The boss of Hermes Real Estate, Chris Taylor, has called for the Government to introduce \u201cplanning zones\u201d for central London, to restrict the building of expensive flats and offices and make way for affordable residential property instead.<\/p>\n
Mr Taylor, who is due to become president of the British Property Federation, which advises the Government on real estate policy, said fears of a bubble will continue without radical intervention.
\n\u201cThere\u2019s going to be increasing pressure for land in London unless we find a way of restricting what\u2019s built,\u201d he told The Daily Telegraph. \u201cMy view is that we need to introduce planning zones where land is more tightly controlled. There needs to be a new planning regime for Greater London that looks at land use more intensively.\u201d
\nHe argued that the Government\u2019s current policies, including Help to Buy and Funding for Lending, are promoting housing demand but not supply. He said: \u201cThere is a shortage of affordable stock \u2013 not necessarily social housing, but affordable homes for ordinary people who want to live and work in London.\u201d
\nHe added: \u201cI\u2019m a free market man but maybe we need to restrict land use. At the moment developers will build what they can sell at the highest price \u2013 high-end flats and commercial buildings.\u201d<\/p>\n
Referring to Bank of England governor Mark Carney\u2019s recent warning that over-heating in the housing market was the biggest threat to the UK economic recovery, Mr Taylor said: \u201cThere is a balance to be found between being an open economy, which we definitely want, and having social integrity too.\u201d
\nHermes Real Estate, which manages more than \u00a35bn of property, is part of Hermes Fund Managers, the \u00a326bn global asset management group, which is owned by the BT Pension Scheme.
\nMr Taylor, who has been chief executive for four years, said he backed Boris Johnson\u2019s idea of forcing local councils to release brown field sites for development. He said the housing squeeze in London has its roots in decades of under-supply. The problems started, he said, when the post-war building programmes led by local authorities were stopped.
\nHe said that the flood on foreign capital into London is not just pushing up prices in smart residential areas but has \u201cundoubtedly distorted yields\u201d in the commercial sector too. Even so, Mr Taylor argues London is an \u201cextremely attractive long-term investment\u201d for property companies. Hermes has 70pc of its UK assets invested in London property.
\nThrough its development division Argent, Hermes is behind the transformation of 67 acres around Kings Cross station in London, which is one of the largest regeneration projects in Europe. Hermes recently set up a joint venture with Canada Pension Plan Investment Board to buy central London offices.
\nMr Taylor argued that the capital will continue to be a magnet for foreign investors. \u201cUnless there\u2019s a major unforeseen political or fiscal upheaval, we think this trend is here to stay,\u201d he said. \u201cSince the September 11 attacks in New York, London has been the top place to go for investors. It\u2019s open, receptive and transparent, and people like the legal and planning rules.\u201d
\nBut Mr Taylor said the company is increasingly interested in investing in key London suburbs too. \u201cCroydon, for instance has great infrastructure and great shopping facilities. We\u2019re are also looking at Tottenham Hale, from where you can get into Oxford Circus in 15 minutes, and Bromley.\u201d
\nHowever, Hermes has also started to invest in UK regional property. Last month Hermes said its MEPC division was selling three traditional business parks for \u00a3400m, in order to focus on developing estates for Britain\u2019s fast-growing science and technology sectors. Silverstone Park, MEPC\u2019s development next to the British Grand Prix race track, will be a major beneficiary as the firm seeks to attract high-tech companies from aerospace to defence and medicine.
\nHermes is also seeking to diversify internationally, with a particular focus on America. The company has started to target residential mansion blocks in New York in partnership with the US operator, Sentinel Real Estate. \u201cWe like the urbanisation trend and theme in New York,\u201d said Mr Taylor. In part its what we\u2019ve heard from the likes of Google\u2019s Larry Page at Kings Cross \u2013 there is a new demand for a good urban environment. The 30-year-old who works at Google, who may have worked for Goldman Sachs 15 years ago, probably doesn\u2019t have a driving licence and doesn\u2019t want to commute. They want to live in an urban environment rather than down the M4. There\u2019s a drive for urbanisation and regeneration of facilities. New York has the same drivers of urbanisation \u2013 but has far better stock.”<\/p>\n
<\/p>\n