The economic downturn may have started to impact on the viability of regeneration projects but developers should not ignore the ongoing opportunities offered by brownfield sites.
The downturn in the housing market has seen residential elements dropped from a number of schemes but Simon Marks, head of regeneration at EC Harris in Birmingham, believes brownfield regeneration still remains a key element of sustainable urban development, and that the housing market slowdown is not all doom and gloom for the development community.
He said: “A more flexible and planned approach is required by all parties including land owners and local authorities, who have more time on their side to capitalise on investment.
“Our advice to developers is to look at all the de-risking options and switch the emphasis or phasing of schemes, with a view to considering the longer-term efficiencies of delivering community-related services first.
“In the current climate there are merits of putting the cart before the horse by focusing on public sector anchors such as health and educational facilities, which will pay dividends, as and when the residential market recovers.
“Developing such services which are of benefit to the existing community will add value to properties and provide a lifestyle and environment which people really need and want on their doorstep. They will also be able to see exactly what they are buying into beforehand, without living with the disruption.
“In order for this to be successful, land owners, including local authorities, need to adapt their approach and buy-in to the long-term benefits of a brownfield scheme. This extends to looking at the potential of loaning land to a developer, on the proviso that they will receive capital as and when money comes into the project.”
While the private housing sector has hit rock bottom, the affordable housing sector has moved up a gear, prompting the government to address the huge shortage of housing.
Only 70,000 new homes have been developed this year to date against a 2008 target of 240,000, which puts the housing situation into perspective and compares with 200,000 homes built in 2007.
Demand for new homes is still very much present but, with those looking to purchase having increasing difficultly in securing mortgages, private for sale schemes are simply not viable.
To help alleviate the housing situation, the government has plans to increase their investment into growing the affordable housing sector. The move is enabling developers to off-load existing residential stock to Registered Social Landlords (RSLs) which comply to set down criteria, as a means of generating cash flow and return on investment.
This has also led to the introduction of rent-to-buy initiatives which enable tenants to ‘try before you buy’ with an option to purchase some years down the line and with a proportion of the rent paid - contributing towards the purchaser’s deposit.
Mr Marks said: “The key to regeneration success for both land owners and developers lies in asking if they can establish a successful working relationship with RSLs in order to deliver affordable housing as part of their schemes. Whilst there is still very much a future for brownfield development, the overarching message is that the emphasis of such regeneration needs to adapt to market-driven initiatives.
“Organisations need to be more flexible in their approach and work in partnership to effectively manage the risks and opportunities which will enable them to continue to deliver community benefits through commercially-viable schemes.”