Delivering Affordable Housing at Scale

Transcription

1 Delivering Affordable Housing at Scale Lessons from Europe and the UK Beacon Pathway Inc

2 Scoping a March 2017 study tour Given Beacon s previous study tours were a successful model (medium density in North America, new housing development in the UK), Beacon decided to use the study tour approach to: Look at how Europe is addressing housing affordability Learn from other nations confronted by similar challenges This presentation reflects preparation for a study tour for March 2017, including: Desktop research Four week scoping tour to Berlin, Freiburg, Hamburg, Rotterdam, Malmo, London, Belfast & Manchester Beacon Pathway Inc

3 Background McKinsey Global Institute report A blueprint for addressing the global housing challenge identified 4 levers to narrow the affordability gap: 1. Unlocking land supply at the right location 2. Value engineering and industrial approaches to construction to deliver housing quickly, inexpensively, and on a large scale 3. Improving operations/maintenance to reduce operating expenses and sustain asset values 4. Improving financing to reduce costs for home buyers/developers; supporting a healthy rental market. Beacon Pathway Inc

4 Strong parallels between Europe and NZ New Zealand is not unique in being challenged to supply affordable housing. Strong parallels across European cities Impact of Global Financial Crisis Low interest rates Land supply a key constraint Supply of affordable / social housing will not be met by market delivery Decline in social housing stock Productivity a key factor for the sector Beacon Pathway Inc

5 Impact of GFC on housing supply UK Sweden A significant number of people in trades and small businesses exited the sector, leaving deficits in affordable/social housing construction. Private investors, disillusioned with bank/equity investments, have purchased residential properties, and increased demand with constrained supply has driven house prices upward. Germany Beacon Pathway Inc

6 Demand not met by market delivery Too few new houses are being built in Germany's largest cities while rural areas are oversupplied. Berlin alone will need 20,000 new homes every year from now until 2020 to keep up with demand, although just 8,744 were completed in Too few homes are being built in Sweden; over half of Sweden's local authorities state that they have a housing shortage and 80% of municipalities in Sweden report a lack of rented housing/ social housing. The UK needs over 220,000 additional homes in England each year until 2031 to meet projected growth but is currently building only 54% of that number. The Housing the Nation report found that successive governments had failed to address lack of supply of social housing and consequently were having to meet increasingly larger bills for housing benefit payments. Beacon Pathway Ltd

7 Decline in social housing stock Germany - over the last decade, decline in the number of subsidised housing units from about 2.6 to 1.6 million. Netherlands - an active policy of selling stock to tenantsapproximately 1% of social housing per annum UK - Right to Buy scheme. Since 2012 only 46% of properties sold have been replaced. Sweden granting private ownership to tenants of public housing but not to building more units. Beacon Pathway Inc

8 UK construction sector performance mirrors New Zealand, where construction sector productivity significantly lags the rest of the economy. Construction sector productivity NZ Labour Productivity in the Aggregate Economy and the Construction Sector Compared ( ) Beacon Pathway Inc

9 What is Europe doing differently? 1. State / city partnerships with sector players. Public land generally not sold to developers rather treated as patient capital 2. Cities facilitating and investing in housing infrastructure and alternatives 3. Alternative forms of housing delivery (housing associations, resident-led development, co operatives) 4. Active investment in housing by non-traditional institutional investors 5. Off site manufacture being adopted by institutional investors to address supply constraints, provide certainty of delivery and quality Beacon Pathway Inc

10 1. State/city partnerships with sector For example, Olympic Village, London This old industrial site was used for London Olympics, but its under-utilised land was a barrier to development eastwards Cooperation between four Councils, Greater London Council, Crown and aligned development with developers: Hackney Wick - affordable employment space, artists lofts. Westfield Here East - games media facility, tech centre Treasury (GBP1240m) and GLA funding a cultural and educational centre. Target across development platforms is 30% affordable (social rental and shared ownership). Most developers looking to hold stock of rental study tour will visit: Olympic Village (talk with London Legacy Development Corporation and Greater London Council), HafenCity (Hamburg), Malmo (Sweden) and Beacon Islington Pathway Inc(Manchester)

11 Olympic Park, London Beacon Pathway

12 West field shopping centre 190,000 m2 retail space Westfield built with 5,000 car parks and roads configured for 5,000. Westfield arguing to reduce the street widths and focusing on public transport experience. Lend Lease, 12 tower blocks, 2 apartments, 25,000 jobs Beacon Pathway Ltd

13 Original Athletes Village homes owned by Qatar Investments all rental Beacon Pathway Ltd

14 Chobham Manor by Taylor Wimpey Residents will have a raft of top class sporting venues, open spaces and places to play, eat, meet and shop at their finger tips The first phase of development offers a selection of Shared Ownership homes. Beacon Pathway Ltd

15 Beacon Pathway Ltd Chobham Manor Pods built off-site

16 Other examples Islington (Manchester) is seeking to regenerate an old industrial area in the inner city. It was developed through a partnership between state, city and local borough. Developer is Urban Splash HafenCity (Hamburg) investment in infrastructure has enabled HafenCity to mandate a target of 1/3 market, 1/3 rental and 1/3 affordable rental Malmo (Sweden) Malmo s West Harbour development was a partnership between City, port company and state. Beacon Pathway Ltd

17 2. Cities facilitating and investing in housing infrastructure and alternatives Substantial investment in infrastructure in return for affordable housing. E.g. integrating transport, land use planning (London, Malmo, Rotterdam, Berlin, Freiberg), to significant infrastructure development (HafenCity) Incentivising and facilitating alternative delivery of housing (HafenCity, Berlin, Vauban) The 2017 study tour will visit: Olympic Park (London), HafenCity (Hamburg) Beacon Pathway Ltd

18 Beacon Pathway Inc Transport investment is key to Olympic Park development in London. Close to Stratford International, High Speed 1, Docklands Light Railway, and the Central and Jubilee lines

19 Beacon Pathway Ltd The Hafencity development in Hamburg is built on the Elbe, and the land has been raised three metres to prevent flooding.

20 With the exception of the quays and promenades, the whole area will be raised to between 8 and 9 m above sea level. Beacon Pathway Inc

21 Beacon Pathway Ltd Berlin City supports baugruppen (resident led housing) by: underwriting 10% of the investment for approved baugruppen, significantly reducing deposit requirements (usually 20%). Funding private design practice Stattbau to facilitate groups to develop baugruppen

22 3. Alternative housing delivery Housing Associations (in Netherlands and UK), Municipal Housing Companies (Sweden), and Municipal Enterprises (Germany) tasked with providing social housing rental Private, non-profit organisations with a public purpose Act independently Resident-led housing design & development Baugruppen Baugemeinschaft - independent consultant-as-developer, e.g.the Melbourne Nightingale model.. Housing cooperatives Purchasing a share in cooperative gives right to rent 2017 study tour will visit: L & Q (leading UK Housing Association), Hamburg (meeting with city-appointed facilitators, Wilhelmsburg baugruppen), Freiburg (social housing Beacon Pathway cooperatives) Ltd

23 Most European city/state governments have federally imposed obligations to either plan for or provide affordable/ social housing Most cities use independent, not-forprofit organisations (housing associations or municipal housing companies/enterprises). These organisations do not necessarily get direct capital funding grants, although they benefit from housing support, and rental income covers building maintenance. Beacon Pathway Ltd

24 Beacon Pathway Ltd Wilhelmsburg baugruppen (Smart Price Houses). The basic skeleton structure, staircase access and basic building connections were constructed for the co -owners. Individual owners then designed and completed the interior fit-out of their own units

25 For the most part, baugruppen are multi-storey, multifamily buildings. There is no requirement for community space or common facilities in baugruppen, though many incorporate them (e.g. gardens, community rooms, roof terraces). Baugruppen incorporate a participatory planning process and are generally funded without developers (self-financed). Effectively, this delivers housing without a developer margin (estimated Beacon Pathway to Ltdbe a saving of 15 20%).

26 Cooperative in Freiburg Cooperatives are particularly popular in Germany and Sweden. Members purchase a share in the co-operative, which gives them access to a home to rent, at a rate which is frequently below market rental rates. Members enjoy security of Beacon Pathway Ltd tenure through a perpetual lease.

27 4. Active investment in housing by nontraditional institutional investors Across Europe, there has been significant external investment from institutional investors (e.g. Legal and General, Round Hill Capital) Global institutional investors (e.g. from the US and Asia) are investing in existing providers of housing stock, in new housing developments, and are purchasing significant tracts of housing across Germany and the Netherlands study tour will visit Legal & General (large insurer & pension fund manager which is actively involved in urban regeneration projects and is developing significant off-site manufacturing.) Beacon Pathway Ltd

28 Legal and General are an active investor across the housing supply chain: land, development, building and off site construction Beacon Pathway Ltd

29 5. Off site manufacture being adopted by institutional investors Off-site manufacture plays larger role in Sweden (84% detached houses use OSM timber components) and Germany (19% housing built by OSM) Includes multi-storey buildings, and a range of approaches from components to complete timber house construction kits and walls and systems Institutional investment in housing includes off-site manufacture e.g. Legal & General, Laing O Rourke, UrbanSplash) 2017 study tour will include: visit to off-site manufacturing plants in Freiburg and Falkenburg, visits to Laing O Rourke and Legal and General (developing significant off-site manufacturing), possibly visiting New Islington, Manchester. Beacon Pathway Inc

30 8 storey apartment made with off-site manufactured components in Sweden and the Swedish A-hus factory Beacon Pathway Inc

31 Modular housing developed by UrbanSplash, lead developers of New Islington in Manchester. UrbanSplash are developing suites of housing typologies for off-site manufacture, from terrace housing to mansion, which delivers housing at multi-storey, medium density with ground floor retail. Beacon Pathway Inc William Street Quarter, built using Laing O Rourke s off-site manufacturing solution. A large UK constructor, Laing O Rourke has invested significantly in digital platforms for on- and off-site construction to deliver not only traditional construction and preassembled components (walls and sub-assemblies) alongside modular housing solutions.

32 What New Zealand can do Central government and local government partnering to address the challenge Crown / city land invested as patient capital to catalyse new housing developments Invest in / facilitate alternative models of development / ownership Government / cities facilitating institutional investment in housing developments Off-site manufacture has potential to assist in overcoming skills shortages Beacon Pathway Inc

33 Beacon s 2017 study tour Visiting London, (possibly Manchester), Freiburg, Hamburg, Malmo Focus on Scale developments (Olympic Village, HafenCity, Wilhelmsburg, Malmo) Alternative delivery models to market (institutional, co operatives, co housing, custom build) Off site manufacture Will also visit: Vauban (Freiberg) former military barracks converted to new urban district. Features include extensive green corridors, renewable energy, high level of citizen participation and passive & low energy houses. Riesenfeld Freiberg s newest housing development with 12,000 inhabitants. Excellent example of integrated transport development, low energy housing, natural stormwater management systems. Modernisation of 1960 s social housing neighbourhood (Freiberg) Intergenerational housing developments (Freiberg) International Building Exhibition (Hamburg) - view a range of innovative housing typologies Augustenborg and Rosengard (Sweden) large scale retrofit of Sweden s one million homes. Beacon Pathway Inc

34 More information Dates: Tentative cost: For more information, contact: Nick Collins Beacon Pathway Inc