Lord Deighton made as good a speech as I’ve seen from a minister on Tuesday. He may have achieved the impossible, convincing a sceptical property audience that under his watch the government could get infrastructure delivery right.
The commercial secretary to the Treasury – infrastructure minister, for short – has the advantage of not being a career politician. That gives him a head start in appearing human. The fact that he was also chief executive of LOCOG gives his CV credibility too.
“On the government’s list of priorities infrastructure is sexy for the first time since Victorian times,” he told the British Property Federation conference. For the UK to remain competitive internationally it has to be.
In last year’s update to the national infrastructure plan, the government said annual spending on these core assets had risen from ?29bn a year between 2005 and 2010 to ?33bn annually in 2010, 2011 and 2012. Does it feel like it? It perhaps depends on where you are in the country and how dependent you are on energy and public transport.
Deighton admitted government was better at writing policy than ensuring delivery and insisted the coalition wanted to strike a better balance. He pledged to lobby ministerial colleagues to streamline planning. And he hinted he would seek expertise beyond Whitehall. “We are long on smart policy people and quite short on effective project delivery people.”
With the government able to borrow historically cheaply, a national balance sheet groaning under the weight of decaying assets and an economy in desperate need of stimulation, the case for infrastructure investment is compelling. Deighton may be the man to deliver.
¦ Across town this week at the London Real Estate Forum, London’s badge as the real estate capital of the world was given a good polishing. Azerbaijan’s ?22bn state oil fund and the ?31bn Canadian pension fund HOOPP both revealed they were mulling moves into property development in London. Said HOOPP real estate vice-president Michael Catford: “London is the largest, most liquid and most transparent property market in the world.” Will those warm words be matched with investment? Well this week the Crown Estate’s ?100m Gateway redevelopment opened. It is the first major project to be delivered as part of its ?500m investment plan for St James’s in London’s West End – and was delivered thanks to the first major partnership established by the Crown, back in 2010. And the partner? HOOPP.
¦ Relief all round at Gazeley, which has endured two years of a for sale sign hanging over its head. It can look forward to a new lease of life now it is no longer under the wing of the debt-laden Dubai World’s Economic Zones World group. The white knight is Brookfield, the Canadian developer which is backing up its European ambitions with cash. It believes – rightly – that industrial is a solid sector with a strong e-commerce-led future. Functional obsolescence is rife and can be capitalised on. Gazeley will change under the Canadians’ protection – from being a developer-seller to an asset manager. The question is, with Hammerson’s offices and now Gazeley’s sheds, what next for Brookfield?
¦ There was plenty of sympathy in the property world for Royal Bank of Scotland chief executive Stephen Hester. In his five years with the bank – the greatest turnaround job in history, perhaps, to paraphrase Hester himself – RBS has cut its exposure to commercial property by as much as ?50bn. A comparatively modest ?15bn to go.
The Treasury wants to see RBS lending to the corporate middle market to support economic growth and drive up the bank’s share price ahead of an accelerated privatisation. And that’s bound to have implications for its property book. A fire sale would be a mistake and bankers may be more interested in hearing half-sensible offers than they have appeared in the recent past.
damian.wild@estatesgazette.com
