The Guardian this week has written a number of articles about buyer-funded developments in the North of England, including in Liverpool. I want to make clear that those developments represent only a fraction of the development and investor confidence in our city at this moment in time.
We are aware of the schemes that have stalled in our city and the problems some people are having with their investments in the private companies they have chosen to invest in. That’s why in the case of New Chinatown we have stepped in as quickly as possible to regain control over the site and get the scheme working again. But we are only able to do this because, ultimately, we own some of the freehold on that site.
Put simply: there are things we are responsible for – and things we are not. The council is not responsible either for raising the finance for development schemes in the city, or for advising property investors about which schemes to invest in.
In most of the large scale developments in the city we have no control over them (other than planning which adheres to a very strict set of national guidelines). If a private investor or private company decide to invest in a property by a private developer on land that they own – then we have very little say in how that project develops.
And, to be fair, Liverpool is seen as a great place to invest. We have over £14bn worth of investment in the pipeline for the city, and it isn’t all housing. This week, I am at MIPIM and have held non-stop meetings with potential investors wanting to speak to us about our flagship scheme, Paddington Village in the Knowledge Quarter. For example, we announced the shortlist today of 5 major international hotel operators who want to run our new high quality Paddington Hotel.
And this is because we have a track record as a good place to invest. Over the last few years around £5bn worth of schemes have been completed. We are attracting major investors to our city and business is choosing to locate or invest here. In the Knowledge Quarter, we have a major opportunity that is exciting companies like Kaplan and Proton Partners International to make key investments.
I wish everyone could see for themselves the response I have been getting from business and investors here in MIPIM. Maybe then people wouldn’t jump on the opportunity to talk our city down on the basis of a one-sided story in the Guardian. I’d love to see them write another article about the positive things we have been doing to secure the New Chinatown site. We were not responsible for the financing of the scheme, nor for its marketing, but we have been resolute in pursuing the developer, Chinatown Development Limited, for monies owed us and I am delighted the new developer of the site has clearly stated their intention to recompense individual investors who have lost money on the original scheme.
But as the Guardian article also shows, this is a problem that is bigger than Liverpool. Other cities have had similar, or worse, problems. I am of the growing belief there is now a legitimate question about whether local authorities need stronger investigatory and oversight powers to assess the financial viability of development schemes to avoid stalled or failed projects.
We also need to see Government action in terms of promoting new, more transparent forms of development finance. I favour the creation of regional banks, with a long-term funding model, lending tied much more closely to specific places, offering developers a more consistent and transparent form of lending, as a solution to this issue.
So as well as writing to The Guardian to correct their erroneous impression of the city, I will be writing to the Chancellor to pursue some of the issues mentioned above. It is time we got serious about giving local authorities the tools needed to better shape development decisions in our cities as well as providing better financing options for the development community.
I also note that the Guardian has made no mention of the role of the agencies that promote these investments (for their own commission, obviously).
Finally, as always, anyone investing their own money should be careful about the risks they are taking when they make any investment. They should also ask their investment agency about the risks involved. The majority of schemes in Liverpool are a success, and when you step on to the world stage the interest in Liverpool is still huge, because they can see the bigger picture about how strong Liverpool’s future is.