How regeneration can beat the property slump Chris Brown, CX Igloo, Regeneration & Renewal, 8 February 2008

If falling commercial property values and a decline in house prices signal a development crisis after a decade of growth, what are the implications for regeneration? How should regeneration adapt over the economic cycle?

While some research has shown development returns can be as high as elsewhere in regeneration areas, many of the buy-to-let properties which have lost most value are located in inner city areas and generate a negative image of potential. Residential schemes are being shelved around the country, especially in the most deprived inner city communities.

Development land values have not subsided to below existing use values because speculative land owners cannot yet bring themselves to sell at prices that crystallise their losses.

Because the past 15 years have been the easiest ever for the development sector a generation is unaware that physical regeneration in deprived areas used to require public subsidy. (e.g. City Challenge, City grants).

Chris Brown, a notably successful inner city developer, identifies five actions that public regeneration agencies and local authorities should be doing in these changed market conditions;

1. Buy land at bargain basement prices

2. Innovate financially (e.g. using Community Infrastructure Levy, Supplementary Business Rates, S106, and Local asset-Backed Vehicles)

3. Write off land values in the short term but negotiate long term overage shares with private investors

4. Insist on design and environmental quality

5. Learn from past mistakes

See: Chris Brown CX Igloo