Deal close for "unique" city housing joint venture
GREATER Manchester Property Ventures Fund (GMPVF) is close to finalising terms of its proposed joint venture with Manchester City Council which will see it delivering new housing schemes across the city.
The joint venture will see the city council providing land for redevelopment at market value, while GMPVF will inject up to £25m in cash to develop up to 250 new homes across the city. News of the potential tie-up first emerged in September last year.
Damian Masters, development director at GVA, which manages the property ventures fund on behalf of Greater Manchester Pension Fund, admitted the model “has taken a little longer than we’d hoped” to develop.
However, he added that the council had carried out a lot of work behind the scenes in identifying potential sites to bring forwards and said he was confident schemes could be progressed quickly once a deal is signed.
“This is new for all of us,” he told TheBusinessDesk.com. “As far as I’m aware, I don’t think it’s been done anywhere else. To have the local authority pension fund to invest their money alongside the city council is unique.”
The joint venture could allow the city council to bring “some of the more challenging sites that would never be developed on their own” to the market by cross-subsidising them with council-owned sites that have greater potential.
The joint venture would then develop a series of mainly two-, three- and four-bed homes before agreeing a fixed-term rental deal with a management company such as a social housing landlord, which would take on the financial risks of managing voids.
Masters said that the family homes would be offered at market rents.
“They’re targeted at people who are employed who earn too much to pay social housing rent but don’t have the £50,000 required for a deposit for a house.”
The model is being developed as a method for stimulating housing in the city-region to help meet housing targets. In the three years to 2010-11, the number of new homes completed in Greater Manchester fell by 76%.
Masters said that once the model is established it could be replicated across other parts of the city-region.
GMPVF is also jointly developing the 210,000 sq ft One St Peter’s Square scheme with Argent, which started on site last week. It has also taken space at the neighbouring Century House, where a marketing suite on the top floor offers views into the site where it is looking to sign occupiers to join anchor tenant KMPG, which has taken 65,000 sq ft.
It is preparing surveys for the former Royal Mail Sorting Office site in Stockport, where planning for a mixed-use scheme containing a hotel and offices is likely to be submitted by the end of summer.
It is also working up plans for the ‘Island’ site in Manchester city centre which it bought in November last year.
The site consists of three separate buildings – Grange House, 5 Ridgefield and Old Colony House – flanked by St James’s Square, John Dalton St and South King St.
Currently, it has 55,000 sq ft of offices on upper floors with restaurants Grill on the Alley, San Rocco and Pizza Express at ground floor level, but it can take vacant possession of the site by 2015. Currently, a redevelopment of the site is considered to be the favoured route.
Masters added that GMPVF was “exploring all kinds of opportunities” both within and outside Greater Manchester. It has shown an interest in the former Granada studios complext at Quay St complex being brought to market by broadcaster ITV and is “keeping a close eye” on the sale process for London Scottish House.
“We’ve got £300m and we want to invest it,” he added.
