The property development game
In its recently published briefing paper entitled “Brexit: implications for the housing market and construction industry”, the House of Commons concluded that the UK’s decision to leave the European Union will have a ‘wide ranging impact’ on the house building sector.
No surprises there, you might think. Yet, in the midst of the report’s somewhat obvious conclusion, there lies a very important message that housing sector commentators have seldom focused on since the Brexit vote: that is, the importance of consumer and sector confidence or, more colloquially put perhaps, the importance of playing the long game.
In an era of political uncertainty, but wide ranging and far reaching technological advances, the notion of playing the long game is more important than ever. Surely now is the time to think ahead, to ‘get good’ at embracing what’s positive and, hopefully, eradicate practices and policies which have cost the industry, and the country, billions over the last few decades. After all, we need at least 300,000 new homes a year if we are to solve the housing crisis.
But is the industry playing the long game?
The positive signs
There’s no denying that with geopolitics giving rise to ever increasing fluctuations in the stock markets (with rippling effects), official figures in every industry are subject to somewhat erratic movements.
However, as well as net supply of housing rising by more than 10% over the past year, recent Markit/CIPS figures showed a clear upturn in business activity in the month of September across the UK construction sector, ending four long months of sustained decline.
So although undercurrents of caution still abound, improved confidence among buyers is giving rise to a more positive mood, boosted by indications from the construction sector of a further recovery in business expectations for the next 12 months.
Undoubtedly, these signs are positive. Are there other (perhaps more tangible) indications that the industry is (really) playing the long game?
New technology, new opportunities
Set to disrupt the property industry as we have come to know it, the smart buildings sector has unlocked new revenue streams for all involved. In fact, the integration of technology and interconnected systems which support the use of the accommodation by the building’s users is increasing and, in the medium term, is set to boom.
With London being crowned top city in Europe to start a tech business (European Digital City Index) and many players in the market expecting serious financial gains from smart building technology over the next 10 years, these advances could give the industry the boost it needs.
There are technologies, however, which have the capability of acting as an innovatory force in the more immediate term, with many even giving rise to a change in business models.
Building information modelling (“BIM”), which integrates new technologies (such as virtual reality) with cross-team information management, is such an example.
When, on average, 25% or more of total construction budgets is being spent on correcting errors not visible at the design stage, it isn’t hard to imagine why forward thinking developers, architects and other players in the market are increasingly making use of this collaborative (and deep changing) way of working, to find efficiencies and increase the chances of projects being delivered on time/budget.
Some of the country’s biggest contractors are even using it as an aid to migrating towards build + asset management models (among others), in the hope of finding more effective ways of future proofing their business, with very positive and encouraging results so far.
However with new opportunities come new challenges, not least legal ones. With carefully considered, and orchestrated, project structures becoming more important than ever, can these efficiencies and positivity be replicated across the board?
The rules of the long game
Investments in new technology will help the industry become better integrated, with collaborative working practices across fields such as construction, engineering, robotics, green energy and computing (among many others) set to become the new norm. Inevitably (and positively), this willingness to change and improve the way we ultimately deliver buildings is being felt as a boost of confidence in the industry’s future.
The only problem is ‘change’, though positive and necessary as it is in the fast pace world we live in, isn’t easy to implement. The reality is that technological advances bring about new challenges, even legal ones. The good news is there are two ways of making the process easier.
Simple as it might be, the first is to remain at the forefront of your competition by at least considering change. Sometimes that’s all it takes, until the right thing comes along. Another is to learn to play the game to the best of your abilities, by surrounding yourself with forward thinking advisers who understand the intricacies of what the game involves and, most importantly, its rules.