REGIONAL URBAN REGENERATION
In our experience, large and complex development projects offer greater profit potential than smaller ones, without necessarily increasing significantly the inherent risk profile. Due to our track record, we also have an important element of competitive advantage when seeking large-scale projects.
Following our success at PaddingtonCentral, we have continued to seek out projects that involve significant regeneration. Not only does urban regeneration offer those direct stakeholders in the property itself a significant reward for the risks and complexities undertaken, it also benefits those communities adjacent to these developments and the people working within them. Previously undervalued, it is often the case that not only do rental levels rise, but investment yields will often also improve, reflecting the perceived improved status of the location.
Whilst our track record in large-scale projects continues to expand, significant scale brings with it a requirement for an extended vision of the character and environment of the development to be created and with it, invariably, a considerable amount of construction and legal complexity. These factors represent significant barriers to entry for competing developers.
It is, of course, not just in London where regeneration activity is needed and, over the last few years, we have secured similar schemes in provincial cities and towns. The Heart of Slough project entails circa 350,000 sq. ft. of prime office accommodation alongside a much larger residential component. In 2006, we acquired an 11-acre site adjacent to central Birmingham which will ultimately contain over one million sq. ft. of mixed-use accommodation.
As our track record shows, we are not limited to any geographical area in the UK, but we will tend to focus on the major conurbations where large-scale urban regeneration projects are sourced.
Land outside the capital city tends to be more affordable, thus reducing specific asset risk and competition to acquire these projects is often less intense than that experienced in London. Regional regeneration not only diversifies risk geographically it also, by its often mixed-use nature, diversifies risk across different market sectors.
