Philip Hammond’s Budget brought back into sharp focus in London the drive to capture the increases in land value which result from transport investment at a local level devolving new powers to the GLA and London boroughs, writes Simon Burnett, director – development at Deloitte Real Estate.
This is a hugely positive step and one which will no doubt attract questions and discussion in Cannes. The timing of this trial will be a particularly hot topic in the current market and caution will need to be exercised in selecting the project so as not to stifle the very development upon which the value will be created.
More specifically, TfL has been asked to bring forward proposals for financing infrastructure projects from land value uplift. A recent study undertaken by TfL suggests that eight prospective TfL projects which cost around £36bn (including Crossrail 2, Bakerloo line extension and the DLR extension) could produce land value uplifts of about £87bn.
This figure illustrates the potential size of the prize and the study suggests that the package of reforms relating to land value capture (including new mechanisms, plus increased CIL, DRAM, SDLT and business rates) could potentially generate £29bn-£44bn towards the financing of the projects.
MIPIM should also provide a chance to celebrate some of the recent successes.
Graeme Craig from TfL will discuss at MIPIM how the Property Partnerships Framework has been used to speed up development around existing transport hubs and generate future revenue streams to reinvest in the system. Earlier in the month TfL announced a consortium of U&I and Notting Hill Housing as the preferred bidder for a site next to Kidbrooke station in south-east London. The scheme will deliver 400 residential units and 50% affordable housing and is the first of many TfL sites which both unlocks additional value and delivers wider benefits such as housing and jobs.
MIPIM provides the forum for further discussion on these success stories and how future investment in transport can be used to unlock development value and intensification of land use.