The year in review from Nicholas Belkin, our Head of Acquisitions.
The late great David Bowie sang about the frequent change of the world in his song ‘Changes’. His passing was very sad news and for many people, not just his fans, the refrain “ch-ch-ch-ch-changes, turn and face the strange” basically sums up 2016. It’s certainly been a strange year of change – from Brexit to Donald Trump’s victory and everything which happened in between.
One of the first big surprises of the year was a sporting one with Leicester City winning the Premier League in May. Only a few months prior that, also in Leicester, Delph kicked off a trio of stellar deals. First we acquired 93 residential units on (Chatham Street) in Leicester city centre before moving onto Liverpool (Orleans House) and then Manchester (The Hallmark).
Another highlight for us was the roaring success of our luxury waterfront Bedford scheme, Merchant Square. The development has posted a fantastic set of results – ending the year with 70% sold.
Obviously 2016 will be remembered for the EU referendum. The debate in the lead-up produced claims that we would be faced with 18% wiped off house prices and we would be plunged into a year-long recession. Despite none of this being true, uncertainty remains as to what form Brexit will take and what this will ultimately mean for the country.
The result hasn’t fundamentally changed the housing situation in the UK – we still have a chronic lack of supply that needs to be addressed. This seems baffling when we’ve also heard news more recently that UK construction is at its weakest in four years.
So why aren’t builders building?
Funding is a huge part of the problem. Reports this year have shown that banks no longer see property as a safe investment, with lending dropping by half since 2014. With Delph’s forward funding model, we have been able to offer builders and developers a viable alternative to traditional bank lending.
Also on the political front, new Prime Minister Theresa May signalled support for tackling the housing crisis – including news that her government will take on the thorny issue of landbanking next year.
It was an exciting year for the regions with the economic balance of power shifting – ever so slightly – from London to the north. Throughout 2016, key regional cities continued to return strong housing growth, avoiding the dip seen in London. In November, our whitepaper – Liverpool vs. Manchester Residential Property Trends – found both key Northern Powerhouse cities are thriving, with property prices now higher than pre-recession levels.
We are believers in the potential of the regions and this has been reflected in our investments for a number of years. This year we announced plans to invest £500 million in regional UK housing projects over the next five years. To support this programme, we have hired Emma Keller, our first Business Development Manager in our 68 year history. Emma will help us reach out and partner with even more developers looking to build in the UK’s regions.
2016 has presented many challenges, but the property industry has proved considerably resilient. Looking ahead to 2017 we’re confident Delph has the knowledge, experience and capacity to overcome any challenges the New Year may bring.