Paul Marsh explains his role in the Northern Powerhouse, and why the Midlands Engine is next.
Paul Marsh
The recent feature on the Northern Powerhouse (Powering Up, CM, January) rightly highlighted that infrastructure investment is key to the success of the wider region. Connecting the cities of Manchester, Liverpool, Leeds, Sheffield, Hull and Newcastle will make the whole greater than the sum of its parts and rebalance the UK economy.
But alongside the necessary investment in transport, we must capitalise on the opportunities for large-scale regeneration and investment in real estate that this brings. These projects have the potential to create hundreds of thousands of jobs, attract and support new businesses and provide homes and communities for the populations of these cities and beyond.
However, having a vision is not enough – delivering schemes at this sort of scale requires a huge range of skills among the various stakeholders and, of course, significant funds.
In 2013, prime minister David Cameron launched the Regeneration Investment Organisation (RIO) under the auspices of UK Trade & Investment (UKTI), with a mandate to help international investors identify and fund these type of regeneration opportunities. At this stage, UKTI had identified some £140bn of regeneration projects requiring funding.
The RIO team undertook a detailed analysis, concluding that £40bn of schemes were ready for investment, while the rest required more work to get them to this point.
Our initial focus was the Northern Powerhouse and in September 2015 we launched the “pitch book”, which identified 20 projects across the north of England that the RIO team believed to be “investor ready”. Acting as an honest broker, we’ve garnered interest in a number of these schemes, with active commercial dialogue currently taking place around seven opportunities in Manchester, Sheffield, Newcastle and Leeds.
“International investors are beginning to understand that UK cities other than London can offer genuine opportunities.”
This is enormous progress. All of the schemes we promote are of a value in excess of £100m so, by their sheer scale, tend to be complex and challenging. International investors really are beginning to understand that UK cities other than London can offer genuine opportunities and fulfil their macro investment criteria: steady population; good or improving infrastructure; employment opportunities and strong local leadership.
If the national press is to be believed, I think more people in the Chinese investment market are familiar with the Northern Powerhouse than in the north of England. But once these projects start coming out of the ground, I’m sure that this will change.
While the Northern Powerhouse has been grabbing many of the headlines, 11 Local Enterprise Partnerships (LEPs) in the midlands have been formulating their plan. In December, the group launched its Midlands Engine prospectus, a plan to boost prosperity, attract inward investment, increase connections and build a regional tourism offer.
The Midlands Engine promotion group has also asked RIO to produce a portfolio document on behalf of all 11 LEPs and we’ll be launching this selection of showcase projects at the MIPIM event in Cannes this month.
What’s notable about this is the recognition by the individual LEPs that to secure the right levels of investment they need to work together. Many cities and regions don’t individually have projects of the scale that major investors in the Far East, North America or Middle East will contemplate.
Read related articles
Powering up for the Northern Powerhouse
North west’s long-standing relationship with China
The Northern Powerhouse could prove far more than a slogan
However, packaging a number of £20m schemes together is a different proposition and we are working on a couple of these, including an industrial development portfolio in the Black Country and aggregated private rented sector (PRS) schemes in the north west.
But what of the schemes that aren’t yet “investor ready”, which still form the majority? By assembling a team of property and investment professionals under chairman Sir Michael Bear, RIO is working with local authorities and other parties that are promoting schemes offering advice and support to help them bring their projects forward.
Initially, this generally meant “shovel ready” – with land ownership and planning in place – but as the market matures we’re seeing a much greater tendency for investors to get involved at an early stage, working through the planning or land assembly process.
2016 promises to be an interesting year. From the economic slowdown in China to the US presidential elections and the prospect of Brexit, there are challenges that we’ll need to consider. However, our experience of the last few years suggests that the UK continues to be seen as a good place to invest and, with the right support and promotion, both the Northern Powerhouse and Midlands Engine will be major beneficiaries.
Paul Marsh is head of projects and finance at UKTI’s Regeneration Investment Organisation
