Property investment of £350m gets go ahead at Barking and Dagenham
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Photo: Dennis M2, Flickr.com. CC.
London Borough of Barking and Dagenham has agreed a £350m investment in property, with a significant amount of development to be carried out through a new regeneration company.
The council’s cabinet this week voted to approve £250m for property investment, with £100m being directed at land acquisition.
The council is targeting a return of 5% a year to help it build 35,000 new homes by 2035.
A report to the cabinet meeting said: “To achieve the target investment return the council will construct an investment portfolio across a range of asset classes covering residential, commercial, industrial and energy assets.
“The aim is to create a balanced and diversified investment portfolio to deliver the overall investment target.”
It said that investing in a portfolio of projects with different levels of returns would diversify risk and enable higher yielding assets to compensate for the lower risk, but lower return from assets including affordable housing.”
At least 50% of the portfolio will be invested in intermediate housing, the report said.
To deliver development schemes, the council has approved the creation of Be First, a stand-alone company owned by the authority.
The report said that the move would help attract and retain skills necessary to deliver the objectives of the strategy.
It said: “Although the scale of investment is subject to change as schemes are brought forward, the programme anticipates a level of investment in excess of circa £750m and this will require a step-change in the capacity and skills to successfully deliver on this scale.”
Set up costs and initial working capital would be provided through a market rate loan from the council, with Be First expected to start generating a profit by 2018/19, the report said.
The company is expected to generate a cumulative surplus of £17.5m by 2025/26. The council has calculated that creating a stand-alone company would deliver savings over an in-house solution of £18.6m.
A business case for the new company proposed that it should be measured against performance indicators relating to improved educational performance, higher skills and average earnings, community cohesion and health and well-being.
The report said: “Be First’s performance will be measured against a balanced scorecard of parameters that will encourage it to deliver the holistic regeneration agenda.”
