By Christmas this year, the Regeneration and Investment Organisation will have deployed around £5bn of international and local capital into UK projects.
And that is just a fraction of the potential £200bn that could be collected across the organisation’s 160 identified projects.
But making sure that those projects are fit for investment will be where the challenge lies, according to a panel of experts at a debate staged by Estates Gazette in association with GL Hearn at MIPIM UK last week.
“Although there is more money out there available for investment in the UK than any of us can imagine,” said RIO chief executive Tony Danaher, “what there isn’t out there is stupid money. Just because money is coming from different places, do not assume that it is not going to be subject to the same rigour, assessment, analysis and requirements that have always been the case.”
He added: “What has changed is that investors are perhaps looking at timing in a very different way, the quality and nature of the returns that they want, and also for government to play more of a part in schemes to de-risk them over time in a way that perhaps historically we have not been as smart at doing as we could.”
Jackie Sadek, adviser to communities secretary Greg Clark, said there were plenty of opportunities out there for investors, but local authorities and central government needed to make sure that they were achievable.
“You have got more opportunities out there than you could shake a stick at,” said Sadek. “What you haven’t got is investor-ready opportunities. There is a lot of stuff that could be done, but is it ready for anyone to get their cheque book out against? No. Not yet. And that is the gap that we are going to have to narrow in the next year. “
She added: “This window [of overseas capital] is going to snap shut and we have got to make sweet music while we can. We have got to capitalise on that opportunity.”
Danaher agreed: “I have found that sometimes through sheer enthusiasm, through need, or through what people perceive as opportunity, schemes that are not shaped appropriately are brought to market far too early. It is an awful cliché, but you only get one chance to make a first impression. Fund managers are very busy people. You need to understand that and often stand back, give a bit more time, and with the benefit of advice, get the project in a shape where an investor looking at it can say, that’s worth the investment of my time.”
Laura Mason, director of direct investment at Legal & General Capital, which has already ploughed more than £1bn into RIO projects in less than a year and has £15bn available, said that the ability to be able to deploy money quickly into projects was important.
“There is quite a long lead time until we get to the place where we can go back to our internal capital committees and say this is an investment we really should make,” said Mason. “That does slow things down. There is a slight tendency to go towards those projects where you know you can get that money invested sooner rather than later while economic conditions are as they are.”
She added: “We have to prioritise. If there is a project that needs a lot of attention and that hasn’t been brought to us in a way that we can easily work with the partners, then that will hold us up.”
But there was confidence among the panel that some local authorities were working to make sure that opportunities were investment-ready.
Paul Clark, director at Capita Real Estate, said that much of his time was spent working with clients to find out the “what they want” from a project, as that was a message that was unlikely to change over time.
“By the time you sit in front of the money, you have to have a firm idea of what you want,” said Clark. “It really is important that you have that story nailed down.”
For Clark, and many of the panel, the ability to turn that £200bn and more of potential opportunities into actual regeneration projects was as much about local leadership as it was about finding the money.
