MARKET OVERVIEW 2021

Not since the end of the last war have we seen so many drivers for change in the land and development marketplaces. Successful developers will identify emerging opportunities from rapidly changing socio-economics across the spectrum, be it housing and retirement, healthcare, education, e-commerce, commercial, industrial retail, hotel or green issues and recycling.

Covid is most likely here to stay for the foreseeable future and the delivery of Brexit brings both challenges and opportunities. Both will impact on the way development is delivered and financed. As with the post war years the government acknowledges that a healthy construction market is a major boost to the economy.

Stamp Duty (SDLT) breaks during these difficult economic times have provided considerable market stimulus but whether the Government will continue to support the suspension of this much feted tax or provide other forms of incentive to perpetuate the build program is yet to be seen.

The strive towards carbon neutral is already predicating the use of modern methods of Construction (MMC’s) increasing build strength, weight, efficiency and the thermal template. A lot of MMC’s are also designed to increase the speed of delivery of new buildings and cut the waste in preliminary overheads.

There is still public resistance to development per se, and housebuilding in particular, often arguing there is little green space left to build on. The reality is of course very different and some 85% of the country remains undeveloped. Such antipathy is none-the-less a vote catcher and thus liable to politicisation. In turn this has led to strategic modification of planning legislation in seeking to balance the needs of the economy, political posturing, and an aging population.

Delivery of (particularly small scale) development remains hamstrung by a broken planning system enshrined in bureaucratic negativity and policy designed to hamper, rather than help. It appears to have lost sight of the fact that the presumption, as prescribed in both the Town and Country Planning Act (TCPA) and the National Planning Policy Framework (NPPF), is in favour of development, subject to reasonable development control procedures.

It is in the backdrop of these prevailing market conditions The Flatman Partnership needs to try to make sense of what lies ahead for its developer and land owner clients and how circumstance impinges upon those who work within this market sector. Below we attempt to look at some of the sectors most affected by prevailing changes.

RESIDENTIAL, AFFORDABLE AND RETIREMENT

If the current Tory Government is to roll out one of its long proclaimed core objectives in expanding home ownership, it is going to have to address, balance and mitigate this new and challenging marketplace, in order to facilitate the consenting, and construction of, the right type of housing, in the right areas, for the right people.

That there is a housing shortage which would be solved in part by the construction of new homes is beyond question. Net immigration is often blamed for the shortage but there are other factors as well.

Major Public Sector building projects fell away in the early eighties to be steadily replaced by Housing Associations who, despite Government funding through the Housing Corporation and (s.106) provision of on-site affordable housing arising from mainstream development, have ultimately lacked the land resource to match the quantum of build during post war construction epoch.

Many investors have moved to buying rental properties to replace poorly performing pensions or low investment yields. Housing owned by investors has effectively been taken out of the market place and created a housing stock reduction.

In recent years’ high levels of SDLT and a shortage of good quality retirement housing has caused many older home owners to remain in their homes and not release larger family housing back into the market for younger family occupation. This is a further contributor to overall market stock reduction.

It goes without saying, where there is stock shortage against a surfeit of demand, price rises are inevitable.

Despite the governments ‘Help to Buy’ scheme (which now applies to new homes only), and similar earlier models, the need to save, or seek assistance from bank of Mum and Dad, for large deposits and hefty SDLT prerequisites has pushed the younger generation into rented accommodation and in deferring a first purchase has broadly increased the average age of the First Time Buyer or forced them to consider a Housing Association solution. This is an area where shared ownership (albeit in under-supply) has been a real boon.

As ever controversial, there are planning reform proposals currently going through parliamentary consultation which in part acknowledge and seek to redress some of these issues.

They address the political and environmental import of protecting the greenbelt and countryside and further, seek a simpler route through the planning system where, for example, redundant industrial buildings can be regenerated into residential homes with watered-down development control constraints.

In land terms, regeneration and the more efficient re-use of land within the urban envelope to provide housing, is of course more palatable to a disaffected public than expanding settlement boundaries into green spaces.

The reforms also acknowledge a land requirement for retirement homes and The Flatman Partnership deal with a wide range of retirement developer providers embracing a raft of tenures from retirement villages to care homes and extra care facilities. With a growing population of retirees, meeting this demand by building more product will free up housing for families and in turn first time buyers.

In the same way, providing a comprehensive mix of residential development will meet housing stock shortfall and trigger the construction of much needed affordable housing, whether such affordable provision meets the expansive needs of local councils housing lists or, forms part of an allocation of shared equity opportunities to help the low paid onto the property ladder.

The Flatman Partnership has long standing working relationships with national and local housebuilders as well as housing associations, build to rent providers and private suppliers of affordable housing.

The Flatman Partnership also has substantive experience in overcoming all kinds of land related restrictions which can frustrate development and is able to work with developers in an attempt to find solutions which will overcome issues be they viability, environment, ecology, green issues, arboriculture, urban impact, hydrology contamination or other impediments to housing or broader development provision.

If you think you may have land suitable to meet the needs of the future, whether it may have inherent difficulties or not, The Flatman Partnership would be happy to discuss it with you, and where possible bring in a bespoke development team to help you to take it forward in order to deliver a housing solution.

Your land of course may be suitable for viable solutions in meeting the needs of the future, other than just the delivery of housing.

RETAIL AND INDUSTRIAL

The change in our shopping habits is almost certainly going to have an enormous impact on the structure of our town centres and create much opportunity for regeneration but not without some pain along the way in market sectors well beyond just property.

The freeholds of most of our major retail outlets are owned by pension funds, investment funds or grade A investors. They are of course dependent on the rent roll from the commercial leases in order to pay dividends on the investments your pension fund might, for example, make on your behalf.

The e-commerce market was already pushing retail footfall into decline but the onset of Covid has accelerated the process and we as a society have become increasingly relaxed about buying electronically from the comfort of our own homes.

Home purchasing does not pay the rents of high street premises nor indeed does it pay the salaries of their employees. We are already seeing a rush of, hitherto, strong covenants voluntarily calling in an administrator, or putting themselves into liquidation.

Giants like Amazon have led the way to our front doors but (and particularly in the backdrop of Brexit) we as a property business believe there is much more to come. If we try and take a ‘sneak peek’ into the future we might possibly see where the property development industry and landowners could be needed to play their part.

We need to try and imagine the High Street in 30 years’ time, how many of us will own cars and how many will use cheap electric driverless taxis. So, what of the car parks and space they occupy? What experiences will cause us to want to visit town and city centres? Will we want to go into town or city centres to buy a product we can buy cheaper on line?

As a business we are increasingly of the view that town and city centres will be dominated by the hospitality industry, maybe with ‘show shops’ for the touchy/feely retail experience with the actual product being ordered on line. We are of the view that the requirement for parking will be minimal and that existing car parks could be a viable source of development land.

Does this then engender some form of social revolution with third sector experiences (museums, art centres etc.) occupying regenerated retail space? Will such occupation be enabled financially by the provision of high value residential space? might education and healthcare and a far broader spectrum of sporting facilities be moved into the town centres? It is of course hard to predict the dynamics of life in the 2050’s.

We are of the view that we will see a return to ‘cottage industry’ bespoke fishmongers, cheesemongers, bakers, green grocers etc. We are also of the view that supermarkets will remain for direct retail, delivery or click and collect, along with more boutique clothes, craft, wedding and beauty retail outlets. We see DIY, Builders merchants and garden centres operating in much the same way in out of town locations.

In reality, this is a seismic shift and there is a substantial role for landowners, developers and investors alike, in responsibly reshaping our communities.

Whatever happens, the e-commerce sector is a growth market and here to stay. It will need to embrace more of the smaller retailers so, in development terms we see the need for affordable shared distribution centres together with the ancillary infrastructure to support them, be that warehousing distribution or production.

Herein lies huge opportunity for developers and landowners to grasp the nettle, make the necessary investments, take the necessary risks and build their way into tomorrow.

The Flatman Partnership is always keen to engage with forward thinking developers and work alongside them to develop and expand ideas, source land and create opportunities.

PRIMARY HEALTHCARE

The last of the market sectors we are going to briefly discuss at this time, in terms of its need to evolve in a rapidly changing world, is primary healthcare. We see the need for developers to be working alongside the NHS family and private healthcare providers to help them innovate, and invest in order to modernise and improve. This will enhance the efficiency of primary healthcare buildings, and so meet the needs of modern medicinal advancements and tougher CQC compliance.

Many doctor’s surgeries are in converted houses and fail to meet space standards. By combining patient lists, and potentially teaming up with developers and landowners, there is an opportunity for healthcare professionals to share new bespoke clinical facilities designed to meet current space standards.

Further, with specifications meeting District Valuers requirements, they should achieve optimum NHSE rent rebates serving to improve viability and standards for patients and facilitate the sharing of the varying skill base of doctors and clinicians. In so doing this should promote the kind of primary care which could also serve to take some of the pressure away from secondary care provision.

The Flatman Partnership has ‘hands on’ experience in the planning of this kind of healthcare provision.

So, land doesn’t just have to be about the here and now, it doesn’t need to be just about housing. Society and industry expertise needs to pull together to plan for the well-being of future generations, and The Flatman Partnership is keen to add value to the process.

Jamie Flatman (formerly the founding Partner) is now Land and Development consultant to The Flatman Partnership Langley.
Jamie primarily continues to serve as Land and Development consultant to the RJD London Mayfair Group.
Jamie is a Director of Eastcourt Consulting Ltd.

Taylor Wimpey

We have worked with The Flatman Partnership for many years on a number of projects. Nick at the Langley branch has supported us on several projects in the area including our successful off plan sales launch of Merrivale Place in Heston. Nick continues to update and advise us on current market conditions and pricing of land opportunities in the area. Michael and Tracy at the Reading Branch have worked with us on several new developments in and around Reading. Their local knowledge is second to none and the level of service and the personal touch from both branches has always been exceptional.