Week commencing 23 January 2017

In today's bulletin

• Brexit uncertainty hits confidence of real estate businesses
• Build on car parks to help solve the housing crisis

• National Infrastructure Commission relaunched as Treasury agency
• £28 million funding boost for energy innovation

Property, Planning and Regeneration

Brexit uncertainty hits confidence of real estate businesses

Unknown factors in the UK’s negotiations to leave the European Union have led to a huge drop in confidence about Britain’s economic prospects, the British Property Federation (BPF) has claimed. Announcing the findings of a
survey of leading property firms, conducted with Grosvenor Britain & Ireland and published on 24 January, the BPF revealed that 87 per cent of those polled identified this as the foremost challenge facing the industry.

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London’s estate regeneration requires a rethink

London is “systematically failing” to achieve the required level of housebuilding to address its shortfall of supply, argues a critical report from London First, Winckworth Sherwood and Terence O’Rourke. Launched on 24 January, Estate regeneration: More and better homes for London points to three priorities for a revised approach to try and address this problem: proper
and meaningful community engagement; providing a deal which suits residents as well as a developer; and establishing an efficient framework for the regeneration process. The report also argues that these must be complemented by increased support from public policy.

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Demand for London office and retail space continues to fall

The capital was the only area of the UK where occupier demand fell during Q4, continuing its downward trend for its third quarter, according to the Royal Institution of Chartered Surveyors (RICS). Published on 25 January, the RICS UK Commercial Property Market Survey: Q4 2016 highlighted that over 50 per cent of respondents in Central London, Northern Ireland and Scotland believe
businesses will choose to move at least some part of their activity away from Britain as a result of the country’s decision to leave the EU. Despite this concern, demand from overseas buyers was up across all areas of the market with the weaker exchange rate identified as an important factor.

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Build on car parks to help solve the housing crisis

Developing city centre car parks could provide new homes for up to one million people without an overall loss in parking spaces, according to research by real estate advisory firm JLL. Car Parks to Residential: Driving Innovation, published on 24 January, identifies 10,500 car parks in town centres
across the UK – more than half of which are already owned by local authorities – that could accommodate around 400,000 new homes. The report also identifies four case studies which re-provided many of the original public parking spaces, ensuring there was no net loss in provision.

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National Infrastructure Commission relaunched as Treasury agency

The National Infrastructure Commission (NIC) was made an executive agency of the Treasury on 24 January. A framework document has been published alongside a corporate plan for the commission chaired by Lord Adonis. This follows Chancellor of the Exchequer, the Rt Hon Phillip Hammond MP’s
announcement in October that the NIC would be made an executive agency with budget, freedom and autonomy. The corporate plan aims to support economic growth in the UK by examining the challenges the industry is facing and offering recommendations on how to best deal with them.

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£64 million boost for walk and cycle to work schemes

The government will invest £64 million to encourage more people to walk or cycle to work as part of a wider government aim to make cycling an everyday activity by 2040. Announced on 26 January by the Under Secretary of State for Transport Andrew Jones MP, the money will fund local projects
between 2017 and 2020, including road awareness training for cyclists, secure cycle storage and bike repair courses. It is argued that the funding could help to reduce car journeys by 95 million miles and increase the number of walking trips by 99,000 per day.

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Energy and environment

£28 million funding boost for energy innovation

An additional £28 million has been committed to energy innovation projects as part of the government’s Industrial Strategy. Announced on 25 January, the investment is intended to bring down energy costs by helping to create an infrastructure system fit for the 21st century and supporting UK companies
at the forefront of developing low carbon growth solutions. Smart systems, industrial energy reduction and offshore wind will be just some of the areas to receive a funding boost.

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Offshore wind set to become best-value source of low carbon energy

Offshore wind is on course to become the lowest-cost source of large-scale clean energy having achieved a UK government and industry target of £100 per megawatt hour (MWh) four years ahead of schedule. A new report from the Offshore Wind Programme, published on 24 January, suggests the
cost of energy from offshore wind has fallen by 32 per cent since 2012. The report also suggests high levels of industry confidence in continued rapid cost reduction to below the levels set by any other low-carbon energy source on the same scale.

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15 per cent increase in capacity of UK wind industry in 2016

1,558 megawatts (MW) of new offshore wind farm capacity was delivered across Europe in 2016 and the industry achieved cumulative capacity of 12,631 MW, according to a new report from WindEurope. The industry body reports that investment in offshore wind is up by 40 per cent year-on-year
and that, with a record €18.2 billion of new wind farms planned in the coming years, output is set to grow by an additional 4.9 GW. The UK provided 56 MW of new capacity in 2016 and is expected to provide half of the planned growth.

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Other News

PM unveils industrial strategy green paper

A green paper setting out proposals for a new industrial strategy was unveiled by the Prime Minister, the Rt Hon Theresa May MP, on 23 January. The paper includes plans for investment in research and development, infrastructure and
skills, as well as so-called ‘sector deals’ which will see businesses working with the government to address common challenges.

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Slow growth predicted for the UK in years to come

“Relatively slow growth” will define the UK economy over the next three years as trade becomes crucial to the UK outlook, according to the non-governmental economic body the EY Item Club. Their 2017 winter statement, published on 23 January, predicts that higher inflation and a weaker pound is set to cause lower GDP growth of 1.3 per cent and 1 per cent in the years 2017 and 2018. However, the report welcomed Prime Minister Theresa May’s
recent Brexit speech, which has “brought greater clarity on the shape of the UK’s exit from the EU” and stated that such an approach will have a “major impact” on the UK’s economic performance over the next decade. Nevertheless, the report confirmed the orthodox view that performance and growth in the years beyond Brexit will depend critically on the type of post-EU deal struck by the UK.

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