Regeneration areas – when is the right time to invest?

In recent weeks, we have been running a series on London’s regeneration hotspots – but how do you know when to invest in a regeneration area?

Knowing when and where to invest can have significant financial implications, for good and ill. Simon Clarke, director of independent property service Acentus Real Estate, argues that both the timing and the location of an investment need careful consideration. 

“Knowing when to invest is just as important as knowing where,” he said. “Urban regeneration schemes can take decades to complete and not all investors want to wait that long to realise fully the profits of their investment. That’s why it’s key to look at each particular regeneration area in detail, to understand the varying factors at play and to consider the kind of development that is likely to reap the most rewards when it comes to capital growth.”

Acentus cites Liverpool as a case in point. The city is currently home to £14 billion worth of investment opportunities, with substantial regeneration schemes changing the shape of multiple areas all at the same time.

With this in mind, Clarke recommends identifying investment opportunities that benefit from the work taking place in multiple regeneration zones, all with varying timescales. The investor can, as a result, realise a profit even if they withdraw their investment before work in each of the zones is completed, with the impact of the various works still combining to drive up property prices in the area of overlap.

The Metalworks in Liverpool is an example of this in action. The 319-home luxury apartment development is on the next road along from a commercial business district regeneration zone, and faces directly into it.

While regeneration work there is currently in the consultation phase, it is anticipated to continue for some 15-20 years. Additionally, The Metalworks is on the edge of the 60-hectare Liverpool Water regeneration area, which received the green light for construction work to start back in 2013. Furthermore, there’s the nearby Ten Streets project, which is an ambitious regeneration zone seeking to transform around 125 acres of former dockland into an exciting new district.

According to Clarke, then, The Metalworks benefits hugely from its proximity to three sizeable regeneration zones, each with their own timescale and a likely impact on Liverpool and its property prices.

“It’s also important to consider the likely future demand for the investment – who will the property attract in terms of tenants?” Clarke added. “How attuned is it with the future focus and vibe of the nearby regeneration areas? All of this comes into play when choosing the right property in which to invest.”

The Metalworks, Clarke says, again ticks all the boxes in this respect, with the spacious one and two-bedroom apartments designed with city centre renters in mind. The two-bed homes, for instance, also include two bathrooms, making them ideal for sharers as well as for couples and small families.

In addition, the apartments have access to a number of on-site facilities, including communal gardens and a state-of-the-art gym, while the presence of secure underground parking and a concierge service are expected to appeal to professionals working in the adjacent commercial business district.

The firm adds that, in terms of timescale, investing at an early stage of a particular development can also reap rewards. The Metalworks, for example, has just announced the appointment of its main contractor – Goodwin Construction Group.

Investing at the point where work begins means there is excellent scope for the value of the real estate to increase even before it is ready to be tenanted – which is late 2020, in the case of The Metalworks.

This is especially true of Liverpool, where property prices are frequently among the fastest rising of all the urban areas in the UK. In May, prices shot up by 5%, according to Hometrack.

“Understanding the area in depth will help with the identification of the right project and the right time in terms of the regeneration work already underway and any proposed future schemes,” Clarke concluded. “The value of local knowledge should never be underestimated when it comes to selecting the perfect regeneration zone investment.”

The Metalworks development has been given a new lease of life thanks to a deal forged between Acentus Real Estate and Birmingham-based brothers Justin and Christian Hipkiss.

Originally granted planning permission in February 2017, development of The Metalworks was delayed due to long-drawn-out legal negotiations over land acquisition and the site’s Section 106 agreement. Now, though, Acentus Real Estate has formed a joint venture with the Hipkiss brothers in order to move the project forward.

Acentus Real Estate and the Hipkiss brothers will together be presenting The Metalworks to investors, with individual apartments available from £108,360.