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Short Term Profits Versus Sustainable Long Term Gains
he current property market approach really the best
features young people financial model? Does it create
struggling to get on the vibrant and healthy communities
housing ladder, brand new and great urban places? The
apartment blocks sitting empty answer to these questions has to
and rising interest rates be no.
threatening to undermine
confidence. Until we adopt a long-term
approach to creating communities
It’s a market obsessed with and vibrant places rather than an
making short-term returns. As a obsession with buildings and
result, the past decade of what short-term profit, the property
is perceived as ‘regeneration’ market will not deliver
has been dominated by speculative sustainable city living in line
investor bulk-buying, killing off with the European approach. I
any chance of creating vibrant believe the answer lies with the
communities resulting in a legacy larger financial institutions and
of absentee owners, and an the public sector. Both can
oversupply of one and two bedroom afford to think long-term, as
identikit apartments. they don’t answer to private
shareholders.
You can’t blame the house
builders, developers or agents; Currently, property only
after all, they represent the represents a small percentage of
private sector which has to pension funds’ total investment.
answer to shareholders who want Traditionally, the financial
to maximize annualized profit. institutions have avoided more
exposure to property perceiving
But what about the next 20, 50 or it to be volatile and management
100 years? Is such a short-term intensive. However, the city’s
financial institutions are now Birmingham in order to use its
starting to look at property as a assets to create long-term
long-term alternative for the returns and sustainable new
creation of excellent returns. waterside destinations. ISIS is
Morley, one of Europe’s largest now revitalising more than 170
property fund managers, set up acres of land in seven towns and
The Igloo Regeneration Fund in cities across the UK, designed to
2002. This is the UK’s first attract a wide range of
urban regeneration fund investing occupiers, including families.
for a commercial return in mixed Icknield Port Loop, one of the
use, environmentally sustainable, most significant regeneration
well-designed regeneration opportunities this decade is one
projects on the edge of the top of these sites.
20 cities in the UK. The fund is
managed by Morley on behalf of When the public sector take this
Norwich Union without pressure long term approach, they often
from shareholders. are faced with a dilemma given
the need to cover short term
The public sector is also costs, for example British
starting to recognize that it can Waterways are responsible for a
take a long-term approach to 200 year old system that
value creation and the generation constantly needs to be maintained
of public benefit through quangos and suffers from years of
like Communities England (English under-investment. The current
Partnerships and the Housing costs are more than British
Corporation) and British Waterways receive. British
Waterways. For example, British Waterways require consistent
Waterways established ISIS funding to be able to maintain
Waterside Regeneration at the the waterways for public benefit
2002 Urban Summit held in and as a catalyst for
regeneration without having to If pension funds invest in well
sell off the family silver. Over designed apartments built as part
the past weeks the national news of a thriving community and well
has reported that it may be managed by responsible investors
privatized; this would be a huge such as Morley, places with
shame. British Waterways has the long-term value can be created,
opportunity to continue to act as which occupants can then buy-in
a force for good in regeneration, to as part of their pensions.
rather than being forced to dance
to the tune of the shareholder. This will be a challenge, as we
need to overcome the stigma of
We need to encourage the renting on a long-term basis. In
government and financial addition, if pension funds do
institutions to get behind the invest in developers like ISIS,
property market and set up more which puts sustainability at the
of these funds. We only need to heart of its approach, there is
look to northern Europe for an an opportunity for large numbers
example of how this can work very to acknowledge and address the
successfully. challenge of climate change. If
there were more communities
In the UK, young people have a living in residential schemes
stark choice – 25 year mortgages like ISIS ones which have
are likely to be replaced by much sustainability built-in to the
longer terms and if the idea of very fabric of the development,
creating huge debts for others to then a critical mass could
inherit is not attractive they develop into combating the
are forced to rent average effects of climate change.
quality and poorly designed
apartments from private, An excellent case study of how
relatively unregulated landlord. the public sector can work with
long-term funds, as I have
described, is represented at google_color_border =
Icknield Port Loop. Birmingham "FFFFFF";
City Council, Advantage West
Midlands and ISIS together with google_color_bg = "FFFFFF";
other key stakeholders are
bringing forward plans to put google_color_link =
this long-term approach to "0000FF";
community and value creation into
practice. It can’t come soon google_color_text =
enough. "3E3F43";
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About the Author:
Mark Ryder - Chief Executive, ISIS - Granary Wharf will be home to 282 well designed waterside apartments in Leeds city centre; complemented by the retailers, restaurants and bars already established.
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