Urgent need to scale up delivery of new homes in Birmingham

Developers in Birmingham need to dramatically scale up plans to deliver new homes if the city is to meet demand from workers moving into the region in the coming years.

Adam Ratzker, Commercial Director at Galliard Homes, said that the pipeline of homes after 2019 coming onto the market was far less than will be needed to cover the new workers moving in due to relocations of staff by a number of firms from London.

Ratzker said: “Birmingham needs more PRS stock. 1,500 units over the next two years following 2019 is not enough. You have 8,000 people moving into Birmingham from corporate relocations alone, you have 3,000 PRS units being delivered this year. Where are you going to put these people?” [emaillocker id=”71749″]

“There are probably 6,000 units being built in total in 2019, then it falls off. People want to move here, whether its relocating from London, you have all the core fundamentals you need to have in a great city. You are retaining the young talent from university that used to move to London and Manchester. In terms of is there demand for that stock? The answer is yes.”

“I think there needs to be more positive development and more people being pushed into developing these sites rather than holding onto them. That is a big issue.”

Galliard are one of a number of developers which have increased its activity in the city in recent years, hailing Birmingham as the ‘New London’. The developer has 53 sites outside London within its portfolio, with five of those in Birmingham.

Work is currently underway on Galliard’s 379-home Timber Yard scheme in the city centre in partnership with Apsley Capital.

 

PRS Changing The Game?

Rebecca Taylor, Director at investment manager Long Harbour, said that PRS schemes had begun changing the dynamics of the housing market, and making developers raise their game due to increased competition and quality of the schemes on offer.

Taylor said: “When we first started looking at PRS we didn’t have much choice, developers were like ‘take it or leave it’. We’re now making them think about things differently, not just about apartment sizes but how people use a building, how people move in and out. It has challenged them to think about what quality actually means. It used to be about putting in a fancy kitchen but that doesn’t work with PRS.”

She added: “The PRS market is really starting from a very low base, people are happy if people come and fix their tap in a week and their landlords leave them along. I’m hoping that this product will challenge the norms.”

According to Joel Cardinal, Head of Sustainability & Energy at the University of Warwick, a number of developers and housing associations are beginning to raise the standards of their homes to allow for less maintenance issues down the line.

Cardinal said: “Social landlords in particular are considering passivhaus type designs. Their (housing association’s) take on it is that it may be a bit more expensive to build, but because there are no hidden charges people are going to be able to pay their rent without having to sacrifice their heating.”

Commenting on the need to build sustainability into their business model Ratzker added that developer’s not toeing the line will be caught out as consumer and client expectations rise: “You have got to try your best, if not you’ll be found out. You must demonstrate that you are trying to build more sustainability and if land values and viability demonstrate that sustainable homes would be unaffordable, you need to demonstrate that. Ultimately, we are in it to earn money and a sensible return on investment, but there is clearly a drive and an aspiration from companies like ours to do better.”

 

The Impact of BREXIT

The panel also struck an upnote tone in their outlook for Birmingham’s property market post-Brexit. Ratzker said: “I was in Asia an thought the Brexit came up a lot, there are so many things going on on a global scale anyway, you have Trump, things going on in France, there is a lot going on. Brexit is something people have their eye on but it’s not more than a bump in the road. People told us they are not worried about Brexit, the fundamentals for investing in the UK are still there, what foreign investors are worried about if forex.”

He added: “We’re hoping that Brexit will help us a little bit, in terms of rates per sq ft. Brexit is helping to soften to London market a little, and is helping us gain access to it. In terms of global sentiment, in Asia and other territories they see the fundamentals here in the UK are outstanding, and people will absolutely take the opportunity to invest if the market takes a bit of a spanking short term to pile into our stock.”

“I think that can’t be in doubt, it is fundamentally great cities with great dynamics with huge shortages across the housing market. I don’t think it will be the major Armageddon people are trying to paint it up to be. We’re still selling. We have confidence that the fundamentals are here and they’re not going anywhere?

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