Jo Sutherland is Managing Director of Magenta Associates
Last month, 7,000 government representatives, investors, funders, developers, housebuilders and construction leaders descended on Leeds city center for the UK Property Infrastructure and Investment Forum, affectionately known as UKREiiF. Following last year’s debut, the 2023 edition focused on how real estate can better connect people, places and businesses to accelerate and unlock sustainable, inclusive and transformative investments.
“The forum focused on the barriers and enablers when it comes to the role of construction in protecting people and the planet”
The forum focused on the barriers and enablers when it comes to the role of construction in protecting people and the planet. The talks, according to the collective admission of the panellists, were supposed to be less “wasting” and more encouraging, but this has not quite materialized, no doubt due to the large number of challenges facing the sector , such as inflation, the skills gap, political instability, the net zero challenge, diversity, equity and inclusion (or the lack thereof) and supply chain agility (or the lack of this).
But with challenges come opportunities…
state of the nation
Take the UK building stock. Many buildings are not fit for purpose or are inefficient. There is – or soon will be – too much impossible space. But here is an opportunity for those with the will and vision (and money) to reconfigure these buildings.
During a session that explored how the built environment sector can meet the challenge of improving the cost of living for UK citizens in the short term, while committing billions of pounds to deliver sustainable buildings and infrastructure for on long-term self-reliance, the panelists reminded delegates that the UK housing stock is responsible for 30 per cent of all carbon emissions, 25 per cent of the housing stock is substandard and the 12 percent is unfit for human habitation.
The new regulations will help rectify that, said IMMO Capital’s Samantha Kempe. But regulatory frameworks take time to finalize, let alone deliver results, and there is a much more pressing need to raise EPC and living standards, he argued. But, as one panelist questioned, what incentive do owners have, especially those who don’t care, don’t know how to do it, or don’t think they’ll make a return, given interest rates?
Add the supply chain pickle. The supply chain needed to fund “unicorn projects” based on “vanity metrics” such as the supply of air source heat pumps is not in place and will not be in place for years to come. This is not an excuse to wait. “Instead of waiting for the supply chain to unlock, work on smaller, continuous improvements that won’t necessarily bring you glory, but will make a difference to the quality of the UK’s building stock,” he urged Kempe.
Zero net bill payment
Throughout the three-day event, environment, social and governance were repeatedly crowned as a value driver rather than a cost center, but there is a caveat. This will only be the case if the industry adopts a “collaboration, not competition” mindset.
The public and private sectors must come together. Following one of many discussions on the topic, consultant and interior designer Clare Danahay commented: “The carbon cost of any project, from new build to fit-out, must become a key metric and priority for all projects, built into the same measure as financial cost.”
This line of thinking certainly captured the general attitude of UKREiiF.
The amendment was hailed as one of the ways forward, along with green leases working together with qualitative, quantitative and honest metrics. Good idea. But renovation is not cheap. And green leases are the first to be broken in negotiations. So who will pay? Net zero costs money. We have to find ways to finance it.
Subsidies and subsidies should be introduced to encourage modernization, a range of speakers argued. Take Germany as an example. Germany has a more mature residential market than the UK. The government has invested 5 billion euros in modernizing projects, but it is rumored to increase this to 100 billion euros, which will move the needle on this movement.
Interestingly, this is administered through Germany’s banking network, reducing the administration involved in starting from scratch, and interest rates are 1 percent or less. “This is the kind of incentive we need to incentivize institutions to take on large modernization projects,” Kempe argued.
Dark data
There is a question mark over how to meet the needs of this generation without compromising future generations, all with limited resources, cash and guidance. In the “future versus now” debate, there is clearly a knowledge gap when it comes to understanding how to use and leverage the potential of technology and data, or rather the vision that goes with it.
What exactly does this mean for construction, a profession that isn’t always ahead of the technology curve? Well, it means that the industry needs to start using the 90% more “dark data” (data that is inaccessible or lost) to drive more effective decisions and streamline processes, which in turn will deliver more value for less time and money . “The future of construction is digital,” said Giulia Papi, Data Intelligence Manager at innDex.
Not to labor the point
Construction needs to understand the fragility of the labor market and focus on education and upgrading career-changing skills as well as younger new entrants into the workforce. We need to tap into the talent of underrepresented communities, such as the ex-offender community. “There is a lot of talent in prison,” commented Bola Abisogun OBE, Digital Director of BIM Academy. “More funding in education and skills is essential.”
It is also necessary to innovate in legislation. One of the panelists suggested that we look around the world to gather examples of countries that are doing this in new, innovative and effective ways, and reflect their approach in our own laws and regulations.
“The climate crisis is real,” said Anne Daw, head of MMC Delivery at HLM Architects. “We’re not just on the edge of a cliff, we’re about to dive off it. If we keep building the way we’re building, these buildings will have to be renovated within the next seven years.”
final word
The fact is, we have a lot of houses to build and we’re not doing it fast enough. We’re not doing it fast enough because we don’t have enough people at our disposal. Add to that changing building regulations and the urgent need to build homes that won’t need to be renovated in 10 years, and there’s a real challenge at stake. To meet this challenge, there needs to be more involvement with the supply chain as soon as possible, along with more collaboration and standardization to ensure that the buildings we’re building today don’t need even more investment (which isn’t available) in even if it is many years.
“There are more questions than answers in real estate,” Jessica Middleton-Pure of React News aptly mused during a session titled “Real Estate Is Fixed.” It’s about time it broke.’ But one thing is clear. The call for the government to clarify its industrial strategy is getting louder because, as many speakers said, it underpins everything else.
“We need to be realistic about the extent of the feasibility conundrum,” commented Tom Stannard, CE of Salford City Council, during a session to understand how construction projects will be delivered in the future. “The UK needs an industrial strategy to drive everything from renewable and cleaner energy to the modernization prerogative. We need clarity on this before the industry can move forward,” he concluded.
The good news is that there will be plenty of opportunities as this begins to take shape.
