Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
Page 11
Page 12
Page 13
Page 14
Page 15
Page 16
Page 17
Page 18
Page 19
Page 20
9 Carlyle Consultants FEEDBACK Have your say Editor The governments move to delay the announcement to extend permitted development rights for office to residential Property Week Government delays office- to-resi plans p4 24.07.15 has clearly affected developers like us. The uncertainty means that some projects will be put on hold until there is clarification over the governments plans. We have recently completed the purchase of an office that we plan to convert to residential but that is only because we think that the work can be completed to a high standard by the May 2016 deadline. Whatever the governments decision is it must not slam the door shut. If there are changes in policy transitional arrangements should be made to enable developers to complete current projects. We therefore believe it reasonable to allow all prior approvals to have the same three-year period in which to complete as other planning consents irrespective of whether the developments fall within Article 4-designated areas. Buildings have been purchased in the knowledge that they could be converted into new homes without the need to go through the planning process. If developers are forced to rush through conversions it is likely to impact the quality of the scheme which will be of no benefit to anyone. People are crying out for top quality well-thought-out homes at a price that is affordable and that is what we at Weston Homes have always sought to deliver. Bob Weston chairman and chief executive Weston Homes Editor As the business environment improves many occupiers are taking the opportunity of MA consolidation activity or lease diary events to improve the quality of space and locations in which they occupy Intelligence p22 24.07.15. This activity needs to be looked at in the context of both the economy and the fact that many occupiers that had the opportunity to review their portfolio in 2008-12 placed their decisions on hold across their portfolios. As we approach five years on more occupiers are looking at the drivers that will influence their estate. We are also seeing occupiers shifting priorities in terms of space take with the competition for talent driving where occupiers locate and the type of space they need. We are now seeing clients expanding some business units and creating new business lines or initiatives as they continue to diversify. This is manifesting itself in the relocation of back-office functions to lower-cost locations while they continue to invest in higher-cost locations for their front-office environment. Your comment in relation to take-up needs however to be taken in the context of a period of relatively low demand but also a very low period of supply. Speculative development has been extremely low for a number of years due to the lack of debt funding. This has created an acute level of low supply which is driving rental growth as the available space is absorbed. From an occupier perspective this influences decision-making in so far as occupiers are either in heated competition for space accepting higher- cost real estate where they are geographically sensitive or certainly in larger urban areas considering newer developing locations within the city. James Maddock international director head of global occupier services EMEA DTZ Changeinofficetake-upasbusinesspicksup Giveusmoretimetofinishofficeconversions WINNER Eachweekthe writerofthestar letterwillreceivea bottleofTaittinger champagne courtesyofcourtesyofcourtesyof Posts and tweets Gov plans to give Sunday trading hours discretion to local councils could backfire on the High Sts as larger stores may get longer hours BillGrimsey In 2015 Q1 London accounted for 13 of property transactions but 47 of stamp duty revenue. ukhousing tax NobleFrancis 65 of landlords considering rent rises following budget ukhousing Dorian_Belvoir We know Affordable Rent isnt affordable to many so lets just scrap it A new model is needed. UKhousing FrankBainbridge Now Cameron and the Conservatives are also dealing with a migration crisis by copying Labour and turning landlords into border agents johnmknox Could big data signal the end of commercial property agents InterestinganalysisbyPropertyWeek dramsay1976 Send letters to Property Week Metropolis International 6th floor Davis House 2 Robert Street Croydon CR0 1QQ Email letters Tweet us PropertyWeek Discuss at PropertyWeek Like us at pwmagazine The Editor reserves the right to edit letters ANALYSISOpinion 070815 25 025_PROPWK070815_Feedback.indd 25 05082015 155602 Anyone unlucky enough to find themselves in Croydon surrounded by dismal office blocks will appreciate the efforts of Martin Skinner right CEO of Inspired Asset Management whos making his mark transforming many of the boroughs unloved buildings into smart and affordable homes. A seasoned entrepreneur and property investor Skinner set up grew and sold his first technology business after leaving university with a degree in business computing. Today hes an innovative property developer heading up Inspired Asset Management IAM a company specialising in office-to-residential property development for first-time buyers with a portfolio of over 200m. Skinner explains his early forays into the property world I saw a gap in the market for young professionals like myself for whom the cost of housing was too expensive. I bought a three- bedroom house turned it into a six- bed and rented out rooms pretty soon friends and family wanted me to help them to do the same thing. Over time Skinner developed a substantial high-yield portfolio of houses rented out to young professionals around Canary Wharf. Nice Group a fast growing property development and management group soon followed as did two substantial joint ventures with large fund managers. After establishing portfolios of more than 150m yielding more than 10 gross Skinner and his partners sold 25 of their 30m operating business undoubtedly a smart move but he explains what really sparked his interest in developing the type of compact housing for which hes known I rented an 8m-square flat in the heart of Docklands. It was very affordable although I didnt want to pay anything in rent but it gave me a different perspective. I preferred to compromise on size not location and a lot of other young professionals feel the same way. They cant afford the extra space plus they dont want to clean it. Over 15 years Skinner built a large portfolio of 2500 tenants but like many business leaders hes experienced the lows as well as the highs. When the credit crunch hit Skinner is on record as admitting to making the eternal mistake of borrowing money to keep working on the JV properties on the promise that we would get paid next week. They werent and Skinner lost his home and almost lost his livelihood in the process. Crediting his family for supporting him with a bailout he managed to bounce back and rebuild the business. Today Skinner remains a passionate advocate of small businesses private investment and property development and Inspired has established a number of substantial JVs through which it is rolling out its unique high-tech high- spec and ultimately affordable private housing across the capital. They are all high quality with shared living showhouse November 2015 85 An inspired approach FINANCE SPECIAL GINETTA VEDRICKAS meets Martin Skinner the CEO of Inspired Asset Management using his property development expertise and office- to-resi opportunities to bring much-needed housing to the south-east Inspired Homes Impact House Croydon and above In association with Finance Inspired.qxp_Layout 1 01112015 1707 Page 1 86November 2015 showhouse FINANCE SPECIAL mainly in Croydon Epsom and Sutton with prices starting from around 265000 so buyers often need a deposit of just 25000. The price is much more feasible compared to most new build on the market he adds. Skinner says that his product is proving popular but raising finance for future projects is still hard Its tough. We use bridging finance and switch to development finance usually in around four months when weve got enough off-plan sales. I tend not to use traditional banks as theyre far too slow. I often use private equity. IAM has raised over 75m of capital with further projects in the pipeline including in Swindon and Impact House in Croydon. Skinner explains his business model We transform run- down real estate into high-quality high- yield housing with a rare combination of skills ideally suited to these uncertain times. Typically we bring investors on board on a fixed return basis between 10 and 25 per annum depending on risk profile and security provided and we occasionally JV with third-party developers A recent acquisition of 15-29 The Broadway in Crawley takes IAMs total of London and south-east properties for conversion to eight. The vacant three- storey former office building is in an area of opportunity and development under the Crawley Borough Council Local Development Framework and was bought for 2.8m. Working with London-based Twelve Architects subject to planning it will be redeveloped over the next 18 months at a cost of around 9.5m into a five- storey 60000ft residential building housing 78 studio one-bedroom and two-bedroom apartments. Its ground floor will remain as a large retail unit which can be divided into smaller units but will also accommodate a residents lobby and cycle store. All units have high-spec high-tech fixtures and fittings such as LED lighting NEST thermostats Bosch kitchen appliances granite worktops and 1GB hyperoptic broadband. All our developments feature cutting-edge technology explains Skinner but its always easy to use. Skinner believes his recent acquisition will appeal to first-time buyers and also investors. We have a strong track record in delivering returns for investors both large and small whether they are looking to invest in single apartments or in an entire development. Hes recently partnered with the rock star of the property world Raymond Bloomfield who was first to introduce German investors to the UK and who was also one of the first to spot Russias potential. Bloomfield too has experienced highs and lows over his lengthy career but is firmly back in the property saddle after meeting Skinner and forming their joint venture Inspired GSP. So far its working well says Skinner. We each have our own projects and have also done a few good projects together. Once theyve completed the sale of Impact House Skinner will be on the hunt for further investment. Well be looking for a JV partner or funding provider. Its all a bit frantic. Business may be frantic but at its core is Skinners belief that they are providing what the housing-starved capital desperately needs. Unlike most developers who think they are building what the customer wants we are more customer-centric. Micro housing is a growing city trend and its realistic. With the housing shortage it will take years to train people and produce labour and materials. This is one realistic way of producing more stock. Stock is desperately needed but Skinner believes that UK real estate remains an attractive asset class. Interest rates are staying low. Credit conditions have eased significantly since the economic meltdown. The UK real estate sector remains strong with house prices up 8.9 in the first seven months of 2015 and London continues to lead the way. However he does feel that the window of opportunity is closing as yields start to decline. Robust returns are still achievable. But now more than ever you need to know where to look. Thats where the experts come in. And Skinner doesnt believe that the government are experts when it comes to tackling the housing shortage. Speaking at RESI the UKs largest housing conference Skinner laid the blame for the housing shortage squarely at the feet of the government and in particular the dithering on extending office-to-resi permitted development rights PDR. Saying the delay had been driving everyone mental he warned that excessive regulation both holds back new supply and stifles innovation adding that the planning system was based on the assumption regulators know best but consumers know whats best for them. Like much of the industry Skinner describes himself as hugely relieved over changes to PDR Its a massive relief and fantastic news as we can now bring as many as 1500 affordable but luxury homes to the market over the next 18 months. Skinner feels that one way forward is to introduce student- style accommodation in cities where its needed most and hopes that the PDR announcement is the beginning of what he calls meaningful discussion to solve the housing supply crisis. Removing minimum space requirements for new builds and allowing developers to bring forward purpose-built graduate accommodation would go some way to getting young people on the housing ladder. sh Inspired Homes The Broadway Crawley Green Dragon House Sky Terrace and below In association with Finance Inspired.qxp_Layout 1 01112015 1707 Page 2 9112015 ShowHouseSeptember15 httpflickread.comeditionhtmlprint.htmledition55ed85905aea2page121end124moderange 14 NEWS 161015 9 NEWS BY HELEN CRANE Developers could be set for a windfall after the government confirmed plans to make permitted development rights PDR for office-to-residential conversions permanent and extended the scope of the measure to allow the demolition of offices. The move contained in the governments Housing Bill this week will see the temporary PDR which was due to expire in May next year put on a permanent footing allowing developers to change the use of offices to residential without planning permission. The government also extended by three years the deadline for developers with office-to-resi PDR schemes currently under way to reach completion and said the new rights would permit the demolition of office buildings to make way for new homes. Michael Brough residential director at JLL said the measures could add millions to the value of buildings. The demolition of buildings as opposed to refurbishment will increase the value of these buildings dramatically he said. Refurbishing a commercial building into a residential building is currently like trying to push a square peg through a round hole. These buildings were never designed to be lived in and consequently the use of space is extremely inefficient. Bob Weston Weston Homes chairman and chief executive said allowing demolition was quite amazing. If we can replace an eyesore with something new and smart that will be a massive windfall for us he said. At the moment many PDR schemes have been purchased by investment money rather than professional housebuilders but if we can go and do the job properly Im sure a lot of this competition will back away and more housebuilders like us will move in. It can be cheaper to knock a building down and start again which I assume is why the government is allowing us to go down this route. Lenders who in recent months have backed away from office-to-resi schemes because any scheme started now was unlikely to be completed by the initial deadline welcomed the clarity on the policys future.We have funded a number of office-to-residential projects over the past two years and once we have studied the small print and are happy will fund many more in the future said Mark Posniak managing director of Dragonfly Property Finance. There needs to be innovation to solve the fundamental issue of housing supply and facilitating more office-to-residential projects is a step in the right direction. However Claire Kober London Councils executive member for infrastructure and regeneration warned the measures could lead to a planning free-for-all. She said the PDR prevented councils from insisting on affordable housing and the loss of office space resulted in lost jobs and lower economic viability. Under the new plans councils that are currently exempt from the PDR including Islington Camden and Westminster will have their exemption extended to 2019 at which point councils seeking an exemption will need to make an Article 4 direction. For more on the Housing Bill see Leader p29 and Developers set for windfall from new office-to-resi PDR 9 Government says permanent permitted development rights will allow the demolition of offices for new homes IMAGEWORKS PDR potential Apollo House and Lunar House in Croydon Allegis Group takes space at Citys Broadgate Quarter US recruitment specialist Allegis Group has signed a deal to let space at Hines and HSBC Alternative Investments Broadgate Quarter in the City of London pictured. The firm one of the largest privately held staffing companies in the world will take 15088 sq ft on the ninth floor paying a rent of around 63.50sq ft on the space. It leaves around 30000 sq ft vacant across the eighth and 10th floors of the 425000 sq ft scheme which is in the process of being sold by the joint venture partners. A 455m deal with a Chinese buyer thought to be linked to billionaire Li Ka-shing collapsed last month and the sale process has since been relaunched. The building is let to law firm Ashurst UBS GFI and Shearman Sterling however Ashurst is due to vacate its 92500 sq ft of space after agreeing to relocate to London Fruit Wool Exchange when its lease expires in 2019. DTZ now Cushman Wakefield advised Allegis. Squarebrook and Cushman Wakefield are letting agents on the scheme. Skarstedt plays to the gallery in St Jamess RebrandforKnightsbridgeStudentHousing Oaktree Capital-backed Knightsbridge Student Housing is rebranding to become Threesixty Developments. The company formed in 2010 when Oaktree joined forces with former Victoria Hall chief executive Bob Crompton to develop a major student housing company is now seeking to expand its portfolio to 1.5bn. It has grown rapidly to become a significant developer and operator of student housing in the UK Spain and Ireland. Earlier this year it sold 12 student housing schemes in the UK known as the Westbourne Portfolio for a value of 540m to Goldman Sachs and Greystar. The group now aims to secure 48 schemes by the end of 2018 which would total more than 20000 rooms. Knightsbridge also wholly owns operating platform the Student Housing Company. Crompton chief executive of Threesixty Developments and the Student Housing Company said the rebrand marks a fresh chapter in our story. New York art gallery Skarstedt is expanding to a new London location in St Jamess. Skarstedt will take over the 6500 sq ft former Portland Gallery at 8 Bennet Street opposite the Ritz Hotel. It opened a gallery in London in2012at23OldBondStreetbut has now outgrown the space. It is believed to be paying a rent of close to 90sq ft in line with prime rents in the St Jamess area. The gallery was founded in 1994 by Per Skarstedt to mount historical exhibitions by contemporary European and American artists. It has showcased famous international artists such as George Condo and is currently running an exhibition called Childish Things to coincide with the Frieze Masters art fair this week. Pilcher Hershman and Michael Horwitz advised the gallery. The landlord was unrepresented. Kitewood wins consent for 40m Sydenham residential scheme 13 August 2015 By Hannah Brenton Kitewood has won planning consent from Bromley Council to create a 40m residential development on a former Salvation Army site in Sydenham south east London. The scheme at The Haven and Rookstone House designed by Dunnett Craven architects will comprise a gated development of 27 four and five bedroom houses ranging in price from 800000 to 1.5m. There will also be 19 apartments for shared ownership and social rent. The development is located a short walk from both Sydenham and Penge West Overground stations offering a 20 minute journey into London Bridge. The 3.5-acre site is being acquired from the Salvation Army with construction expected to commence towards the end of the year.