Residential sector: 2018 growth and 2019 forecast
Public and Private Sector Housing showed strong growth figures in the three months up to August 2018 both for New Works and Repairs & Maintenance. Most noticeably is the 8.2% Private Housing year on year %change. (Source ONS). With the trend of Residential tenure moving towards a more even balance between Open Market Sales and Build to Rent, Experian note that growth is more likely to be seen in the Build to Rent market and from the smaller house builders being encouraged back into the market by easier financing in the form of Government joining with Barclays in the launch of a £1bn fund for small house-builders. The data and changes to activity in the Repairs & Maintenance workstreams will no doubt be more closely followed and analysed as the significance of Planned and Preventative Maintenance, Life Cycle and Operational Costs on financial models become more scrutinised.
The Building Safety Programme established post Grenfell identified 468 buildings in England with Aluminium Composite Material (ACM) cladding systems. The split of these being 159 social housing tower buildings and 295 buildings in the private sector (residential towers inclusive of purpose build student accommodation and hotels, and 14 public sector buildings inclusive of schools and hospitals. Good progress is being made in the remediation works for social housing with 22 buildings finished and achieving building control approval with a further 99 buildings as work in progress. The final 38 buildings all have plans of work in place but have yet to commence. Experian forecast that 2019/20 will see a continued uplift in high rise remediation activity with the backdrop being Government estimates of approx. £400m of remedial works to be undertaken.
Data from Barbour ABI – October 2018 shows that value of contracts awarded in September 2018 reached £5.6billion (based on three months rolling average), with the Residential Sector securing the largest share with a dominant 38.4%. Barbour advises the second largest sector in September 2018 was Industrial with 16.4% (so approx. under half the size of Residential). Faithful+Gould previously reported in our Quarterly Construction Intelligence Report that we anticipated a trend of Residential leading the way, more interesting is to see that the largest Residential contract award was for Purpose Built Student Accommodation (PBSA) in Coventry, West Midlands with the largest Industrial award being at East Midlands Airport (Part of the Manchester Airport Group). Of the Top 10 biggest projects awarded by value £ four were in the Midlands.
How did F+G fair? Themes around our Growth Strategy
At Faithful+Gould we organise our People in response to the Residential Sector by core services and by workstream (Public/ Private/ Student/ Hotels/ Extracare) with a working group looking closely at the impact of Design for Manufacture & Assembly (DfMA) (Offsite technologies).
We are forecasting strong FY2018 results with Growth of 13-15% Year on Year likely to be achieved. It’s pleasing to see that our Clients are evenly split between the Public Sector and the Private Sector Developers and we are winning work up and down the UK in each of our four geographical Regions.
With the appointment of Kit Malthouse Minister of State for Housing focused on “MORE, BETTER, FASTER”, there is a need to harness innovation. In his first speech to the industry at RESI Convention 2018 Malthouse called on the property industry to “allow its ambition to let rip”.
We believe Faithful+Gould are uniquely positioned in the UK with our 23 offices providing a clear focus on adding value and delivering outstanding results to our Clients, our People and the Communities we work in.
Public Housing Project Showcase
Faithful+Gould have won a place on a £100m multidisciplinary framework with Homes England
In a collaboration with Atkins, and supported by our supply chain, Faithful+Gould have won a place on a £100m multidisciplinary framework with Homes England, a Government body that looks to use its land, money and influence to increase the pace, scale and quality of new home building in the UK. The framework will act as a one-stop-shop to enable Homes England to prepare land for housing development quickly, an important step in helping to meet the UK’s growing housing demands. Over the next 4 years, we’ll be supporting Homes England to reach their goal of delivering 300,000 homes a year by 2025.
The framework itself will be available to public-sector bodies, such as local authorities, to help them develop homes for residents. As one of twenty framework members, we’re in a strong position to help these clients respond to the long-term housing challenges this country is currently facing and ensure homes are built where they are needed most. Among the reasons that Homes England selected us as part of the open competition for this framework opportunity is our extensive experience of unlocking complex sites and securing robust planning consents for clients such as St Modwen, Church Commissioners for England, Homes and Community Agency and Berkeley Homes, as well as our work on innovative Modern Methods of Construction (MMC) such as MetroHome, our offsite manufacturing solution, and other digital solutions like our award-winning Human-Centred Design toolkit and interactive stakeholder engagement technology, ICON.
Private Project Showcase
Grainger Exchange Square
F+G Appointed to provide Funding Technical Due Diligence
Grainger plc, the UK's largest listed residential landlord and leader in the UK private rented sector (PRS), announced on the 18th December 2018 that it has agreed to forward fund and acquire a 373-home PRS development (known as 'build to rent') at Exchange Square in Birmingham for c.£77m.
The transaction is subject to a number of conditions that the developer must meet, including securing planning consent. When these conditions are satisfied, the transaction will become unconditional, anticipated in mid 2019, after which the scheme will be fully secured, and construction will commence.
The scheme will form part of a new urban village at Exchange Square. The building will be a prestigious landmark for those arriving at the Birmingham HS2 Curzon Street Station, which is directly opposite the site, providing a gateway into the city centre and will link residents to London in 49 minutes.
Grainger expects this investment to generate a gross yield on cost in excess of 6.5% once stabilised, with completion anticipated in 2022. This is a highly attractive investment opportunity in a prominent, central location in Birmingham and meets Grainger's strict and disciplined investment criteria. The scheme builds on Grainger's existing portfolio of PRS investments in Birmingham which will provide scale and operational efficiencies once practical completion has been achieved.
Student Accommodation Scheme
A Pioneering Manchester co-living and student accommodation scheme
Faithful+Gould has been appointed Project Manager, Employers Agent, Quantity Surveyor and Principal Designer by iQ Student Accommodation on their £100 million Echo Street scheme. This is a pioneering mixed-use development consisting of co-living accommodation and purpose-built student accommodation in Manchester City Centre.
The three-block development, which will replace the existing Chandos House student accommodation building, will comprise of 403 units of co-living accommodation and 94 units of purpose-built student accommodation, alongside significant improvements to the surrounding public landscape. co-living is a new concept in residential development in the UK. It centres around a social way of living, providing a community feel to those living in a city, with access to a range of social spaces. At the Echo Street development, this will include collaborative work spaces, lounges, a library, gym facilities, and a rooftop terrace and sky lounge. This will be the first purpose-built co-living space in Manchester, though it is already well-established in North America and is a growing housing trend in London and other major European cities.
Stuart Rogers, Regional Director said: “Already working on a programme of projects in Manchester area, our appointment to the Echo Street development supports our regional and national strategic vision, and complements our current capability in the North West.”
The appointment to the Echo Street development in Manchester complements Faithful+Gould’s capabilities in the North West, which includes supporting the Mayfield Development Partnership, Airport City Manchester, the Our Town Hall project, Urban & Civic’s Grosvenor Gardens and Manchester New Square developments, , Liverpool City Docks, and a number of other significant projects.
Hotels Project Showcase
Airport City, Manchester
Faithful+Gould is appointed to provide Project Management and Commercial Management Services for a Portfolio of Hotels delivering 1,000+ keys
The Airport City Joint Venture has recently received planning permission for the construction of four new hotels in close proximity to the new Terminal 2 building at Manchester Airport. The Airport City Joint Venture will deliver a 280 bed Holiday Inn, 262 bed Ibis Hotel, 375 bed Hilton Inn and a 254 bed Hampton by Hilton Inn. In total more than 1,100 hotel keys to be delivered by the Joint Venture on behalf of investors.
Continuing our excellent relationship with the Airport City JV, Faithful+Gould have been appointed to provide both Project Management and Commercial Management on the Ibis and Holiday Inn hotels and Commercial Management services on the Hilton Garden Inn and Hampton by Hilton hotels. Faithful+Gould have been involved in the development of all four hotels from the early stages of project inception. A key part of our role has been to provide support in concluding development agreements with international investors and to provide strategic procurement advice to the Airport City JV.
An Enabling Works contract is underway for the Holiday Inn and Ibis hotels project. All four hotels are expected to start on site in Q2 2019 and are due for completion in 2021.
The hotels will add much needed capacity to support the major expansion of the Airport and to support the development of Airport City itself.
The current capacity is:
- 280 bed Holiday Inn
- 200 bed Ibis Hotel
- 375 bed Hilton Inn
- 254 bed Hampton by Hilton Inn
2019 is going to be an interesting year in the residential sector
Here are 5 predictions:
- Public and Private Sectors working more closely and collaboratively in order to hit the 300,000 new homes target.
- Acceleration in new-starts of build-to-rent city-centre living with greater focus on mid-market rents and tenures.
- Substantial investment and growth in the extra-care and later-living sectors.
- Increased governance and legislation around houses in multiple occupation (HMO) leading to continued growth in purpose built student accommodation and co-living developments.
- Innovation, property technology, and design for manufacture & assembly becoming the norm and at the forefront of our approach to creating new homes.