on the open market.
‘These are long-term investments and are seen as ways of delivering to the market, robust, well designed and built residential accommodation that is not being sold at a premium. These are also not targeted at foreign investors but more the institutions, pension and investment funds looking for returns over a longer period of time. Local authorities are eager to tap into this as they see it as being more affordable accommodation brought to the market, rather than having properties sitting empty.
‘The challenge is to ensure these properties are designed to a good standard, with good facilities but not too expensive and can be easily maintained. The last thing the institutional investor wants is a costly management regime.’
Shahriar Nasser of Belsize Architects
‘London is viewed favourably by investors who are impressed by the city’s willingness to couple growth with infrastructure investment, and while attention remains focused on central London, we sensed emerging interest in outer London and beyond thanks to Crossrail nearing completion. It was encouraging to find investors with a sense of social responsibility too, with an awareness that a property bubble in central London will make the city less economically and socially viable as lower paid workers and public servants are priced out of town. However while we heard lots of talk about expanding affordable housing, we heard much less about how it could be achieved.
The confidence in London was tempered by some nervousness
‘The confidence in London as a sound place to invest was tempered by some nervousness. While investors are attracted by the new buoyancy of the UK economy, some remain slightly wary of committing until a number of big issues - including continuing EU membership and investment in airport capacity - are properly resolved.’
Julian Lipscombe, a director of Bennetts Associates Architects
‘What I noted from MIPIM was the rather ubiquitous nature of a lot of the architecture, rescued only by the label on the case to inform the viewer which part of the world the proposals were intended for.
The sense was the recovery is embedding or has embedded
‘There was a general mood of optimism, not just to do with spring sunshine or vino, but a sense that the recovery is embedding or has embedded.’
Gerraint Oakely, managing director of Curo Enterprise
‘We were impressed by the huge positivity we encountered from foreign investors at MIPIM. There’s strong appetite for mixed-use, residential-led development opportunities, particularly outside London.
‘There’s a lot of excitement about the Bristol and Bath region and its development plans for the next ten years; foreign-based investors were keen to meet us to discuss high-value prime market schemes offering long-term investment and capital growth.’