How do you know it is real regeneration?
In a previous article, I posted some questions that you should ask before you invest in property covering an area’s history and four of its current property fundamentals (shops, schools, transport, and major employers). Getting the answers to those few questions will help you assess the area’s potential for long-term property investment. But the biggest factor to assess when researching an area is major investment and regeneration. It’s a factor I am always sceptical about, but always want to see. In this article, you’ll learn why regeneration is so beneficial to the long-term performance of your property investment.
What is a major investment?
I use the term ‘major investment’ to mean regeneration projects, and ideally, major regeneration of an area. Let me make something clear at this stage: though I believe that regeneration is key to investment, am always sceptical until it has been confirmed. It always takes more time than the media reports, and I find that often too much value is placed upon a project in the early stages of planning: nothing is certain until the project has been started and earth is moved. Far too many times I have heard of regeneration projects that have been stopped or funding withdrawn with a change of government, but….
Regeneration is the lifeblood of the built environment
While I’m a sceptic about regeneration, of all five property fundamentals it is the one that has the biggest long-term impact. It is the fundamental that will probably contribute the most to the capital growth of your property. Regeneration, however, is also the most uncertain, because it is in the future.
What regeneration is not
Don’t get fooled into believing that infrastructure maintenance is regeneration. A new pub being built down the road, or the road outside the property being resurfaced (though this will help your property), is not regeneration.
Real regeneration is a major investment. The sort that will change the dynamics of an area forever. It will make the property more tenantable or more attractive to prospective tenants.
What does it mean
My father’s side of the family was from Scotland and England. The English side of the family lived in Stoke-on-Trent, and when I arrived in the UK in 2002 my mum wanted me to go visit the family. Like a good son, I drove all the way from London to Stoke-on-Trent one wintry day. The sky was grey, and a light drizzle followed me the whole way. I drove into Stoke-on-Trent and was confronted with a run-down town: graffiti lined the buildings; every road was unkempt and potholed. The town was so uninspiring that I didn’t stop, not even to look up my relatives. I turned around and drove back to London as fast as I could.
In 2007, I received a call from one of my Sales Director buddies. She wanted to do a bulk deal on some properties by the canal in – you guessed it – Stoke-on-Trent. I immediately recounted my horrible first experience of Stoke. She was adamant that I needed to come and see the area for myself. I agreed, and sure enough, the entire town looked totally different, and yet the regeneration program was not even half-finished: the local council had put in place regeneration plans through to 2030.
This is the type of regeneration that I am talking about: major transformative investment into the infrastructure of an area. Investment and redevelopment so deep that it changes the look and feel of an area.
How to uncover what's real
I always look for a balanced approach to regeneration. It’s no use building 20,000 new homes without the supporting infrastructure – shops, schools, roads, and leisure centres. So, it’s important not to be swayed by the promise of a new development in the middle of a field without the supporting infrastructure and businesses. This will simply create an imbalance in the fundamentals.
To uncover real regeneration, conduct in-depth searches on Google and ask questions in the area: speak to the local authority, businesses, residents, and agents.
Remember, too, how to invest in property through the growth and decay cycle. At certain phases of the property cycle, an area is likely to become overdeveloped with residential, industrial, and commercial properties. You will need to adapt your investment strategies to profit from the entire property cycle.
To discuss how our property and area research has helped hundreds of investors build profitable property portfolios, get in touch with Gladfish on +44 207 923 6100 .
Live with passion
Brett Alegre-Wood
