A way must be found to increase the flow of traffic in the most cost-effective and environmentally sensitive way – The Cardiff Property plc interview
In the first interview of our Southern Powerhouse series, Richard J. Wollenberg, chairman and chief executive of The Cardiff Property plc, talks about the need for infrastructure overhauls, balancing growth with sustainability and issues with developing land across the south.
If Richard J. Wollenberg should have the keys to Number 10, some of his first priorities in government would be to promote the deregulation of the planning system, expedite the building of an additional runway at Heathrow Airport (and at Gatwick), and make the M25 five lanes on each side of its circumference.
“Of course, that would encourage people to travel more, but major infrastructure schemes encourage inward investment and improve the local and regional economies,” says the chairman and chief executive of The Cardiff Property plc, the Thames Valley-focused property investment and development company. “So much time is spent in traffic queues with thousands of man hours being non-productive. A way must be found to increase the flow of traffic in the most cost-effective and environmentally sensitive way.”
Sustainability is essential
Wollenberg accepts that there is a need to balance infrastructure growth with environmental sustainability, but argues that sustainability is an interesting word that requires definition, as it has numerous interpretations: “Responsibility for the environment has to be put into context because we have to progress as an economy,” he says. “But at the same time we have to accept that progress in our eyes might not be seen as progress by other people.
“Developers need incentives to use more sustainable materials and construction methods, because these usually cost more,” Wollenberg points out. “As a start, the government should re-introduce worthwhile solar incentives.”
He concedes that some of the most important infrastructure projects in the region have gone spectacularly over budget: “The Channel Tunnel cost around £9.5 billion to build, about double the original estimate, and Crossrail is costing millions more than its intended budget. But in the great scheme of things, they are fantastic projects in terms of their contribution to the region’s economy,” he says. “If we started building either of them today, they would be considerably more expensive. Future generations will be very grateful for them.”
Wollenberg is more cautious about the commercial property market. “The uncertain world we live in makes businesses less willing to commit to long-term contractual arrangements,” he points out.
However, commercial rental levels haven’t been compromised for now, aided by a shortage of modern offices and small/medium-sized industrial units that have good parking and facilities, although he points out that future take-up levels will be important in determining rental growth.
That being the case, Wollenberg is concerned by the trend among local authorities of borrowing low-cost money from government and investing in commercial property, believing it could lead to trouble: “It might make sense at the moment, from an income point of view, but what happens if the tenants don’t renew when their leases comes to an end?” he muses. “And if there is an economic downturn, capital values will probably fall.”
Discussing residential property, Wollenberg believes that despite the supposed shortage of land, there are “plenty” of brownfield sites that could be freed up for new builds. “The Ministry of Defence, utility companies and railways all own suitable redundant land,” he suggests. “I believe it’s happening, but not quickly enough, which can be down to the response of the planning authorities.”
Provided a “clear case can be made that it is appropriate,” Wollenberg would also allow some additional development in the green belt. “We have been trying for many years to develop residential property in areas of need, and separately, a health service-related scheme, both on green belt land,” he says. “But despite obvious local benefits, the councils are not being supportive.”
Permitted development rules, under which offices can be converted to dwellings without local council sanction, have allowed the residential market to flourish and should be encouraged, but the market has been affected by changes to stamp duty, he believes. “That was a mistake on the part of government and should be urgently changed,” says Wollenberg. “The market stalled as a result of the stamp duty increase. Sellers of more expensive houses struggled to sell so it was difficult for more people to move up or down.”
Wollenberg would like to see more re-zoning of land to allow more residential development, and feels that such a move should be accompanied by continued tax incentives for investors.
A pre-requisite though is a speeding up of the planning process, he says. “The problem here is lack of funding, leading to a shortage of experienced planning staff employed by local authorities. This has led to long delays in the planning process,” he explains, “especially in towns which are preferred locations for living and business. Planning departments are under serious pressure, which in turn means that developers are unable to move forward, and that doesn’t help the economy.”
Wollenberg’s idea to help the ‘high street’ wouldn’t involve the planning process. To help enable a reduction in business rates for smaller retailers, he supports calls for a tax on internet-based retail sales, with an exemption for smaller retailers, namely those with sales of less than £5 million a year.
Meanwhile, he wants to see more being done to attract young people into careers in construction to address the skills shortage. “We need to make it as attractive a career as possible in terms of packages and prospects,” he says.
One practical solution would be to further subsidise apprenticeship courses in building trades. But Wollenberg accepts it won’t be easy to find a way to finance such an initiative. It’s not going to be a quick fix either. “There is a time-lag between any such initiative and the resulting increase in skilled personnel,” he says. “You can’t just turn the tap on, as those outside the industry seem to think.”