Provision of Accessible, Affordable Domestic Housing Sites and Employment Premises

The region requires significant core investment into strategic sites and premises that can support foundational growth, local supply chains and sector-specific developments. In addition, support is needed for unlocking unviable sites for domestic housing development and for diversifying the quality, variety, and sustainability of local housing.

Across the UK, development funding availability remains highly limited for both debt and equity, in some sub-markets it is virtually non-existent. Traditional lenders have constrained risk appetites, offering lower leverage and often only being willing to lend when a scheme is fully pre-let. This is exacerbated by the current Covid-19 pandemic. Without developing speculative schemes, such as those that might support clusters, and creating good quality employment space for inward occupation of enterprises, the region will be at a disadvantage to other competing regions that are able to provide this occupational pipeline.

This is equally relevant for prime city-centre office space (which historically has been pre-let prior to development; this is seen less frequently in the current day) as it is for small SME industrial and manufacturing type space, where the occupiers seldom are able to plan ahead in time to commit to pre-let space. The accelerating trend in remote working, catalysed by the Covid-19 pandemic, is expected to make pre-letting even less common for at least the short-term but with likely consequences in the medium term.

Proposition

Provision of additional early stage development finance through enhancing the CCR Sites and Premises funds. Despite the lack of development debt available, there is still strong appetite from funders for completed development schemes with evidence of letting potential.

The proposed Fund provides the ability for innovative, flexible and structured finance solutions at various access points in the capital stack whilst bringing together the public and private sector to create the right environment to accelerate the delivery of projects. This will ensure that the Cardiff Capital Region is well positioned to maximise opportunities that arise in the economic recovery.

The Fund is designed to align with CCR objectives only funding projects where the strategic criteria are met. The Fund will target sectors where investment is needed and alignment to the strategic goals for CCR allowing for:

Regeneration & Infrastructure: Creating grade A or equivalent space, reusing Brownfield land, regeneration, and recycling capital
Innovation: The Fund will target projects used to in support of innovation as well as business growth and regeneration.
Skills and Employment: To promote and measure jobs creation from funding
Connecting the Region: The Fund will be purposed to serve the CCR strategic approach and Funding connections within the region should also be considered
Covid-19: Providing funding to kick start developments, which will attract inward investment which may have slowed due the pandemic as well as well as accelerating post covid-19 economic recovery.

Requirements

£100m – To scale up the CCR Premises Fund to facilitate investment in cluster initiatives such as the creation of a Fintech hub.
£50m – To scale up the Housing Viability Fund over the next 5 years.