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Residential

UK Construction Intelligence Report

Update

Residential sector growth and our half yearly review - 2019

Output in the Construction Sector increased by 0.4% (three months to April 2019) although on an annual comparison like for like 1Q19 vs 1Q18 we have seen more positive growth of 2.9%.

Specifically, to Residential Housing both Public and Private Sector Housing showed strong growth with a 2% increase for the Private Sector and the Public Sector increasing 2.4% (on March 19 figures). Both for New Works and Repairs & Maintenance, most noticeably is the growth in Public Housing y ear on year %change. (Source ONS).

Trade

Of the Top 10 biggest projects by value £; 50% of these were recorded in the Residential Sector for the month of May 19 with 42.3% of all Projects awarded being in Resi.

Trade

Savills have reported in UK Operational Real Estate: The Sky’s The Limit? that “Momentum is building, with the opportunity for investors to deploy an additional c.£700billion across Purpose Built Student Accommodation, Build to Rent and Senior Living Residential Sectors. In our 2018 growth and 2019 forecast we at F+G made 5 predictions which we will monitor and report on throughout this year, and peers at Savills et al seem to be supporting our initial thoughts and as the market data is collated and reported I’m already confident that we may well have got a credible 5 out of 5 spot on (The possible exception being will we ever build 300,000 homes pa?). We have seen an upturn in enquiries in Design for Manufacture & Assembly but I fear the market is still dragging its feet and needs a shot in the arm to really catapult this level of innovation and a new approach to the levels we all really need it to be at.

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Grenfell

We should also take time to reflect on the two years of events since Grenfell. The 2nd anniversary of Grenfell past recently (14th June 2019).

We will pick up on the progress being made and what more can be done with our Head of Public Sector Terry Stocks in our February 2020 Construction Intelligence Report.

At Faithful+Gould we continue to organise our People in response to the Residential Sector by core services and by workstream. Half year indicators show we are on target to deliver our Residential growth plan for FY19/20 and in doing so we continue to support some of the UK’s leading Residential Clients. We look forward to Q3 when Faithful+Gould will be a key sponsor and speaker at Property Week ResiConvention19. We will be releasing our speaker and delegate list in August via fgould.com and social media so please feel free to contact and make an appointment with our team.

We believe Faithful+Gould are uniquely positioned in the UK with our regional offices and we are proud to have now opened our doors in Liverpool where we are working on some exciting high rise residential developments.

We continue to provide a clear focus on adding value and delivering outstanding results to our Clients, our People and the Communities we work in throughout 2019 and beyond.

2019 is going to be an interesting year in the residential sector

As we approach summer, my news feeds and social media is full of stories on Wimbledon and the first week of uninterrupted play by weather, school holiday reminders and last-minute deals from the travel operators and the inevitable England semi final loss (Congratulations to the Lionesses you did us proud). Politics and Politian’s are still jostling for the moral high ground with positioning around Brexit and the Conservative Leadership Battle; no doubt we will see our 17th Housing Minister announced shortly? I’ve lost count in recent years!

Predictions

So, we take this opportunity to reflect on four of the predictions we made at the start of the year and see what’s happening in Residential Sector news to either support and confirm or dispel our predictions;

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1. Public and Private Sectors working more closely and collaboratively in order to hit the 300,000 new homes target;

Still some way to go; Whilst we are seeing positive noise in the Sector it’s still very much a slowly slowly approach across the board. It’s unlikely we will get close to the magic 300,000 new homes target, however we are seeing positive signs and momentum building.

From an F+G perspective we were please to see our private Sector Client U+I secure a Home’s Infrastructure Funding (HIF) application for £273m which will help to enable the development of a 121-acre site for 5,600 homes working in collaboration with Cambridge City Council and Anglian Water

2. Acceleration in new-starts of Build to Rent City centre living with greater focus on mid-market rents and tenures;

Evidence based approach fuels market confidence; The Build to Rent sector continues to grow at pace and has broadened it’s reach with prominent developments gaining planning consent and commencing works on site across all regions of the UK. In 2019 we supported Godwin Group in securing the first purpose designed BTR development in Derby, at 17 storeys and 200 homes this will be the tallest residential building in Derbyshire.

Working with Grainger PLC the UK’s leading Private Landlord we have been commissioned to advise on BTR developments in Birmingham (Exchange Square), Cardiff (Capital Quarter) and Sheffield (Well Meadow) delivering close to a 1,000 new city centre homes. North of the boarder in Glasgow Suzanne Gray is leading our research into Scotland’s emerging BTR market, she has created a bespoke RESI tool which informs design development and supports client’s appraisals driving greater certainty of achieving viability. Suzanne is appointed by KR Developments on one of Glasgow’s largest BTR sites equating to approx. 10% of the overall pipeline of apartments in Scotland. In support and to accelerate Suzanne’s development we have nominate her as a Property Week RESIConvention19 Trailblazer which if successful will provide a fantastic opportunity to engage and build networks with likeminded RESI peers across the whole of the UK (RESIConvention19 is held at Celtic Manor Newport South Wales between the 11-13 September).

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3. Substantial investment and growth in the Extracare and Later Living Residential Sector;

Market to double in size; Savills are reporting that “Retirement living is expected to expand rapidly, both as a tenure and asset class. Institutions and REITs are already active in the care home market, but the scale of activity is growing rapidly”. The forecast by Savills is that the sector will double in value to £260 billion at full maturity.

Reflecting on the March HousingLIN conference our Leanne Owen commentated; demand for older people’s housing remained clear. By 2066, there will be 20.4 million people aged 65 and over, in the UK. Recently, the focus for this age group has been extra care housing, but many conference participants emphasised the benefits of intergenerational housing. A recent survey indicated that 33 per cent of potential residents of retirement villages had reservations about living solely with other older people. Intergenerational living could help, but people would not want to feel forced into this type of single building housing. Whilst in larger communities or as part of a masterplan, an intergenerational approach can be adopted without the feeling of a contrived environment, financially viable smaller-scale extra cares with intergenerational living are not always possible. However, older people ‘ghettos’ can be avoided, by offering initiatives that encourage a diverse age-range of community visitors, such as children’s ‘stay and play’ or providing workspace for individuals within the facilities.

Read Adam Hartleys article published by Building – Are we Building the kinds of homes we want to live in? https://www.building.co.uk/communities/are-we-building-the-kinds-of-homes-we-want-to-live-in/5099281.article

4. Innovation and Property Technology, and Design for Manufacture & Assembly (DfMA) becoming the norm and at the forefront of our approach to creating new homes;

In reporting by Tom Bloxham Chairman of Urban Splash, news hit the market of Sekisui House (Japan’s largest homebuilder founded in 1960, last year the company delivered 44,000 homes, 5% of the 942,000 homes delivered across Japan) investing £22m of new equity in return for 35% stake in Urban Splash’s modular business, House. With a further £30m of equity and debt funding coming from Governments Home Building Fund administered through Homes England. Just weeks after confirming the Sekisui deal, Urban Splash announced a £75m deal to supply 440 modular homes for Homes England at Northstowe, Cambridge.

Working with our Atkins team F+G have supported the pilot development of MetroHome which is currently on site in Lambeth London delivering new affordable homes. MetroHome is more than just a way to build a house. It’s a process that covers offsite manufacturing techniques (a kit of parts approach), flexible design and end-to-end development expertise which together, provides local authorities across the UK with a viable option to address the country’s social housing shortage. The first four MetroHomes are currently taking shape in South London and are expected to be ready for occupation in late August 2019.

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