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Anette Simpson Appointed as Chair of ULI United Kingdom
Anette Simpson, director of development and partnerships, Legal & General Affordable Homes, is the new chair of ULI UK. Find out more.
ULI UK Annual Conference 2021 Summary
18 June 2021
This year’s UK conference took place virtually on 10 June 2021. After a short video outlining ULI’s mission statement – to “shape the future of the built environment for transformative impact in communities worldwide” – chair of ULI UK Vanessa Hale introduced the conference. Hale remarked that while a digital event may not allow the same spontaneity of networking, it does allow for a stellar global line-up of speakers. After thanking the sponsors, she handed over to Sir Tim Smit, KBE for the keynote speech.
Sir Tim Smit’s Keynote
“There’s never been a more exciting time to be alive”
Sir Tim’s speech did not suffer from a lack of ambition. In it, he discussed a wide variety of topics, including emerging fermentation and cellular agriculture technologies, geothermal energy, electric cars, the misuse of ESG, the future of education and the meaning of community. Bringing these areas together was a single core thread – the future is coming, and we need to be ready.
The address began with a quote from American biologist Edward O. Wilson: “We have Paleolithic emotions, medieval institutions and godlike technology.” Sir Tim did not agree with the implied pessimism, however. He saw the emergence of a raft of new technologies as being key drivers of long-overdue change when it comes to the relationship between humans and the Earth, or what Sir Tim calls “our one planet home”. “There’s never been a more exciting time to be alive,” Sir Tim added.
To outline his thesis, Sir Tim made some bold predictions. Among them, that China would no longer eat meat within 10 years due to advances in cellular agriculture, and that Hangar Lane – London’s busiest road – would soon be a leafy promenade full of pedestrians and bicycle lanes following widespread adoption of self-driving vehicles.
Sir Tim was insistent that the business world needed to “debunk the nonsense around ESG”, criticising organisations that were “proud of doing less bad”. Instead, Sir Tim called for business leaders to “wake up, smell the roses, and decide to do good.”
If the population were to put more value in “education, beauty and growing things”, Sir Tim said, a better future would be possible. He told the audience: “A new green enlightenment is in your hands!”
Perhaps the most ambitious prediction, Sir Tim saved for last. Referencing mycologist Paul Stamet’s research into the underground communication networks formed of fungi, Sir Tim suggested a profound spiritual revolution was underway among the world’s youth, hinging on the realisation that the roots of communities go far deeper than we might expect: that we are all “Earthlings”.
Reinvigorating Our Towns and Cities: Joining the Dots Between Finance and Place
“It is not just about the public/private sector but also the partnership with communities”
Colin Lizieri, who moderated the session, started us off by placing the regeneration of towns and cities into context. They’ve experienced major challenges including: the death of the high street, relentless growth of online shopping, housing affordability, social-inequality, land availability and environmental and sustainability issues.
Real estate development can play a key part in sparking and leading on regeneration. This requires a collaborative approach between the public and private sector, along with suitable financing.
Eleanor Jukes highlighted a key theme in regeneration, that it is important to pick the right partner, who you can align with early on and then focus on solutions.
Simon Russian built upon the theme of partnerships; it is not just about the public/private sector but also the partnership with communities. It is vital to understand the area you are seeking to regenerate and the needs of the community, this is best achieved through constant engagement and participation with the local community. Urban regeneration is a huge responsibility and people care about their town centre.
Richard Cook highlighted the challenges in dealing with short-term political ideas when Clarion’s approach is to take a long-term focussed view. Political will is required to deliver levelling up, which has to be about jobs and long-term employment for people, who can then invest in their communities. Richard also highlighted the recent issues with the First Homes initiative, which will result in fewer homes being built.
All attendees highlighted the considerable cost involved in mammoth regeneration schemes and the requirement for partnerships, often in the form of Joint Ventures, to successfully deliver a scheme. All parties involved need to understand their roles and responsibilities from the start, to mitigate the potential for any friction later in the deal. It is vital to negotiate the various risk types and who they sit with, along with corresponding profit expectations and strike a balance between all parties involved.
Richard’s recent experience is that they are seeing mass demand within the debt market, with Clarion often being massively oversubscribed from a bond issue which is compressing yields. This reflects an uptick of investors seeking to invest in affordable housing, potentially due to the ESG implications.
Simon highlighted that a long, patient capital outlook often sits well within urban regeneration programmes due to the time horizon on the delivery of the schemes.
The solution to the high street’s problems will require a holistic review of how development can successfully re-purposes town and city centres. This will require a collaborative approach between all interested parties, including the central government. The current planning and CPO process can slow the ability to regenerate town centres and political impetus will be required to assist.
Urban Art Forum Film
“Those working in the built environment must do their utmost to ensure that cultural requirements are taken into account”
Between panels, the audience were shown a short film featuring footage from ULI UK’s Urban Art Forum, an initiative that brought together creative industries and the property sector to advocate for cultural placemaking as a way of bringing social and economic value to the built environment. Sherry Dobbin, chair of the Urban Art Forum, introduced the film.
Members of the forum were shown offering their insights into the best ways of leverage culture to invigorate high streets. The driving question: what are the characteristics of a successful cultural hub? The ideas ranged from maintaining artists in residence in apartment buildings, maintaining social accessibility as well as economic accessibility to spaces, to having communal buildings that could host national and regional cultural activities.
A common theme emerged – those working in the built environment must do their utmost to ensure that cultural requirements are taken into account.
Capital Markets Forum 2021 Debrief
“Whilst ESG used to be a tick box exercise, it is now at the forefront of investors minds”
John Forbes, Founder of John Forbes Consulting, moderated the debrief on the earlier Capital Markets Forum 2021. Joined by Steven Cowins, Shareholder at Greenberg Traurig, and Kari Pitkins, Head of Business Development, Europe, Allianz Real Estate they both fed back key highlights from the roundtable.
Steven noted there was a general optimism held by participants, especially in relation to rapid growth in a post-pandemic recovery. Inflation risk was on the lips of many participants and the potential impact it may have on asset allocation for funds. Kari noted that if the overall size of the portfolio was shrinking, due to external factors, then real estate could be hit.
Kari and Steven then talked us through the discussions in relation to the Forum’s viewpoints on the various asset classes.
Despite the monumental shift to working from home as a result of the pandemic, prime London offices have proven very resilient. Investing within this segment has remained extremely competitive, as despite there being fewer buyers they are competing for fewer assets. It is believed that foreign investors will return en masse once restrictions ease and that sellers may be hanging on to stock awaiting the return of active buyers.
It has become a challenge to pinpoint trends within the occupier market, as some occupiers are consolidating, others are looking to mitigate risk by spreading activities across locations and others are reconfiguration of space. The general view was that the death of the office had been overplayed during the pandemic, with rhetoric shifting towards a return to the office.
The vast amounts of capital being attracted by the residential sector reflects its position as an investor darling. The view was that rent levels and collections have remained strong, despite the prevailing headwinds. However, one investor was concerned about the potential of future job losses once government support is withdrawn.
Pre-pandemic issues remain firmly on the agenda, with a focus being on housing affordability and the undersupply of housing stock remaining unaddressed.
Segmented residential elements i.e BTR, Co-living and Student have continued to be attractive propositions to investors, becoming core investable classes in their own right.
An insatiable appetite remains for logistics, although there are some concerns about a loss of discipline in this particularly frothy market. It’s important to ask if you want to be right, or if you want to be relevant? Further discussed, was the attrition of available land within the golden triangle and whether land bookmarked for logistics may be switched to higher value use classes such as residential.
Whilst ESG used to be a tick box exercise, it is now at the forefront of investors minds. There has been an accelerated interest in ESG and impact investing. There is a discussion to be had about how to be more aware of ESG, potentially looking to proptech/VC to be at the forefront of some of these technologies.
The ‘R word’ was left to the end of the session to discuss, potentially as the outlook appears far less rosy for retail. Whilst some retail assets may be re-imagined and re-purposed, for the majority “retail is currently off of the shopping list”.
Reinvigorating the City: An Outside Perspective Looking In
“Flexible working and healthy, engaging work environments was something progressive employers were already thinking about, but the pandemic has put these issues at centre stage”
Frank Khoo, Chief Investment Officer at City Developments Ltd was joined by Sigrid Duhamel, Global CIO at BNP Paribas REIM and Peter Ballon, Global Head of Real Estate at CPP Investments to discuss what makes London and other UK cities attractive to international investors. They spoke about how there is still a lot of value in the UK despite Brexit and the pandemic. The UK real estate market offers transparency, and there is a high quality of income due to long-leases which aren’t common in other parts of the world.
Sigrid highlighted the diverse asset classes available in the UK, including offices, logistics, and even retail – which took a hit during the pandemic – but is still seen as having potential. She also pointed to the UK as being ahead of the rest of Europe in terms of alternatives, such as data centres.
Peter went on to say that the UK has been an attractive market for many decades, and this won’t change, as investors look far beyond blips as a result of the pandemic. The UK is a uniquely large market, and differs from others in its sophistication and transparency.
The discussion moved on to how use classes have changed and will evolve further as a result of the pandemic. Investors will need to think about a world free from the pandemic, rather than what’s actually happening on the ground. It was agreed amongst the panel that the picture pre-pandemic is more important to look at. Covid hasn’t necessarily changed things, it’s just sped up what was already taking place. Flexible working and healthy, engaging work environments was something progressive employers were already thinking about, but the pandemic has put these issues at centre stage.
The next point of discussion was ESG, and how the panelists, as investors, consider their impact on cities and buildings. They agreed that the E and the S were now getting a lot of attention (rightly so), and that we all have to contribute and reflect on what society is now demanding from developers. Frank highlighted the new focus on wellness, and spoke of how his company, with the aid of healthcare professionals, have worked to maintain the wellbeing of residents.
Real Estate Diversion and Inclusion Committee Presentation
“The lack of diversity has had a negative impact on the workplace, and for many, this difficulty is an everyday occurrence”
This presentation consisted of a short video displaying how the industry has strived to deliver positive change, and the committee’s work in doing so.
Over recent years, ESG has demanded increased attention for all those involved in the real estate industry, and has become an increasingly urgent topic. Now, the time has come to focus on the S, as an inclusive environment is key to achieving ESG goals.
The lack of diversity has had a negative impact on the workplace, and for many, this difficulty is an everyday occurrence. The ULI’s RED&I Committee is dedicated to improving inclusion and equality in the sector.
Each member of the committee has a unique view of the challenges faced and the actions needed to resolve them. They have been working closely with the UK Executive Committee in order to explore and shape opportunities to positively contribute to real change.
Technology’s Role In Place-Shaping And Facilitating Investment In Social Value
The final session of the day saw Susan Freeman, partner at Mishcon de Reya, interview Duncan Walker, CEO & Co-Founder of Skyports.
The interview started with a helicopter view of what is currently occurring within the advanced air mobility sector and how it will impact society. The underlying theme was that the industry is rapidly growing at pace and passenger air taxis are likely closer than we think, with Walker predicting we are likely to see them by 2023, early 2024. It may take longer to see them in London, but Skyports is experiencing higher engagement in Singapore, LA and Miami, with the first vertiport already being completed in Singapore.
“The industry is rapidly growing at pace and passenger air taxis are likely closer than we think”
Whilst air taxis or autonomous drones may seem futuristic, the latter is already being utilised and the former is not far off. It is already possible to fly in helicopters above cities, travel with no drive on the DLR, and the autopilot function is used significantly in commercial flights. The advanced air mobility sector looks to build upon and improve these existing use cases.
Electric, autonomous Skyports cargo drones are already being utilised by the NHS in rural Scotland, resulting in improved service provision by significantly cutting delivery times, man hours, costs and pollution.
Walker confirmed the main challenges to adoption within cities were technology, regulation and social acceptance. The business case is stronger with rural locations, as urban environments are already well served by same-day delivery.
Walker believes we will see piloted air passenger vehicles first, with the responsibility on the pilot continuing to diminish until its zero, before the vehicles become fully autonomous. Due to the stringent nature of the Western regulatory environment Walker believes that once the vehicles have been certified as safe, then popularity will take-off exponentially.