Too many high rises being built – Property Rant 031

No matter much you want to resist change it’s going to happen. With 20 high rise towers and buildings in London already planned, the only way is up. If this concept disrupts your thinking well good because the other thing in this video will blow your mind…

The answer is already in existence and works so well it’s almost the richest place per capita in the world… So bring on more high rises…


Video Transcription

Hey guys, Property Search… Think Gladfish.

I’m Brett Alegre-Wood and this is Property Rant.

So, today, the question is too many high rises being built creating too much competition and creating high rental wars, too many investors. So, yeah, there’s a few aspects in there, and I’ll deal with each, and I’ll deal with it generally. The first thing I’ll say is this, the future is up, my friend. The future is up. In other words, everything that’s going to be built into the future will not be low level. It’s going to be high rise.

So, if you think that we’ve got too many high rises now, you know, look at every sci fi that you watch, it’s always up. It’s always up because it makes sense because that way you can…you know, if you build up, you can bring all the services in which means the fundamentals are concentrated, and that’s what you want.

London right now has over 20 towers in planning. So, things are going to change. The skyline is going to change. London, largely, actually does it, and it’s spread out and sprawled out. London is now going to start building up because that’s the only way it can grow. It can’t really spread out any further. It is quite spread out, and if anyone lives there, you’ll know what the traffic is like. The traffic, actually, I think, will sort itself out when we get driverless cars, you know. There’s just the transition period in between, but anyway, let’s not get into the future car thing. Let’s stick on focus so, high rises.

Look, look to Singapore. Singapore is one of the most densely populated cities on earth, yeah, and they’ve solved the problem. So, look to how they’ve solved the problems of high rises. HDB, Housing Development Board flats everywhere yeah, and, in fact, the whole island is full of them. And what they do is they’re, you know, small clusters of high rises with all the services, communities, commercial down the bottom, and it works so well. Okay, you’ve even got food courts, all that sort of thing within the actual HDB developments, and, you know, you look around, and you’ll see these problems.

A lot of them are already solved. Now, let’s talk about supply and demand because is there too many, you know? The reality is with the way things go with planning and how hard it is to get that and how hard it is to…you know, all the aspects that need to be in line, supply and demand is a hard one. Now, the question of supply and demand often isn’t about, “We need 100 flats. Here’s 100 flats, we’ve solved the problem.” Okay, It’s never about that because what you’ve got to take into account is what people want and what they can afford.

So, if you’ve got someone on a low income, and you build 100 flats, and there’s a 100 flat requirement but those 100 people are on a low income, and you build something at a high-end, well, obviously, now you’ve created a mismatch. And when you do that anywhere, don’t take that town planning and the actual demographics and site graphics and all that sort of stuff into account, and that’s what good counsel should be doing. They should be seeing the people they’ve got in their constituencies and then matching the property they need based on that. They should be doing that. That should be functioning.

The problem is the process has so much ego involved in it now, and that’s where it comes unstuck. Now, rental issues, so, it creates high rental wars they said, which that’s quite an emotive word. But anyway, the important thing is we’ve never had a problem renting a property ever. Now, does that mean that we’ve never had individual problems? We have, but generally, if you find the real estate market around a competent agent, you’ll get the place rented. Now, when the issue comes, and this is where a lot of people come unstuck is when they buy into a new build development, and there’s a phase launch, and they all complete it the same days.

So, let’s say they complete, you know, today, and there’s 100 flats, but the demand for that is only, say, 10 flats a week. Well, then, potentially, it’s going to take 10 weeks. So, my question then is how do you become in the first 10 or the second 10 rather than the, you know, second to last 10? Well, that comes down to real estate market rent, that comes down to an incompetent agent, and when you address those two issues, then your property will be rented here and the people who give it to an agent and don’t follow up and don’t actually actively manage that agent will be the ones at the back end.

So, you know, that’s the rental issue, and that’s how you solve the rental issue. Very rarely…I mean, developers aren’t stupid. They don’t just launch 100 flats onto the market knowing that there’s not the demand there. They will phase them, okay, so they may do 20 a week or 10 a week or whatever it is over a period of time.  So they’re smart enough to do that, and the final bit was, you know, is there too many investors, you know? Look, the interesting thing is too many investors, actually, you know, no, there’s not. If you look at the stats, in most countries there’s still a higher ownership than there is investment.

But property investment and buy and sell investment has become the go to for the mum and dad and for everyone else whose not a major corporate. You know, the problem I see with a lot of things is you’ve got these corporate’s coming in and just profiteering at every angle and really decrease the services they provide making it a boost in their profits. Because their shareholders are more important than the people they’re servicing, and unfortunately they’ve got lobbyists in the government that can…you know, they can get away with that. And that, for me, comes down to one of the real issues with a lot of high rises is are they able to create a community? And that’s one of the things Singapore’s done very well with its HDB. They’ve created a community that actually isn’t a self-interested, profit-making, you know, area.

So actually, it works very, very well, So, hopefully that gives you a broad interest. Have I got, you know, in opinion, too many? Look, without knowing areas and without knowing times and, you know, generally you’ll find that infrastructure investments will go in all at once. So what you may find is all of a sudden high rises go up everywhere, and you think, “Aw, too many.” But then nothing will happen for 10 years, so that will happen. Is that bad? Well, it’s bad if you don’t pick it right and if you don’t pick the fundamentals right.

So, all the rules of the game that usually apply still apply and if you apply them, you make money. If you don’t, then, potentially, you lose money.

All right, guys, have a great day, live with passion.

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.

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