Differentiating Private Sector Development Companies

This section describes the key themes relating to the type of private sector development organisations that engage in property development and urban heritage regeneration activity. Havard (2008) describes in detail the apparent diversity of developers with respect to size and motivation. It is claimed that the property development industry comprises a wide heterogeneous breed of agencies from government agencies to local house-builders (Ratcliffe et al, 2009). The authors continue that development companies can vary from large companies with extensive development programmes capable of undertaking extensive complex major projects. In contrast, they believe that small development organisations also exist who they claim operate on a more modest and selective basis.

The types of organisations that engage in property development and urban heritage regeneration activity has been previously described in detail (Adams et al, 2012; Colliers et al 2011; Guy et al 2002; Havard 2008; Healey, 1991 and Ratcliffe et al, 2009). These organisations can be characterised as developer investors, speculative housebuilding organisations, developer traders, local and independent developers,

multi-national conglomerates and others. It appears that these organisations possess different motivations and attitudes to risk when engaging in property development activity. However, providing a precise definition of the nature of development organisations has been described as difficult due to the differences in organisational objectives. Adams et al (2012, p2579) comment on the limitation of the lack of knowledge relating to the property development sector, outlining that in their opinion “the substantive account of what typifies the property developer is still to be written”.

Developer investor organisations appear to engage in development activity, by adopting a top down formulaic approach. The key characteristics of their development activity are the adoption of a risk-averse attitude, focus on analysis of past property data and trends in order to identify and implement development projects in established locations. Development activity of these organisations is characterised by the adoption of a long-term view to development activity, underpinned by retention of properties within their existing property portfolios. Adams et al (2012) similarly identify speculative house-buildings organisations who adopt a formulaic approach to development. They claim that these speculative housebuilding organisations possess a reluctance to innovate and are reliant on a narrow product range.

In contrast, developer trader organisations appear to be concerned solely with the engaging in development activity. Their motivation is short-term profit maximisation by engaging in development activity with an objective to dispose of the completed asset following project completion. Havard (2008) describes these organisations as entrepreneurial risk takers who are active in development in periods of economic prosperity. However the author claims that these organisations possess few assets and are less active in periods of economic decline. It is claimed that this type of organisation is the “organisation that perhaps come closest to the general publics’ idea of a property developer” (Havard, 2008, p39).

Guy et al (2002) provide evidence relating to local and independent development organisations that appear to possess different motivations and attitudes to risk in comparison to developer traders, investors or speculative housebuilding organisations. The motivation and ability of these types of developer is to utilise their detailed knowledge of a local area to operate in peripheral and marginal locations. The authors

holistic context of an area to progress development opportunities. They also engage in bottom up development activity identifying factors such as acquisition buildings of high aesthetic quality combined with adoption of measures such as a design led approach to property development. This enabled these developers, Guy et al, 2002, claim to capitalise on issues such as social complexity and urban vitality. They claim these issues are unimportant to formulaic institutional developer traders, investors and speculative housebuilders.

Local and independent development organisations have been described as developers who are less reliant on strategy with more involvement of intuition (Landry et al, 1996, cited in Guy et al, 2002, p1191). The differing perspective of local, independent organisations to engage in development allowed for the identification of locations from which to achieve rising rent and values. A quality of these apparently entrepreneurial or maverick (Guy et al, 2002) development organisations is the adoption of an irrational approach to development and engagement in creative and unconventional development solutions in order to satisfy demand. These organisations are also willing to enter into partnership with local authorities in order to mitigate risk and increase project viability. Engagement in these projects, it is claimed, is often via the receipt of public sector financial assistance. It has been claimed that this type of developer engages in analysis of future trends rather than past data in order to establish the potential demand and value of a development project.

The globalisation of real estate (Healy, 1991) and emergence of multinational conglomerate organisations engaging in property development activity in the case study area has been evidenced. These organisations motivation for engagement has been described as diversification away from core business activities to add to a portfolio of existing business activities (Healey, 1991). It appears that these organisations are willing to enter into partnerships with local authorities in order to deliver property development projects. This has been evidenced by the delivery of the urban heritage regeneration project, Murrays Mill, Ancoats project by the Abu Dhabi United Group working in partnership with Manchester City Council. The project is described further in section 5.1.6.

Other development organisations that engage in property development activity have been identified as building construction companies, landowners and owner occupiers. Landowners and owner occupiers wish to enter into development either acting solely or in partnership. The motivations for engagement in development activity appear to include development for their own occupation or to maximise profit from existing landholdings. Building contracting companies appear to engage in development activity acting solely or in partnership with other organisations. Their motivations for engagement have been claimed to include a desire to obtain a continuous workflow and to recycle profits from existing construction activities. In addition, it has been argued that contracting companies are willing to accept a reduced level of development profits. This is due to their desire to diversify from engaging solely in construction activity (Guy et al, 2002)

Colliers International (2015) argues that a limited number of development organisations are willing to participate in urban heritage regeneration activity. They claim that whilst many developers participate in converting heritage assets for residential purposes, few solely operate in the field of urban heritage regeneration. The report highlights negative case analysis highlighting the role of not for profit third sector organisations engagement in urban heritage regeneration. Due to their status as charitable organisations, they appear to be able to access public sector funding in order to bridge the conservation deficit and progress urban heritage regeneration projects for local community uses.

2.4.3 Private Sector Development Companies Involvement in Urban Heritage