Community Spirit And Property Development Challenges

Despite the downturn in the economy, return on investment for commercial property has been in the increase. Annual return has been steadily increasing in city locations thanks to high demand for central business locations pushing up rental rates. Properties surveyed in London showed the largest growth rate as they averaged a 1.3% return in October 2012 according to Property Week’s report on details released by CBRE. Total returns in October were 0.4%, which doubled from September, but the trend is obvious even when analysing a short time frame. Does this mean the property market is about to drive recovery? Sadly, this is unlikely.

Not all Doom and Gloom
Although income from commercial property has been rising, there have been no surveys for new build properties and property purchases. There have been large-scale applications in and around London that defy the statistics, despite the lack of new developments. Again, most of these concern commercial properties, which further enforces the theory that few people who work in London actually live there.

Commercial property developers, Stanhope, have announced their intentions to re-develop property in London’s Kings Cross and St Pancras although Stanhope plans to extend as well as refurbish existing office space received the green light by planning officials earlier this year. This is a welcome development to the ten-storey structure at 1 Mabledon Place. It is ideally situated between Kings Cross and Euston so commuter links are perfect for office workers. In other parts of London, developments are not so welcome by residents who feel councils are forcing them to move from their homes.

Residents Revolt Against Development Plans
Residents of the Carpenters estate in Stratford are facing a battle with Newham council’s planning department, as they want to remove the residents to make way for a new development for university accommodation. Some residents have taken it upon themselves to have surveys on their properties in advance of a sale, but the majority of people are outraged because they have lived in the area for much of their lives and have deep connections with the Carpenters.

Residents argue there is a documented shortage of housing in the UK and to remove homes that are not defective or are not under threat is counter-productive. A large portion of the residents who were in local authority funded housing have already been re-located to nearby accommodation and this has fragmented communities that have existed for more than fifty years with one resident having lived in the same home for forty of those years. This follows closely behind the extensive building work that took place to accommodate the Olympic Games and many of the streets are in the shadow of the Orbit Tower, which was built specifically for the games.

The Bottom Line is Cost
Many arguments used by planning officials centre around a need to encourage commercial interests and possibility for incomes through new property developments. While the need for enterprise was and still is a valid reason, many people were informed that their homes are inefficient and that new homes would help the UK meet energy efficiency targets. It is true that homebuyer surveys show that new homes are generally more efficient than older buildings, but there has to be a case for spending money on improving existing structures instead of tearing them down and starting again.

Parliament Publication on Property Development
Chapter seven of The Select Committee on Science and Technology (second report) features views on energy efficiency and much of their findings relate to cost savings and the most cost efficient ways to meet targets. The worry is that new commercial developments may appear to drive local economies, offsetting any potential outlay and thus are more cost-efficient for the same relative carbon reductions. Local authority housing is increasingly burdening council budgets and it is not just politicians keen to cut the costs. Many people who own their own home feel aggrieved when they see neighbours in rented accommodation have solar panels, insulation and other cost saving devices fitted at no cost to the occupant.

There is no quick answer to the problem of providing private and social housing, but there has to be some degree of compromise. The question is should the people who pay the bills be the ones to concede ground when negotiating if they are altering the community spirit that London has been famous for in the last century?

Bill Jobs writes commentary on investment properties for some of the most popular chartered surveyor London has to offer and is experienced in financial analysis for property developers London.