In my last blog I explored the success of PRS in Manchester. However, from this success there has been some concern around the rising number of residential tower applications and the proliferation of small scale apartments. Are these developments catering for a diverse offer? Are they able to deliver success in the long term? Equally, if you head beyond the inner ring-road the intensity of development activity quickly drops off, how do these developments work beyond the immediate high land values of the city centre? This isn’t a challenge unique to Manchester.
As the sector matures we need to consider how it can evolve to deliver more diverse and therefore stable, mature communities, in which people of all ages might aspire to live. Therefore, going forwards, aspects we must consider are:
1. Understand who makes up a balanced sustainable city – From an understanding of demographics as they currently stand we can begin to develop an understanding of what the ideal city demographics might be and what those people will want. By housing families and older people in the city we can reduce pressure on healthcare in our outlying boroughs and transport infrastructure from commuters for example. How can Local Authorities help the market to see the opportunities of a more diverse range of product and therefore tenant? Is this simply about waiting for the market to mature, or can they begin to start to drive this change, particularly given the impact constant small unit delivery has on a city’s dynamic.
2. Consider the impact of community infrastructure – “Education and social infrastructure facilities are core to location selection for 30 somethings,” said Alex Thomas of Property Alliance Group at our recent round table on the topic, “perhaps we need to look at whether the city has an educational offer we can build upon to provide Sixth form colleges and higher end schools that are aspirational?” The prioritising of these facilities and their profile within the city could be key to broadening the appeal of the city to this age group.
3. Challenge the identikit – Pressures such as rising land value expectation and construction costs, place pressure on design proposals.
As an industry we need to be strong in understanding the long term impact of design proposals on not only the look of a building but the wider functionality and appeal of the city. There is also a very real long term yield threat, which PRS operators are alive to, if buildings are not well designed or robust.
4. Consider movement infrastructure – City living is about freedom from the car. Public transport and accessibility is critical, as we see from London’s nodal-focused growth, but in smaller regional cities, active transport is just as important. A city which focuses on weaving accessibility throughout will appeal to more diverse communities and secure higher return opportunities for PRS investors in the long term.
5. Personality and Place curation – Place making is so often mentioned, but it is paramount to long term success and returns for any PRS developer or investor. The key question is whose responsibility is place making and who takes on the longer term place curation? Without large scale land owners, who will look beyond a single plot, this is a problem all cities in the UK face. Having previously worked for the HCA, David Chilton of Rowcon felt particularly strongly about this during our discussion. “I am acutely aware that many of the schemes we are discussing today have been in discussion for many years. Public policy set long term plans for places like New Islington and its school has been in the pipeline for many years, delivered at the right time, following careful choreography of the numbers. My concern is that as the Government has moved away from long term policies we are reliant upon Councils to take this approach alone, and if we are not introducing place curation thinking, we are likely to miss the opportunity.”
The Government made it clear in the Housing White Paper that it wants to see faster build-out rates and a wider range of tenures, including more housing for rent. City living and the private rental sector is appealing to families and older people and I do hope the models being delivered will continue to evolve to cater for these demographics. Manchester is leading the way, with developers, investors and the city council working together, so I can’t help thinking other cities, particularly in the North, should learn from both Manchester’s successes and challenges and if we are going to deliver the Government’s aspirations.
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