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The Lucent Group is a land site assembly specialist incorporating expertise in real estate acquisition, finance, planning, infrastructure delivery and project management. Our investment decisions are made on the basis of many factors, but staying up to date with the market, the economy, the investment and real estate industry as well as government and planning policy is critical. Here we share with you some of the news and views of our company's leadership. We hope you find them helpful.

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Recent blog posts

Volatility abroad drives an interest in English property. But domestic demand for housing is just as strong – and long-term – a factor for investors.

Seven years after the global financial crisis and the recession that followed, the times could not be more challenging for investors. There is much uncertainty and fear in global markets.

We don’t have to look far to see major economic problems in Europe with the situations in Greece, Ukraine & Russia all well documented. The opportunist has always looked to the BRIC economies for reliable growth. Today, however, we see that despite a new government, Brazil is still struggling with no signs of improvement and Russia is having to deal with UN sanctions & falling investment. Whilst India has had a bad time, it is showing signs of growth but the once reliable Chinese markets are in a state of disarray. A bear market and a devalued Yuan do not bode well. Even in the U.S. where markets have shown steady growth toward record highs, there is cause for major concern due to a combination of China’s slide and historically low global oil prices. Both Warren Buffett and Gerald Celente (Trends Research Institute) are forecasting a crash or major correction in the US Market before the end of 2015. Only time will tell if they are correct but their records are pretty good!

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The cost of living and doing business in London has reached a tipping point, driving young workers, employers and investors to consider other growing UK cities.

An important signal to many global investors – and even some domestically – that an England exists outside and beyond London came in early 2015. This is when the Urban Land Institute (ULI) ranked Birmingham as a top European city (#6) for property investment, ahead of London (#10), Amsterdam (#8) and Copenhagen (#7).

This isn’t news to everyone, including investors who are already banking on developing property in all points east, west, south and north. Lucent Strategic Land Partnership projects now underway in Allerdale, Southampton and Peterborough bear this out.

The survey (conducted jointly by the ULI and PwC), “Emerging Trends in Real Estate Europe 2015,” bumped London down because stratospheric property prices there simply make it a hard investment for anyone new to the game. Because of their affordability, cities including Birmingham are able to attract the entrepreneurial class, which then create jobs that are near more-affordable housing for productive, younger workers.

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Forming new property from the sea has gotten sophisticated, even as the relentless tides are a force to be reckoned with. But it’s worth the investment.

The new scheme at Royal Pier in Southampton will be constructed partly on existing land at Mayflower Park and Town Quay, and partly on land reclaimed from the sea. It is this reclaimed land that presents the major challenge for Lucent Group ("Lucent") on this project.

As participants in a joint venture land opportunity know, any work undertaken on the coastline is always going to be difficult, but the scale of the reclamation at Royal Pier Waterfront ("RPW") presents its own trials. In essence Lucent will build a dam out into the Test Estuary using sheet piling that stretches from the existing Red Funnel ferry terminal right out to the tip of the old pier structure, then returning back in a straight line to the western end of Mayflower Park. This will create a 13 acre lagoon, and the next step will be to pump out most of the sea water which will leave a large ‘hole’ – ideal to be made into a large basement and exactly what Lucent plans to do.

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The design of new property is a collaboration of architects, investors and the existing community. Ideally, cumulative creativity spawns exciting new places.

Placemaking is a hot topic for local planners. Often there is a big divide between the business community who look at the viability and a local authority who are undertaking visioning workshops for a large development. As such, it is important that we bridge this divide. Development does not need to be boring; good design is essential in creating a development, which captures the imagination and is welcomed by the local community, residents and investors (e.g.,real asset fund managers). So how can this be achieved?

Firstly, engage a good design team; a team that has the flair, imagination and organisation to translate the clients’, local authorities’ and local communities’ aspirations into a workable scheme, adding their own quality and style to the plans.

Secondly, put together a highly experienced technical team, a team which cannot only identify key constraints, but which can also produce workable solutions with the design team. Seeing the constraints as a potential opportunity allows the design team to integrate this into the overall masterplan. For instance, in the Lucent Lincolnshire Lakes planning applications, the drainage system was designed not only to provide a functional network but also to offer a visual amenity and ecological benefits, adding to the individual character of the development. Financial backers who are familiar with investing in real assets understand how sustainable and aesthetic features add value to the final product.

Tagged in: land development
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So many factors spell out a rational case for building more homes. It’s important that local politicians study the well-documented benefits and lead the way.

Since the publication of the Barker Review in 2004 successive UK Governments have agreed that around 245,000 homes need to be built each year to meet the country’s housing needs. In 1977 314,090 new homes were built in the UK. Two years later that figure was down to 251,820 and since then there has not been a single year where house building completions in the UK have reached 245,000. During the 1980s the average annual completion rate stood at 217,314; by the 2000s it was down to 191,332. Last year the UK housing industry built 140,930 new homes.

This long-term undersupply has manifested itself into what we are now calling a ‘housing crisis’ leaving many working people with longer commuter times, smaller homes than they desire, high levels of housing debt or excluded from home ownership altogether. The average home in England now costs 8 times the average wage. In a country with high economic ambitions we need to deliver greater housing choice at more affordable levels.

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Posted by on in Investment

The pressing need for housing has only increased since the 2008 financial crisis. People are working and need homes, and private investors can build them.

Local Authorities in the UK are currently facing huge challenges. The global economic downturn has reduced central funding whilst the country’s population increased by 7% in the decade to 2011. Government figures suggest that 232,000 new homes will need to be built every year to meet projected household growth in England alone over the 25 year period from 2008 to 2033. So how do local authorities build more homes with less money whilst central government is putting them under increasing pressure to do so?

Traditionally the answer would be found in selling off land to a developer and hoping that the developer would build what was needed, where it was needed, when it was needed. In today’s environment, that is not much of an answer!

The Lucent Local Investment Partnership (LIP) is a sophisticated solution to this problem. Lucent provides the commercial know how, market relationships and investment funding (via strategic land partnerships) required to give local authorities a holistic plan across their development portfolio, to assist them in gaining the best returns for their land assets and to ensure that the developments are entirely appropriate and in keeping with the local community.

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The government is investing in housing to help Britain build again. In April, it unveiled its Locally Led Garden Cities prospectus, coupled with an invitation to bid for £1 billion investment in infrastructure.

By: Martha Grekos

The basic aim is to deliver up to 250,000 new homes between 2015 and 2020.

Unlocking large-scale housing development is critical to the supply of new homes in the medium to long term. Garden cities offer the opportunity to take a strategic development decision about how housing needs should be met now and in the future.

However, they are tremendously hard to make work, because they need complex land assembly, key infrastructure funding, cross-boundary co-ordination of local authorities and statutory bodies, an element of compulsory acquisition and, most importantly, a clear and long-term policy commitment.

 Investors working through property fund management schemes have to be certain that their fund managers can work through this complex maze.

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The steps required to build a quantity of new homes are daunting to many local and even national leaders. Lucent’s capital growth management can get it done.

Politicians have “forgotten” that housing policy is central to economic and social wellbeing and regard housing as a “private good, not a public service”.  I should note here that these are not my words, but those of David Orr, President of the National Housing Federation, at their 2014 conference this week. Are they an accurate assessment? Probably not totally fair given the raft of Government initiatives during this Parliament aimed at boosting house building.

Nevertheless, the NHF’s strong rhetoric and the formation of the ‘Homes for Britain’ coalition pressure group are symptoms of the UK’s housing crisis. But it isn’t just campaigning groups that are making noise – think tanks, businesses and the public have all recognised the problem and are set to make housing policy a central theme in next year’s general election. Indeed, a recent poll from YouGov showed that housing is one of the top five most important issues for voters.

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The UK housing crisis makes no sense when the abundance of available land is considered. Some local authorities partner effectively with private developers.

They say that necessity is the mother of innovation. With the housing crisis sitting stubbornly at the top of the political agenda for months now, countless think tank studies, business manifestos and government reports all point to one conclusion: the UK needs more housing, and this needs to happen sooner rather than later.

The start of September saw the coveted £250,000 Wolfson economics prize go to David Rudlin, an urban designer, for his plan to expand 40 UK towns and cities with ‘garden city’ extensions. From one side came high praise, that it was an innovative and viable plan, a bold and daring solution to the housing crisis – from the other, outcry that it was simply nothing more than urban sprawl. Indeed, Brandon Lewis rejected the plans saying that the Government would have nothing to do with it. The problem is not a dearth of capital: investors working through alternative investment funds recognise the financial opportunity. The principal objections to the plan stemmed from the proposed expansion into the green belt, attracting fierce criticism from Lord Rogers of Riverside and the Campaign to Protect Rural England.

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Capital growth planning benefits more than housing investors– local authorities find Lucent’s development models resolve many of their issues as well.

Last month this note discussed the issue of ‘predictable outcome’ and the increase in housebuilding that is occurring in the UK (new home registrations in April were the highest April total since 2007). We have spent many months arguing the different variations of this theme: whether it be the overwhelming demographic driver for housebuilding that exists in the UK or the absolute cross-party political support for housebuilding and the economic policy initiatives that have subsequently stemmed from that demographic reality.

A recent article in the Financial Times (‘UK housebuilders embrace collaborative spirit to lower risk’, May 28th 2014) has prompted me this month, however, to emphasise some rather more technical issues that underpin the opportunity that the Lucent Strategic Land Fund (LSLF) is delivering to investors.

There has been a paradigm shift in the way in which land is being brought forward for development in the UK. Housebuilders are increasingly focusing their efforts on housing delivery, rather than investing in strategic land, for the reasons outlined below. Having identified this trend several years ago, and the gap in the market that it created, the LSLF is delivering land in a manner that the market requires with planning consent and appropriate infrastructure in place:

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Historical data shows that UK house building typically rises post-financial crises. But our planning system keeps supply significantly short of demand.

The improved returns we predicted, on the back of the new projects undertaken by the Lucent Stragetic Land Fund in February, are continuing as witnessed by the performance in April - up 1.19% for the month.

Investors (such as those involved in real asset investing) understandably take comfort from 'predictable outcome'. Extending that theme the chart below confirms that historically house building in the UK enters a predictable period of 'boom' six years after a period of economic turmoil. Six years on from the height of the Financial Crisis the UK is now set for another such house building boom.

This time, however, this predictable economic trend is being massively reinforced by demographics and deliberate government policy. The Office of National Statistics expects the UK population to increase by nearly 20% in 20 years. That in turn has led to cross-party political determination, and a whole raft of policy initiatives including the Help to Buy Scheme, to have more houses built. A recent review of The Barker Report to Parliament stated that the figure needed to meet housing demand is now close to 320,000 new builds pa (which is more than double current levels of delivery). Those houses, however, cannot be built until first the increasing demand for land with planning consent is met: exactly what the Lucent Strategic Land Fund delivers. Demand for strategic land is set to significantly outpace supply and, whatever business you are in, if the demand for your product significantly outstrips supply then you are in a good place – capital growth partners engaged in housing development please take note!

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Posted by on in Investment

A tsunami of demand already swamps available housing supply. It will require 25 years of aggressive building for builders, investors and planners to catch up.

Investors from emerging markets are increasingly turning to UK real estate as a reliable, long-term investment target. As the market grows crowded, however, they are taking a more granular approach to it, seeking low-leverage opportunities in supply-constrained sectors. The residential sector in particular is garnering investor attention, as demographic trends and government policies point to strong fundamentals in the short and long term. Of the many facets of the residential sector, the provision of consented land to the house-building industry – the work of land fund managers – offers perhaps the best opportunity.

After the fallout of 2008- 2009, UK real estate quickly became a target for emerging market investors, especially from Asia: in recent years the market has solidified its standing as a top destination for global investors in property funds and land funds in particular.

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Posted by on in Planning Policy

If we are to satisfy the critical and growing need for homes, alternative investments in green belt and urban sites have to be considered. Smart design helps.

Much has been made of the various government initiatives to both kick start the UK’s economy and increase demand for housing.  Several programmes were introduced in the Budget in April 2013:  the Help To Buy Mortgage Guarantee scheme, the Help To Buy Equity Loans scheme and the Build To Let scheme.

According to Kieran McLaughlin, a Director of Jones Lang LaSalle, together with a significant uplift in mortgage approvals – up 25% since January – and the re-emergence of the 95% mortgages from providers like Halifax, these initiatives have boosted market confidence.  Indeed the share prices of the main house building PLCs have increased by 50% on average since the beginning of the year.

There are concerns however that all this demand side activity will do little more than create another housing bubble unless there is also an increase in supply.

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The divisibility of land enables housing-driven real asset portfolio investing more liquidity than alternatives such as tall buildings. This broadens exit options.

In light of the difficulties recently experienced by several funds that have led to their suspension or closure, I wanted to reiterate the robust controls that the Lucent Strategic Land Fund (LSLF) has in place to ensure its continued financial well-being, particularly with regard to fund liquidity.

Admittedly real asset funds do not have the same liquidity as a daily traded equity fund. This is something that investors should always bear in mind. Liquidity therefore has to be carefully managed. This is an area the Investment Advisors and the Fund have to plan for, both during the initial submission of the file to the regulator and on an on-going basis.

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A confluence of economic and demographic factors draws investment inflow to UK land-to-housing investments. Specialists in land assembly provide critical advantages.

There is an acknowledged housing shortage in England and a population forecast to increase by 17.5% within 20 years. Existing housing stock needs to increase by 29% by 2031. This presents a huge opportunity in land development to which Lucent Group is uniquely well placed to respond.

Lucent is the only group in the UK able to undertake a rigorous land acquisition process backed by the proven "in-house" land skills that are necessary to bring land forward for development. This is done without bank finance given the Group's own international fund-raising capability via the Luxembourg-domiciled and -regulated Lucent Strategic Land Fund (LSLF). These and several other factors draw investors from around the globe to house building-driven real asset funds.

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Posted by on in Economy

The Lucent Strategic Land Fund thrives at bringing investors to build residential communities needed in the UK. Rigorous governance and sustainability help.

In October 2012 we announced that the Lucent Strategic Land Fund had grown in value by just over 50% since we launched in 2010.

The market case for strategic land development is overwhelming: There are many more people wanting homes than there are homes available. This acute housing shortage in the UK means there is a high demand for "oven-ready" sites that can be developed for residential or mixed use. Official projections show the need for an additional 232,000 homes to be built in England every year just to meet current household growth. And yet in 2009 there were just 118,000 housing completions; in 2010, 102,570 completions; and in 2011, 109,020 completions. These figures have helped to create strong cross-party political support for the need to boost the house-building sector and for changes to planning laws that are designed to make the development of land easier. The constraint on the delivery of "ready-to-build" land is the single biggest hurdle to increasing housing supply.

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The Government recognises that aggressive house building is essential to the UK economy. This is why planning reform and funding make land investments viable.

Is it a free-for-all in land planning?

Well, not quite!

The Government is proposing some significant reforms to "provide a comprehensive plan to unleash one of the biggest home-building programmes this country has seen in a generation," in the words of Prime Minister David Cameron. By extension, this means that capital growth land opportunities are likely to increase for private investors.

The proposed reforms include the following:

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