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Entec is currently undertaking a range of remediation projects for Harrow Estates, one of the UK's foremost land and property investment companies. On a recent visit to its Cheshire headquarters, we took the opportunity to interview the company's managing director, Mike Riding, on what makes it different, key issues in the property market, and what the future holds.
What sets Harrow Estates apart from the rest of the property sector?
Harrow is in part an investment company, rather than a traditional property development company: some properties are purchased as longer-term investments, others for development, depending on demand and site-specific issues. The timing of decisions is critical, when it comes to buying, selling or developing a site. We buy on a completely unconditional basis, often on former industrial and contaminated sites, for residential, retail or leisure end-use. A typical housebuilder would look at buying sites on a conditional basis, subject to everything including environmental and planning issues.
So you take a greater risk?
Yes, though the risks aren't always environmental: sometimes they are technical planning issues or even legal issues on a site that give traditional developers a headache. I suppose you could say we avoid sites that are squeaky clean. We are in an unusual position in being able to take on these risks, such as the environmental liabilities of a site. Sometimes you're making decisions on sites based on very little information, so our in-house expertise and that of our consultants is essential in making the risk as calculated as possible. We tend to look for opportunities, perhaps where people need to dispose of sites quickly or where there is some kind of risk - it's on these sites that we can make the biggest difference. That's more so on the development side. On the investment side, we look for long-term opportunities, perhaps with companies that are struggling, rationalising, or wish to continue a particular operation within a fixed timescale. In those cases we come along and buy the site, with the company in place, lease back to them, and at the end of the period either lease elsewhere, sell, or move the site into a development phase. But while we have two distinct arms for investment and development, properties often switch between the two depending on circumstances.
What are the advantages of this approach?
From our perspective, the flexibility we have between our investment and development arms is a big strength. Taking this broader view enables us to see a lot of sites, rather than just those that are appropriate for immediate development. We also keep an open mind regarding the type of development that would be appropriate for a site. With many of our sites being managed over a 10-15 year timeframe, it's critical that we keep an eye on policies relating to planning, housing, environmental issues, as well as demographics and trends in demand and supply, but this also means we are able to pick up on opportunities as they appear.
Taking a broader view of the benefits of our approach, because we often acquire sites quickly and need to develop them quickly to maximise the return on our capital, we work hard to get them through the processes. So the big delays you often see in regeneration areas are avoided. The local authority or development agency can be very supportive in these cases, as the overall regeneration aims often get a kickstart, providing a catalyst for further investment in the area; for example Leeds and Barnsley.
How do you see the UK property market progressing?
It's a very interesting time in the housing sector with values staying positive, though sales rates are generally down. On the other side, the commercial investment market has been very strong for two or three years now and shows no sign of weakening - the economy is stable, and though the stock markets have recovered of late, property is still seen as a sound investment for individuals and financial institutions.
What about the impact of the Barker review, and the government's response?
We're naturally supportive of a number of the recommendations, principally the improvement in supply of housing. Affordable housing does remain an issue nationally, but a balance needs to be maintained - on difficult sites such as those we deal with, and in terms of the general policy of brownfield development, there needs to be a continuing recognition that costs are high, and levels of affordability need to be managed accordingly, otherwise sites will continue in dereliction and that's in no-one's interest. What we want to see most of all from government on the whole issue of housing supply is clarity of purpose rather than an ongoing climate of uncertainty. Likewise, new legislation such as the Landfill Directive, while beneficial in many ways, can have knock-on effects in this area: when the cost of dealing with contaminated soils increases, and the time spent on site lengthens, affordable housing becomes a growing challenge.
So where does Harrow go from here?
Appropriate sites can crop up absolutely anywhere - we are aware of possibilities overseas, such as in Eastern Europe or the US, though while enough opportunity exists at home our main focus will remain in the UK. We're happy to continue along the path that has proved successful so far, expanding our property and land holdings into new areas that show potential, while playing a key role in the redevelopment of difficult sites around the country.
For more information on Harrow Estates visit www.harrowestates.co.uk. To discuss Entec's work with Harrow further, please contact Ian Evans on 0191 272 6100. Alternatively visit www.entecuk.com for an overview of our work within the property sector or to review our land remediation experience.
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