Sadiq Khan clinched the vote to become London mayor in the month before the London Real Estate Forum, and the conference was abuzz with chatter regarding the problems he faces and how he must deal with them.
At the crux of many of them are issues of shortages and undercapacity.
London’s failure to prioritise its airport capacity problems is damaging its reputation among international investors, experts at LREF said.
Speaking at Estates Gazette’s keynote session, London: How Likely Is It?, Linus Forsberg, partner at Trinova Real Estate, said the inability of authorities to take swift action over an expansion had made London a laughing stock.
“For me, the airport is more important than Crossrail 2 or 3 at this point. Internationally, it is seen as a joke and we need to get on with it.
“It is damaging to how London is viewed internationally, especially if you are sitting in the airports of Hong Kong or Shanghai – it’s embarrassing.”
His sentiment was echoed by Desmond Taljaard, managing director of hotels at London & Regional Properties, who blamed “red tape and bureaucracy”.
“The French have an ability to get on with things, but we seem to have an infinite number of navels to gaze through,” he said.
On housing, Daniel Mahoney, head of economic research at the Centre for Policy Studies, set the tone with a presentation that cast doubt over Khan’s election manifesto to build 50,000 homes a year.
Mahoney went so far as to describe the mayor’s housing proposals as “harmful to London”.
He said: “In answer to the question of how likely it is that Sadiq Khan will build the 50,000 homes a year needed in London, I’d say not very likely, unfortunately.”
While applauding plans to free up public sector assets for development, Mahoney was critical of the mayor’s 50% affordable housing target.
“Not only will this target probably not succeed, as was shown under Ken Livingstone’s mayoralty, when the identical target failed miserably, it will probably reduce the prospective supply of homes.
“Affordable housing requirements and development viability need to be carefully balanced and – in my view – Sadiq Khan has got this balance wrong.
“These stringent targets will likely dissuade many developers from building, which in turn will reduce the supply of homes.
“Sadiq Khan doesn’t seem to be too bothered by this. He believes the number of homes built is less important than affordability.”
Mahoney said that the housing crisis could not be addressed with the release of public and private brownfield sites alone, and that the release of green belt land was crucial.
“More than a one-fifth of London’s land is considered green field, and some of it is far from essential: 7% of London’s green belt is accounted for by golf courses, while 1,784 acres already have buildings on the land,” he told the audience.
Grace agreed, and urged for “dynamism and pragmatism” from James Murray, the newly appointed deputy mayor for housing, and the Homes For London board.
He was also optimistic over the mayor’s compulsory purchase order powers with the setting up of the London Land Commission, though Bruce suggested the powers would be used more as a stick, before adding: “It is not just a housing crisis but also an infrastructure crisis.”
“The lines between real estate and infrastructure are blurred… and that’s what we need in London, along with all those brains out there that can make the quasi real estate and infrastructure investment happen.”
Working with developers
In order to help regenerate the areas of London that are most in need, Khan will have to make best use of public land and work with developers in order to bring new schemes forward.
To help him on his way, best-value guidelines in the OJEU and public land disposals process need to be changed to support communities, said Tony Pidgley, chairman of Berkeley Group.
“We have a sophisticated society, London is a world-class city, we have excellent borough leaders,” he said on a special panel for the mayor’s fund for London at LREF entitled Building for the future.
“But the government has set down under the OJEU process that we must always get best value. I think the best value is people’s lives and community.”
The special panel was, according to panel chair and chief executive of the mayor’s fund Matthew Patten, actively seeking to address the “software” side of the development equation: community engagement and development.
Pidgley said that for Berkeley, as a developer, community engagement must begin on day one, and that “politicians will come second”.
“We have to recognise that housing is about people first and foremost. That’s where we as a regenerator start,” he said. “We put the people first, then work on the strengths of building.”
The panel universally agreed that community engagement was essential in development, though Jamie Ratcliff, assistant director for housing at the Greater London Authority, warned that encouraging the right kind of engagement was important.
He added that where London often sees the most community engagement is in opposition to development.
“You get strong community engagement against regeneration: people uniting around a common theme they do not like,” he said. “There is a challenge where people get engaged against something, but how do you get them to be more positive?”
Ratcliff said the new mayor was looking at ways to improve community engagement, including schemes to allow communities themselves to develop.
“The mayor has been very clear that he was elected as a mayor for all Londoners and there are probably a few different elements to that,”
he said.
“You are not going to deliver thousands more homes by doing the same thing we are doing at the moment. We need to be looking at other partners to deliver homes as well – communities delivering their own developments. ”
Patten also voiced concerns that the push for housing was coming at the cost of place and community, though Ratcliff said the two were not binary.
“There are lots of areas in London with no world-class facilities, but have things that people value. You have to work with that fine grain. It does not necessarily mean things that are not compatible with density,” he said.
Solving the housing crisis
In order to enhance a sense of community as well as provide as much housing as possible, the new mayor will need to be open to a variety of new ideas.
“London’s problems are profound and complex,” said JLL’s head of research Jon Neale, who called for a more flexible approach to planning policy to meet the capital’s needs.
He said the new mayor should focus on how to provide new forms of affordable housing of different tenures and on ending the obsession with overseas investors.
“They are not the biggest issue facing London anymore,” he said. “We need to focus on over-occupation and stimulating the private sector.”
The mayor has already pledged to free up more public sector land for development.
Transport for London’s commercial development director Graeme Craig said that in four years’ time, he expected to be witnessing the start of construction of 10,000 homes on TfL land.
To achieve its targets, Craig said TfL needed support in planning, build for rent, intensification around stations and access to public sector land adjoining its development sites.
“We are no more successful than anyone else in being able to access other public land, and that gets in the way of our ability to maximise opportunity from our sites,” he said.
Strong leadership will also be vital in order for TfL to optimise its commercial portfolio, Craig said.
“We have 3,000 retail units, the world’s most valuable advertising estate and a willingness to invest in a new telecoms network.
“There is a huge amount that we can do to create commercial space and support commercial space.”
Craig McWilliam, executive director for the London estate at Grosvenor, called on the mayoralty to create “a compelling vision for growth that extends opportunities to all of London’s occupants and residents”.
He suggested this should start in the West End, where there is an established trade-off between growth and amenity, but where there are many districts that could support more development funded by public sector money from fiscal devolution.
Exemplar Properties’ founding director, Dan Van Gelder, praised Khan for seeking to understand “the myths and reality of real estate”, rather than attempting to achieve quick publicity gains.
He said he had met with the mayor to explain the loss of office-to-resi in Westminster over the last cycle, and Khan appeared to “really want to understand what London needed”.
However, he said the mayor needed to maintain Boris Johnson’s track record of standing up to local authorities and combat “nimbyism”.
Indeed, the mayor has been in listening mode since his election.
He will need to take some strides forward quickly if he is to have a hope of driving real change.
