Sector Spotlight: Property

Bristol is booming – the winner of multiple accolades as the best place to live, with high demand for property and prices to match.

But scratch beneath the surface and things get a bit murkier, as the city faces an increasing lack of usable office space, rent hikes, a severe housing crisis and people being priced out altogether.

As demand continues to outstrip supply, the residential property market is expected to grow steadily throughout 2018.

While the sector flourishes in a city awash with JCBs, shiny new builds and gentrification, it also has a juggling act to balance the drive for profit with sustainability, skills shortages and an urgent need to address the affordable housing crisis.

“Bristol is one of the top six UK cities, with an estimated 80 people a week moving here from London,” said Tim Davies, head of global property specialist at Colliers International‘s Bristol office.

“Both residential and commercial development in Bristol will inevitably continue to accelerate as more people and businesses choose to locate here.

Property prices around the Clifton Suspension Bridge are some of the highest in Bristol

“Our experience has been that developers are rewarded when they are prepared to push the button and build in Bristol.”

James Petherick, director of residential development at property consultancy JLL in Bristol agrees that the city remains a highly attractive place to live, work and invest in.

“We have seen many residential schemes brought forward over the last few years, fuelled by a change in planning laws that allow the conversion of office buildings for residential use, and increasing prices that have allowed major schemes to be brought forward,” he said.

“However, demand still outstrips supply. We need to build more to satisfy demand for both private and affordable housing.

“Whilst house price rises will be at a slower rate than we have seen in the past few years, we predict that the demand for residential will see redevelopment in parts of the city that have previously been ignored, as demonstrated by the amount of development activity in Hengrove at present.”

With people increasingly being priced out of their communities, in a city fraught with economic disparity and conflicting needs, the sector has a responsibility to find sustainable solutions.

“Planning remains a challenge in Bristol, but the key issue is that demand for housing outstrips supply, which brings both benefits and challenges,” said Hannah Pollard, sales director of Redrow South West, a developer with three current residential developments in Bristol.

“It’s vital that development is carried out in a sustainable way that builds or enhances communities in the city, which is why we focus on creating developments that have plenty of green space, play areas, good transport links and amenities.”

She added that demand is still focused around certain key areas, such as Bedminster, but the city’s popularity means residential developers are more willing to invest, safe in the knowledge the homes will sell.

The build-to-rent sector is particularly strong at the moment, as Bristol continues to attract buyers from around the world, according to Gavin Bridge, director at Cubex, the developer behind Finzels Reach.

Finzels Reach. Photo by George Phillips

Despite widespread confidence, the majority of developments still fall well short of the council’s required 40 percent quota of affordable housing, demonstrating a lack of collective will to make a difference.

There are however companies in Bristol bucking the trend and proving that pioneering, sustainable solutions can also bring economic benefit.

“In a world where affordable housing has become the oxymoron of our time and the property ladder has no rungs for people on low and intermediate income, we need new models of housing delivery,” Craig White, founder of White Design, told Bristol24/7.

His company, in conjunction with Knowle West Media Centre, launched We Can Make, an initiative that puts home-building in the hands of the community, creating jobs and skills opportunities, rather than imposing speculative developments on areas earmarked for ‘regeneration’.

Rachel Clarke and Melissa Mean of Knowle West Media Centre and Craig White at the first We Can Make home in Knowle West

The partnership has identified more than 1,500 microsites in Knowle West that could accommodate one and two bedroom homes. It is working with Bristol City Council to deliver up to 350 affordable homes from early 2018.

The first home of its kind, built in the summer of 2017, is made from, low-carbon straw and timber materials, is triple glazed, energy efficient and affordable.

White adds that in order to meet demand, the UK will have to double the supply of housing from just 150,000 in 2017 to 300,000, year-on-year, arguing that this cannot be met by the business-as-usual housing industry.

The architects behind Wapping Wharf and the proposed Redcliffe Wharf, Alec French – in collaboration with United Communities Housing Association and homeless charity 1625 Independent People – has jumped on the shipping container bandwagon to create quick, affordable homes.

Aardman building, designed by Alec French Architects

“The ‘technology’ of using shipping containers is not pioneering in itself, but the aim to create active communities is,” explains director of Alec French, Nigel Dyke.

He is positive about the impetus to create innovative solutions to the housing crisis, but on the property sector as a whole in Bristol, he is less confident than some.

“There are some large schemes being developed, such as the new Bristol University campus, Filton Airfield and the expansion of Broadmead, but to me it all feels a bit frantic and a little fragile and uncertain,” says Dyke.

“Almost as if all this activity is happening despite some serious underlying challenges both political and economic, as well as a serious skill shortage.

“I would suggest that as far as Bristol is concerned at present, the more interesting aspects of the property sector are less about design and technology and more about how it can address issues such as affordability, workplace wellbeing and the creation of better communities and urban spaces.”

Housing may be top of the political agenda, but at a business level, there is growing concern about the lack of affordable office space.

Bristol has seen nearly one and a half million square feet of office space converted into residential property since 2013, when the Government relaxed planning laws, representing the highest rate outside of London, according to the British Council for Offices South West Chapter.

Wapping Wharf. Photo by George Phillips

“It is clear more housing is needed in Bristol, especially affordable housing, so the conversion of some older buildings which are no longer suitable as offices is sensible. However, once office space is lost to residential, it is often lost for good,” said the council’s chairman, Andrew Heath.

“While this may be good news for house buyers, it has led to a shortage of commercial space in the city, pushing up rents for businesses.”

In Bristol city centre, some Grade B office rents have increased from £12 to £28 per sq ft in the last two years and with the lack of Grade A space or future development, prime rents are now £32.50 per sq ft and due to rise to £35 per sq ft in 2018.

Heath says the knock-on effect is that many Bristol businesses will not have access to office space of the right quality to succeed and drive growth.

Jonathan Brecknell, founder of Bristol-based developer Urban Creation, argues the conversion of old office buildings into residential has mopped up relatively poor commercial space and created more badly-needed homes.

“This, in turn, has helped stimulate the office market again,” he said. “But there’s a careful balancing act required to make sure both sectors thrive, if we’re to continue to grow our economy.”

He added: “Addressing key issues, such as delivering the arena and sorting out the area around Temple Meads will help create more confidence and further grow Bristol’s reputation.

“The main challenges are in terms of delivery, rather than market demand. Planning hurdles, shortage of skilled construction workers and the cost of materials are all adding to the rising cost of development, but we have confidence in the opportunities ahead.”

Cask Store interior, Finzels Reach

As a developer behind a number of students housing in the city, he is quick to emphasise the huge contributors both universities make to the city’s economy.

But the fact remains that the ever-growing amount of student accommodation is exacerbating the city’s housing crisis and calls to mitigate against the effects of this have gained cross-party support.

Paul Smith, the council’s cabinet member for housing cabinet member has described student homes as a ‘get out of jail free card’ for developers, because of the lack of affordable housing requirement.

Reflecting on the sector as a whole, he said: “We made a commitment to build 2,000 homes a year by 2020. It’s looking like it will be more.

“The challenge for us is how we can make better use of the land. We are always going to be interested in good quality development, it’s also getting the balance right between public amenity spaces, so we do not create a concrete jungle.”

Read more: ‘Office rents to rise to highest levels ever’