Highlights from RESI Convention 2019

By Rishi Banerjee

At this year’s RESI Convention, yet again, record numbers of attendees made it to Celtic Manor in Newport. This year’s conference was titled ‘Brave new mixed-up world’ taking a closer look at mixed-use developments, partnerships, BTR and Modern Methods of Construction (MMC).

Is housing policy taking a step back in time?
Esther McVey made her first public appearance as Housing Minister at the Welsh golf resort and, while she hoped to score a birdie, the majority of the room felt she delivered a dated and rather underwhelming address to the industry. Her speech was geared very much towards home ownership and why that was the priority for the current government.

According to a Twitter poll during the Newport conference, 7% of respondents thought McVey’s speech had been successful. While the option for “very impressive” received no votes, 23% of voters said it had been “average” while the 70% majority opted for “Meh, heard it all before”.

Modular housing – has its time come?
Homes England’s deal with developer Urban Splash and Japan’s biggest housebuilder Sekisui House, as well the housing accelerator’s support for airspace developer, Apex Airspace, which bases its model on offsite modular construction amongst other news, acted as catalyst to bring MMC and modular construction to the fore at this year’s conference. Urban Splash hopes to deliver 2,000 homes per year and Sekisui’s CEO Konishi Kenta confirmed that this deal was the start of a number of deals in Europe.

Despite Brexit, panellists were unanimous that modular, offsite construction was a viable option and could help deliver the housing needs of the country. The discussion went one step further and debated whether modular construction is right for affordable housing provision. The panellists all agreed that it was viable, and the fact it is market agnostic makes it suitable for the private sale market and BTR. They also suggested that JVs are the best way forward as they can cater to the specific needs of a project/tenure.

This is because modular construction is flexible and the fit-out can be tailored depending on the design and feel of a development. This also helps faster placemaking. Interestingly, 53% of delegates voted that they would rent a modular home because they “love the design credentials” – a sign that the sector is steadily shaking off its post-war pre-fab label.

What panellists did bring to the fore was the fact that there is still confusion amongst the lending community over modular homes and the fact that there was still some concern over the longevity of the product and the technical terms used, which can lead to confusion. The panellists all agreed that lenders needed more education on MMC and modular construction to demonstrate its benefits to the market and, ultimately, the customer.

Partnerships are the future
The partnerships panel looked at the importance of mutual respect, and the recognition that partnerships and collaboration can help serve the needs of a community. The panel also agreed that there was less risk in a development’s lifecycle and market fluctuations have a lesser impact if there are a number of stakeholders behind a development with shared interests. It was also pointed out that local authorities no longer perceive developers as terrible, recognising that most come to them with expertise they might not have and are transparent in their actions.

Disruption – can it be positive?
Disruptors in the property market are looking at the way we build, where we build and pricing. Panellists agreed that disruption can be positive especially if current systems and norms are not working. The key takeaway was that any disruption should be done through collaboration to ensure there is buy-in both from the industry and also the end user.

SME financing
We also attended a panel looking at how SMEs can secure financing. Panellists included Arshad Bhatti, CEO of Apex Airspace, Michael Dean, cofounder of Avamore Capital and Dennis Watson from Barclays. Together, they suggested SMEs should look at brokers who understand a product and can bridge the gap between a business and the lender. They also recommended ensuring there is flexibility within the product: can it be adapted? Are there contingency plans in place for challenging market conditions? Do you have the right capital around you?