• EMEA

Links, Sparks and Rails

By Richard Pickering, Head of Futures Strategy

Concrete progress  Coming back to work after a long summer break can be painful, but be thankful that you’re not David Davis. The man whose job probably defined the phrase ‘poisoned chalice’ was yesterday called upon to give an account of progress towards securing a deal on Brexit. With exit payment talks sequenced ahead of the new trade deal, the desire for ‘concrete progress’ on the former must be palpable. As Davis admits: this could take the full two years on its own. This discussion could of course be circumvented, but as Davis put to Kier Starmer, that would cost £100 billion – would he pay that? With the EU apparently running out the clock, and Davis holding to the (surely sensible) negotiating position that ‘nothing’s agreed until everything is agreed’, one wonders whether trade talks will commence within two years, never mind being concluded within that window.

Devolution deadlock  When power is taken away from an organisation, it has to find a new home. Therefore, as we edge closer to Brexit and wresting back control, positions are being taken across the UK as to where that control and cash will sit. The LGA has published a paper this week calling for an escalation of the devolution process, which would allow powers to be transferred from Brussels directly to local authorities, rather than to Westminster, Holyrood, Stormont or Cardiff Bay. The next planned devolution comes in the form of a new Sheffield City Region; however the scale of this proposal is relevant. Some would prefer a ‘One Yorkshire’ deal cut at a county rather than city level. The experience abroad is that regional authorities tend to house five million people, whereas our proposals in the UK are much smaller – perhaps too small. We should remember that striking a deal with the EU is only one side of the repatriation of powers coin; the other being putting our own regional governance in order.

Raising and raffling  Real estate investment is for wealthy individuals and large funds, right? The high stakes nature of the game, combined with specialist skill requirements and low liquidity has created significant barriers to entry for investment in large scale development projects. Disruption, in the form of crowdfunding, at first brings opportunities for those of lesser means to invest directly in projects. However, the longer term prize for the industry must come in the form of greater liquidity, the lower costs of typically less sophisticated capital, and in turn improved viability. The Guardian points this week to the increased use of crowdfunding by Local Authorities, but this tends to be philanthropic (pledge money, get name on plaque) rather than commercial. Another innovative approach (currently being scrutinised by the Gambling Commission) is ‘raffling’ houses (selling a £1m house by selling 500,000, £2 tickets). Beats winning a box of Quality Street.

Metro monorail  Global cities are increasingly reliant on public transport, and so being close to a transport node is a recipe for high land values. But how far can transport be integrated into building design? Underground stations are often linked to office developments above them (e.g. 55 Broadway, London). In Meadowhall (Sheffield) the station is effectively linked to the shopping centre via the M&S store (routing footfall through the store), whereas in Tokyo you find whole shopping centres in train stations (‘Ekinaka’), and even train platforms on the upper levels of department stores. This week Chinese tech consortium BYD opened Skyrail – a new form of silent monorail that is capable of being routed through buildings. Cheaper and quicker to develop than tubes, how long before we see a monorail on Oxford Street, and how might this change the value differential between ground and first floor levels?

Charging ahead  Nissan predicts that there will be more public electric car charge points in the UK than petrol stations by just 2020. With the days of the internal combustion engine running out, what is the future of the UK’s gas stations? In the 1970s they numbered c.37,000; however, already this figure is c.8,000 and falling. Stations in urban locations will doubtless find ready alternative uses, but for those in more dislocated areas the outlook is more challenging. Perhaps, more interesting is the future of motorway service stations. Even a ‘rapid’ car charge currently takes 30 minutes – so unless this speeds up considerably (enter Elon Musk), the rise of electric cars may precipitate greater dwell time at service stations, providing a captive audience for F&B and other activities. Alternatively, pack a spare battery?

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