Damian Mitchell, Director at Causeway Asset Management, recently attended the fifth BRE “Frameworks to build a better Britain” roundtable. The event comprised a range of in-depth interviews with planners, architects, policy-makers, and construction experts discussing “The construction needs for Northern Ireland now and in a Post-Brexit world?”
The article below was published by the BRE Group and the original piece can be found on their website here.
Since the Good Friday Agreement of 1998 and an end to The Troubles – Northern Ireland’s economy has edged forward. The centres of Belfast and Londonderry are buzzing with a new ‘cappuccino culture’ and appear, in some ways, barely recognisable from the bad old days.
The majority of growth since has been thanks to EU funding. The North received almost £2.5bn in the last EU handout round and a further £2bn had been promised before 2020. In October 2018 the Chancellor Phillip Hammond found £350 million for the Belfast region in his City Deal.
The economy, and therefore its built environment’s future, remains fragile. The proportion of the population employed by the state is the highest in the British Isles: 27.6% work in the public sector compared to 25.2% in Wales and 16.2% in South East England. Levels of entrepreneurialism are low – Northern Ireland has the second lowest business birth rate of all the UK regions. In addition, there is currently no devolved government since the Stormont system collapsed two years ago.
Since the Good Friday Agreement of 1998 and an end to The Troubles – Northern Ireland’s economy has edged forward. The centres of Belfast and Londonderry are buzzing with a new ‘cappuccino culture’ and appear, in some ways, barely recognisable from the bad old days.
Nevertheless, Northern Ireland and Belfast in particular has the sense of possibility and potential. It has an energy and hunger which is palpable. The Titanic Experience, completed in 2012 at a cost of more than £100m and hard by the famous cranes of the Harland & Wolff shipyard, is a real gem. Part-museum, part-ocean-going-liner theme park, it has won awards from all over the world and is well worth the £17.50 ticket price. More buildings from Northern Ireland have appeared on the TV show “Grand Designs” than any other part of the UK.
This was the fifth in the series of UK-wide roundtable discussions instigated by BRE. One notable factor made this roundtable different. In most of the cities visited before, they are grappling with having too many people to house and move around the infrastructure – this is especially the case in London, Manchester and Edinburgh.
In Belfast the reverse is the case. The city has an active plan to attract 66,000 new city centre residents by 2035 – this would require 33,000 new residential homes and bring the population to around 400,000, roughly the population number when the Titanic was built in 1912. Northern Ireland has had a serious challenge retaining its talent especially during the years of The Troubles. The great success of the city since the Good Friday Agreement is palpable but more people and therefore economic activity is needed.
The discussion was opened by Cathy Reynolds, the Director of City Regeneration and Development for Belfast City Council. “We’re now in the top ten for mid and smaller sized cities for economic potential, human capital, lifestyle and cost effectiveness,” she said. “When you look at labour cost and our office rents being about half what they are in Dublin and a third of those in London, Belfast is a very attractive proposition for occupiers, developers and investors”. A recent large Belfast delegation to the MIPIM annual event in Cannes was very well received.
David Gavaghan of Aurora Prime Real Estate agreed it’s “more a numbers game”. “We are looking to raise an equity fund for Grade A office space initially focussing in Belfast but potentially extending investment to two or three other locations within Northern Ireland. Unfortunately, the outcome of Brexit still remains an issue for institutional investors but we are making progress. I have also been working closely with Arup on how to improve the rail journey time from Belfast to Dublin, potentially to 60 minutes. This modest speed for the 100 miles distance starts to equate to historical rail journey times seen in Britain since the 1970s. Currently, it takes 130 minutes, which is slower than any other train journey time between two principal cities in Europe”.
“From the Foreign Direct Investment perspective – in the most recent update by fDi Intelligence – of the top 25 Global Cities of the Future, Belfast was listed for the first time – at 14th! There were only two other cities on the two islands in the top 25: London (2nd) and Dublin (3rd). So, Belfast is now officially identified as one of two Global Cities on the island of Ireland! What a fantastic backdrop for everything that we need to do. We’ve got common purpose in terms of trying to bring together both jurisdictions. By doing this, we will create along the eastern corridor critical mass on a global scale as the island’s population continues to grow to 8m people (estimated to occur in the 2030s).
“I think the biggest opportunity is to persuade more people to come and live here. My wife runs a small Thai restaurant in Belfast – we went through some difficult times in a previous incarnation – a large part of the problem was a numbers game. A couple days ago I was chatting to a major entrepreneur thinking of opening three or four more restaurants (not in Belfast!), but without more population I think you’re just eating somebody else’s meal. So, it’s fundamental that we attract more people to Belfast City Centre in particular and the region as a whole. And that is not a dream – it will happen”.
There are two major obstacles to further advancement – Brexit and the two-year lack of a devolved government which emerged repeatedly as hurdles that Northern Ireland needs to cross. The question of public vs private soon came up. Joan McCoy is the founding director of White Ink architects and President of the Royal Society of Ulster Architects. “We can’t leave the responsibility in the hands of the private sector because housing is so important to the people of Northern Ireland and everywhere.
“I think what is really key is quality” said Joan. “Our concern in RSUA is that in Northern Ireland in the past we’ve been so desperate for development that we’ve accepted anything. Now we have a real opportunity to accept really good development, particularly in housing. I worry that as an architect who works in Northern Ireland and in GB that the demands made of designers in GB are much higher than those by our statutory bodies – the quality of lighting, the quality of space, open space, the public spaces. The demands in Northern Ireland are still low compared to London and I really want to see the people who are in charge of approving these things lifting that quality and saying, ‘We want better, because we deserve better’”.
Northern Ireland’s geographical situation was highlighted by one panel member. “We’re an island off an island off the mainland. We have a serious skills shortage and Brexit is only going to make that worse – we must attract talent here because our time really is now. Tourists are coming here in droves and say ‘this place is incredible’ and people are switched on. Our bars still close far too early, though”.
Damian Mitchell, property director at Causeway Asset Management reminded the panel how hard pound, shillings and pence were still front and centre of many discussions and decisions. “I’m a great believer that sometimes to look forward you have to look back. We’ve come an awful long way. But it does come down to costs, no matter what we’re trying to do. Ultimately better buildings cost more money. You have to be able to have an occupier that can pay the rent or an end buyer that can justify that price. Our universities have done a terrific job training graduates so the tech sector and legal services are coming in. We’ve stopped the brain drain. So, we have positioned ourselves very well to attract inward investment, which then helps to increase demand for space, for better quality space, and helps the likes of us go out and source income, source financial support to develop those buildings that’s required that wasn’t here before. That is where we need to consistently raise the bar”.
“Brexit is having an impact. Local government not being in place is also having an impact on confidence. But we are very resilient here and we have always had to be, and that is what’s carrying people continually through at this time. However, look at the cranes building student residential – and we can do a lot more with resi – and all this without a local government in place, with the uncertainty around Brexit. What could we do without those factors?”.
Joanna Robinson property partner from Pinsent Masons highlighted a potential skewing of the market saying, “We know the expectations and living habits of millennials is driving change in the property market and build-to-rent is ideally placed to meet those needs. However, if Belfast is to learn the lessons of other markets, avoid overheating and achieve sustainable growth, we must balance this with a parallel focus on affordable public sector housing”.
Paul Johnston leads Arup Belfast, an office that is home to a hundred engineering, specialist technical and digital staff. Johnston has extensive experience of delivering built environment projects in Northern Ireland: “When we assess our people and potential recruits we are thinking about how to match skills to our clients’ current and future needs. We look at two things: at potential and at performance. There is no doubt that Belfast sits in the ‘very high’ category in terms of potential, but when we consider performance it depends on the area you focus on. I’m sorry to say that if we’re considering quality of design and construction – as well as the processes and outputs we use in Northern Ireland to progress from an initial idea to a completed development – the performance bit is definitely in the ‘could do an awful lot better’ category. We need to map the gaps between performance in Northern Ireland and other geographies and create an effective plan to catch up”.
“People talk about quality but generally don’t mention fees. There is a link between the two! If you were to ask me the biggest problem facing Arup in Northern Ireland, it’s the low fees that clients are willing to agree for the planning, designing and delivering of projects. The recession drove fees through the floor, and we are still bobbing along at the bottom. At the same time, technology is changing things and clients have much higher expectations. To keep up we need to invest – and thankfully Arup is ahead of the game in investing for digitalisation. We are able to deliver better quality more quickly and cheaply than in the past. Still, clients cannot expect a 21st century solution at recession prices”.
Brian Lavery from CBRE appreciated the resilience of the population but said problems remained. “In a normalised market you would have speculative development. We are not at the point where developers sitting around this table who are sitting on a site here of 200 acres which is ready to go for Build To Rent are actually going forward. The margins aren’t quite working. We have to get some government intervention – rates free for a couple of years or some other incentive – to make sure at least one of those schemes comes through and if it works we will see the quality you can get. Exactly the same as happened in the office market. If the quality comes and you get the rentals up then it works”.
A period of freedom from rates and a special low corporation tax rate of 12.5% for Northern Ireland to stimulate growth were suggested by several panels members. The challenge remains that for the Northern Ireland government cash is already overdrawn and there are, as one contributor noted, “far too many asks”. The tendency of the public sector to drive down costs in the procurement process leads back to the old contradiction when quality is considered.
The youngest panel member was Stuart Anderson, a lawyer and associate at Carson McDowell. “I trained as a lawyer in Dublin and was gone for twelve years” he stated. “Then I moved home because my first child was born. Life became simpler, easier, more cost effective, closer to family. However, had the family tie not been there I don’t know that necessarily I would have made that move”.
“Whenever you come back you are reminded this is still a very divided place and I think sometimes we can lose focus on that. And Brexit exposed those fault lines maybe in a way it hasn’t before. When we sit down with clients there are frustrations borne of uncertainty. There’s an opportunity right now to do something and gain from what’s distinctive about Northern Ireland. But we need to ensure that business growth doesn’t simply benefit the middle classes and those who are up the socio-economic chain. It won’t address the divisions if it does”.
Gerry Millar, director of Property and Projects at Belfast City Council agreed: “Quality is the only issue that lasts the pace. Where we can ensure its foremost people try and push that in terms of any construction we do. We have to think about place shaping as a long-term concern. What we do is about the people primarily, rather than buildings. We shape the buildings but the buildings shape the people, as Churchill said. That whole quality argument needs to be pushed harder all the time. And it’s not easy – there are so many asks. We’ve spoken a lot about new, high profile glitzy buildings but most of our buildings are already here, there’s people already living in them, and large parts of this city, like Manchester and Birmingham are grim. We can’t forget about that”.
Niall Trafford, the outgoing CEO of BRE Group, agreed that “we can’t afford to be distracted by such things as Brexit when there is so much to be achieved in improving the quality, experience and ensuring the safety of the built environment.
“At BRE we started this National conversation after Grenfell and all the critical questions it posed. We wanted to challenge and understand better what was going on and to hear from professionals throughout the country, not just in London.”
“Is Sustainability now just a hygiene factor rather than a differentiator? If it is, what are the stretching built environment ambitions to aim for?
Are wellbeing and comfort built on a strong and trusted foundation of quality, safety and consistency? If it is then why is it not being routinely achieved? The biggest tension of all that we have encountered is the one between a desire for quality and the drive on cost. The balance to be achieved cannot be a compromise because with that compromise comes too great a risk. Failure on this can’t be an option so innovation and skills as ever become a driver for change and always combined with a real focus on quality and safety”.