Must London Allow Density and Sprawl to Address Housing Shortages and High Prices?

The city has to do several things to keep it affordable and vital. Public policy matters for increasing housing supply, but private investment is already at work.
The population of London continues to increase at a faster rate than housing growth - by quite a bit. In fact, while the shortage of homes currently is thought to be somewhere between 500,000 and 800,000, the city additionally falls short of the goal to build 80,000 new homes each year. Only 18,380 new flats and homes were built in London in 2013 as the housing gap grows ever bigger.

The prevailing argument was to build on brownfield land first, taking advantage of previously used space by constructing something new in those spaces. But by definition those spaces largely accommodate smaller-scale construction, which most likely will not fill the entire void any time soon. Private investors, through such things as real estate investment trusts and real asset investing (more often individual investors who work in smaller groups), build where they can find available land and achieve planning approval.

This is why the discussion about density, high rises and suburban/greenbelt building is increasing. London is fairly spread out within the city proper - it is the world's 23rd most populous city (second in Europe only to Moscow), yet ranks 43rd in density with about 5100 people per square kilometre. The city's tallest building, The Shard London Bridge, with 73 floors above ground, still only ranks 87th among the world's tallest buildings in the world. Architectural issues aside, London could build a bit more densely with more high rise residential towers.

The city’s options include several approaches:

Increase housing density in London - London First, a non-profit organisation that promotes pro-business public policy for the city, published "Home Truths, 12 steps to Solving London's Housing Crisis" in March 2014. Among those dozen recommendations is to increase density, noting how peer metropolises are denser. The publication suggests that city "encourage and facilitate greater density of well-designed homes within London," such as through designated high rise districts.

Transport-oriented development in new suburbs - London First’s "Home Truths" also advocates for the construction of transport infrastructure such as Crossrail and Crossrail 2, which would lead to the development of new suburbs. Of note: development near stations on these transport lines within the city is likely as well.

Building on greenbelt land - The city has to consider the sacrosanct nature of greenbelts, and whether or not they serve their intended purposes. For every example of a lovely, green view to residents located nearby, there are examples of disused greenbelt lands that fail to live up to the idea of what greenbelts should be. Writing for City A.M., the chief executive of London First, Baroness Jo Valentine writes, "It's time we put a myth to bed: greenbelt is not all parkland where deer graze serenely, surrounded by wooded copses. Portions of the greenbelt are forgotten, unloved scrubland that would be considerably improved if thoughtfully developed. Although we don’t need to go so far, Paul Cheshire of the LSE has noted that taking a 1 km ring outside the M25 would yield enough land for more than a generation of building at current London rates."

Tellingly, uber-green writer Lloyd Alter, who is managing editor of TreeHugger, wrote in The Guardian that there is such as thing as "too dense," noting that London already has more people per square kilometre than New York and Toronto. He extols the virtues of "smaller flats, closer together, with narrower streets that acted as their living room, pantry and entertainment centres" found in Paris, Barcelona and Montreal - all designed and built before the age of the automobile. But he doesn’t much care for skyscrapers, claiming they destroy streetscapes and are energy-intensive to build and maintain. Alter places highest values on active transport (walking, bicycling and public rails and buses), around which he feels development should be designed.

Perhaps the best approach to improving on the housing shortage is an "all of the above" strategy. Capital growth partners, in tandem with large and small homebuilders, should build in planning regimes where an understanding of the need is clear and where such development will enhance the existing communities. Government-sponsored efforts - such as establishing density zones and to build new transport rails - can help facilitate this as well as enhance the city's low-carbon efforts to a sustainable future.

This is not misplaced optimism: individual investors are strongly drawn to real estate because of its historic record of generating strong asset growth. But all investors should consult with an independent financial advisor to determine an appropriate degree of risk in property development.

Labour's Emma Reynolds Predictions: A Dire Housing Future - and Her Proposed Solutions

The shadow housing minister's job is to disagree with the Government. But her policy proposals to boost homebuilding investments certainly offer detailed perspectives.

As shadow minister of housing, it is MP Emma Reynolds' job to challenge the ruling Government. In so doing, she arguably lays out a future set of policies and programmes that might be how the UK housing crisis is addressed should Labour take back the reins - not as, she contends, how the Coalition Government is doing things.

Reynolds has laid down her positions in light of some very troubling observations and statistics. At mid-2014 she projected to the year 2020 saying that the nation’s deficit in homes would climb to 1.3 million, or as she put it "equivalent to the city of Birmingham." And for homebuyers, the average price would be 13 times the average wage at £359,000 - requiring an average deposit of £72,000, a number she sourced from the House of Commons library.

She also lobs criticism at the Government's Help to Buy scheme for boosting demand without directly increasing supply, an equation she says that can explain the rapid price inflation that seems to be occurring since the programme began implementation in 2013. While others may say this is simply a lag time between when developers (often funded by time-driven investors such as capital growth partners) see action and when they are able to deliver more completed homes, the country's one-year average price increase of 10% at mid-2014 has to be acknowledged.

Reynolds laid out Labour's ideas in detail on 1 August 2014, but she made no mention of the empty homes in England (many of which are held by foreign investors, treating property as an investment more than as an abode). She does make clear what the party would do if restored to power:

• Undertake the biggest council home building programme in 40 years - With 1.6 million families in queue, she says the number is growing because the fewest number of council homes are being built today than at any time since record keeping began.

• Support first-time buyers by boosting supply - Reynolds says that getting young families on the housing ladder is what distinguishes Labour from Tories.

• Underwrite loans to small builders to "unlock their potential" - Noting that when 200,000 homes were built each year, in the late 1980s, smaller builders were responsible for two-thirds of that total. Today, they are responsible for less than one-third of the much smaller number of home completions last year (about 109,000).

• End land banking - Empower local authorities to enforce "use it or lose it" rules on holders of land with planning permission but on which nothing has been built.

• Build New Towns and Garden Cities - In the spirit of William Morris, providing housing for communities en masse similar to those towns successfully developed in the post-War period in places that include Sheffield, New Ears wick, Letchworth and Hampstead Garden.

Making additional partisan distinctions, she notes that in local councils headed by different parties, the commitments to build vary. Councils controlled by Labour are committed to building 862 homes per annum, while that number drops to 508 with Conservative councils and 393 where Liberal Democrats hold sway. By and large, investors through real asset funds look to build where those commitments are greater, and in those locations the local economy benefits from more housing, new employers, and increased infrastructure and commercial development.

The high demand for housing in public and private markets is unquestionably a draw to investors. And under each party leader, commitments are put forth emphatically to set policies that encourage more building. Any individual considering this sector for achieving asset growth is encouraged to speak with an independent financial advisor to sort through the relative risks and rewards of such investing.

Is the UK Housing Shortage Crisis a Myth?

Yes, there are many empty homes in London and elsewhere. But affordable, middle-class homes are lacking - something the private investment sector is correcting.

A columnist for The Guardian, Simon Jenkins, caused a bit of a stir in May 2014 by writing a contrarian viewpoint regarding housing in the UK. In his opinion piece "Housing crisis? No, just a very British sickness," Jenkins did a fair job of dissecting the economics and geography of homes in the country – including how many thousands stand empty in the midst of a housing shortage.

So, there is no housing shortage? Well, not exactly. Jenkins' point is that the wrong homes are in the wrong places, and that Government programmes favour some of these misplaced portions of real estate. As private investors (such as those in alternative investment funds) in middle class housing will point out, those homes are sold and occupied by owners in relatively short order, disproving any notions of a glut. Rather, location and price points for housing are what matter.

Jenkins references others who share or at least inform his unorthodox position:

Neil Monnery (author, "Safe as Houses"), who notes that the relative wealth of Germany comes from its middle aged citizens investing in industry and less in housing (only 43 per cent of them own their residences, even if comfortably middle class). The country does not have the rapid home price and rental inflation found in the UK.

Danny Dorling (author, "All That is Solid"), where the author compares rooms per person statistics of today versus 1971. Formerly the number was 1.5, now it is 2.5, which Dorling says illustrates longer occupation in larger homes by families after children are grown.

Rebecca Tunstall, an economist who writes on income inequality, cites how the top 10 per cent of Britons had three times as many rooms as the poorest in 1981. Today that number is five times as much - suggesting that it's largely about growing income inequality (a point made emphatically in the Thomas Piketty book, "Capital in the 21st Century").

Other writers have noted the well-known fact that rich foreigners - mostly from Russia, China and the oil-rich Middle East countries - have bought up stately residences in the most expensive neighbourhoods of London as investment homes (example: One Hyde Park in the City of Westminster, where 34 of 83 luxury residences qualified for second home council tax discounts). This phenomenon largely support’s Dorling and Tunstall's points, that increasing wealth at the upper end of the spectrum skews the numbers. Which somewhat undermines Jenkins' point, that there is no housing shortage. The lack of affordable housing, where working and middle class people can live in relative close proximity to their jobs, is the real housing problem in England.

It bears noting that under-occupied homes, many falling into disuse, are all over Europe, particularly in Spain, where a 2011 census shows 3.4 million empty built properties, mostly in resort areas. In Italy it is at least 2 million, in Portugal 735,000, in Ireland 400,000 and the UK, 700,000 (source: Lea Data collated by the Empty Homes Campaign).

Gavin Smart, director of policy at the Chartered Institute of Housing, attributes these vacancies to houses in regions that lack jobs. Which underscores an interesting point: Local Planning Authorities in UK towns and boroughs are tasked with supervising sustainable development. This includes giving planning permission to the construction of homes that help bolster the local economy. When employers look for places to locate their workplaces, they want to be near a ready supply of labour. The organic means by which private capital through real asset funds investors build homes are within this construct.

Investors in real estate generally fare well with putting their money to work at building homes. But any individual who wishes to participate in this sector should always do so with the counsel of an independent financial advisor.

How are "Locally Led" Garden Cities Different?

Localism in land use planning is the new mantra for address the UK housing shortage. But smaller scale, investor-driven projects get more done for now.
The housing shortage in the UK is generating a revisiting of the "garden city" concept first proposed by Ebenezer Howard in the late 19th century. Some of the most aggressive, large-scale building in England after the Second World War (Basildon, Central Lancashire, Letchworth, Milton Keynes, et al.) are in retrospect considered successful. Now, Deputy Prime Minister Nick Clegg and the coalition government are proposing that garden cities be developed in Buckinghamshire, Warwickshire and Oxfordshire.

There are many reasons that garden cities - with 15,000 to 30,000 homes each, along with the infrastructure that enable these to be largely self-contained - may not succeed. Neighbouring towns fear the loss of Greenfields and an inevitable increased burden on highways. And an "eco-towns" version of garden cities proposed ten years ago was largely perceived as a means of overriding local planning authorities and their agendas.

In the interim, private development on a smaller scale has been responsible for much homebuilding in the UK. Real asset investing groups have largely and independently obtained planning changes that turn disused land into new communities.

The Cameron government, through the Department for Communities and Local Government, proposes a new iteration on this approach called "Locally-led garden cities." In an April 2014 publication, Deputy Prime Minister Clegg and Eric Pickles, Secretary of State for Communities and Local Government, state the following: "Local people know what is best for their areas...people want to be ambitious and innovative in their approach to delivering the homes they need...new development at new settlement scale can offer a great opportunity to build in quality from the state in terms of design, open space, homes and jobs that make places great to live in."

The publication goes on to note the department is investing more than £1 billion to bring about "locally-supported housing schemes capable of delivering up to 250,000 new homes." Calling it the 2015-2020 Large Sites Infrastructure Programme, Clegg and Pickles are emphatic about how local authorities should express how they want their garden cities to develop. Rather than the imposition from Whitehall on unwilling communities, the Localism Act-era approach is to allow local planners to devise their own new, large-scale towns.

Still, opposing voices cite reasons why even locally led garden cities will be challenged. One is that the 20 to 30 year time frame to build these places means they must transcend the shifts in governments over those decades - in addition to the fact that delivery of homes will take a while as well. Another question: just what characteristics of design, transportation and affordability will best serve the interests of occupants, neighbours and local economies?

Offering some answers might be Saffron Woodcraft, a social anthropologist with the community consultancy Social Life. Woodcraft presented her work on garden cities, which she observes have had successful applications for decades in disparate places around the globe - including Soviet Russia and modern China (in skyscraper villages), as well as some developments in England - for various reasons. She urges the following questions be addressed in garden city planning:

• Will development favourably affect the physical and economic wellbeing of existing towns, cities and neighbourhoods?

• Can the garden city deliver the full range of community facilities and services?

• Is it still the right way forward for urbanism and development in the new century?

While government support for development of garden cities will likely be necessary in all cases, private investment will ultimately be required as well. Whether working through property fund partners, a real estate investment trust or homebuilders, investors should consult an independent financial advisor to identify their most strategic, risk-balanced approach to garden city or other types of housing development.

Do EcoVillages and Other Sustainable Developments Inform UK Housing Concepts?

Green developments are perceived as a means to circumvent local planning processes. Private investments in earth-friendly, resilient development can still work.

In this age of sustainable design and building, it's an unsettling fact that the "eco-towns" thought to offer housing solutions in the UK have not come to fruition. But in the best ways of looking at it, the stalled concepts of green communities might provide ideas and lessons for the kinds of communities that are and will be built in the near future. The problem may not have been green building per se, but the process by which such communities are bureaucratically created.

In 2007, Gordon Brown initially proposed ten large-scale, carbon-neutral communities that would be built on greenbelt land. Ideally this would have delivered 200,000 new homes which, of course, are sorely needed in the UK where an estimated one million households are waiting for affordable accommodations.

The idea of earth-friendly building is technically no longer a pie-in-the-sky concept. LEED certified buildings, including residences, as well as Passivehaus construction, which entails structures so energy efficient they draw little to no energy from outside sources (using solar or geothermal energy instead), are becoming commonplace in Europe and the world over. With construction supply networks incorporating once-advanced technologies and materials as standard equipment, it has become increasingly expected that high-performance buildings make much better use of resources (energy to build and energy to operate) than in previous times.

But something that is well understood by experienced homebuilders and investors (such as land fund managers) is that it is unsavoury and nearly impossible to parachute in a large-scale development onto any community. EcoTowns have yet to be built, and the reasons are largely because existing communities opposed them - not because they are environmentally sustainable, but because they impose large changes on the existing communities themselves. The progressive concept was perceived as a means to circumvent planning authorities, but those authorities fought back.

Two communities are still on the planning process track, in North West Bicester (a 382-acre, 2,600 home site) and Rack heath (near Norwich), which could include 5,000 new homes, 30 per cent of which would be affordable. Each would feature renewable energy use, efficient waste reduction and management, minimised transportation emissions (incorporating public transport, bicycling and car sharing) and efficient water use. But as of late 2014, neither has been built.

Top-down planning is problematic in England, particularly in the new "localism" era. Planning authorities are required to increase the housing supply to meet the high demand, but how and where is to be worked out with local communities. This is how private development companies are accustomed to working - develop a plan and provide the infrastructure necessary to enhance the community. Typically, these are on a smaller scale so as to minimise disruption and to answer immediate needs, such as to provide housing that then makes the area attractive to employers.

Still, the environmental goals and tactics can be incorporated into smaller, investor-led development. Energy-efficient homes are more valuable. Natural green spaces, watershed management, preservation of habitat and healthful living amenities (such as walking and biking accommodations) still provide a qualitative living experience.

This is why capital growth planning from private investors has a greater chance of succeeding in the next few years. Working through prescribed (and modernised) planning processes, they can propose community-appropriate development where eco-friendly features are a clear enhancement of the local environment. In other words, sustainability does not require large-scale building.

Individuals can get involved in these developments as investors, including members of those existing communities; before doing so, however, they are advised to consult with an independent financial advisor to determine if the investment fits an overall wealth-building strategy.

Beyond Just Housing, the UK Needs to Develop Holistic and Sustainable Communities

Fast building, as is needed in England, can often lead to poor quality structures. But with new and better, sustainable homes, smart houses are possible and affordable.

According to UK National Statistics, the Department for Communities and Local Government reported an 18 per cent rise in new housing starts for the April-June 2014 quarter compared to the same three months in 2013. Looked at another way, the 36,230 house building starts in the second quarter were 112 per cent above the same quarter in 2009 (but 26 per cent below the building peak in 2007). This increase is important, good news and likely an indicator of the success of Government lending schemes as a way to loosen credit and make more people eligible and able to buy homes. This consequently leads to homebuilders increasing their productive output because a larger market has materialised.

So what might go wrong now? With so large a pent-up demand for housing in the UK, joint venture partnerships that marry investors with available land and homebuilders are actively pursuing planning authority approval to build where homes are needed most. Social housing and projects by private housing associations are also under construction to increase affordable housing and alleviate high rental and purchasing prices. But recent history shows that hasty building can sometimes birth mistakes, which can lead to poor quality and underperforming houses.

In the U.S., hasty building in the mid-naughts, particularly in the American South recovering from severe hurricanes in 2005, led to significant off-gassing problems from imported Chinese wallboard. Something in the gypsum wallboard material caused wiring to deteriorate, affecting between 60,000 and 100,000 new homes and the health of occupants.

Homes in the UK were spared those problems. But a four-year study of houses in the UK, Germany and Sweden by researchers at the University of East Anglia (UEA, in Norwich) found a different problem occurred in the 1990s through 2010. Housing in these places often under-deliver in terms of energy efficiency and indoor air quality. The report attributes these under-performing homes to "poor teamwork across design and construction processes [which] leads to defects that compromise energy performance."

So as the country proceeds with building, with a housing boom that by all accounts is needed to provide homes for a million households and a growing population, how can such problems be avoided? The UEA make a strong pitch for passivehaus ("Passive House") building - a standard of construction that aims to dramatically reduce the need for mechanical heating and cooling, even while improving on comfort and air quality.

More than 30,000 such homes have been built around the globe since the early 1990s. As techniques and materials become more readily available, the construction costs are no longer higher than by traditional methods. Long-term, they save a great deal of money on energy costs.

But sustainable building can also include renewable energy sourcing (e.g., solar panels on roofs), low-impact landscaping (plants that reduce heat and cold exposure, and which retain natural rainfall to reduce potable water use for maintenance). For communities, the economic benefit comes when homeowners spend less on utilities that in turn allows them more money to spend locally on goods and services. When applied to social housing and by housing associations, it reduces their costs as well.

Given the weather events of recent years - which range from summer heat waves to heavy winter rains - more climate-resilient, energy-efficient housing certainly is welcome. Retrofitting existing structures with energy-efficiency measure is often affordable as well.

Individuals who participate in real asset investing should scrutinise projects for sustainability features. So too do local planning authorities when considering land use changes to accommodate residential and commercial building. Investors should also consult with an independent financial advisor to determine if the project - hyper-eco or at least built to perform well - is a fair risk relative to their overall financial goals.

What are the short and long term risks of investing in land as a real asset investment?

Land assets are quite capable of yielding strong investment returns. But risks are everywhere - know what they are, and work with professionals if you can.

Without risk there is no reward, correct?

Investors understand the equation well, and financial planners help guide them to achieving the right balance of risk. Not only should the rewards be worth the worry, but favourable returns on investment should be well-timed to the investor’s needs. What’s clear today is that investing in real assets such as land – at a time of exceptionally high demand for residential real estate - seems like a good risk.

Alas, it is still quite possible to get it wrong. While some of history’s greatest wealth has been built from buying, owning and selling land and developed real estate, there are all kinds of circumstances - and bad ideas - that create unnecessary risk. In addition, there is the dynamic of time, whether the investor expects gains in the short, medium or long run. Consider the following that could occur to the land investor:

Landowners unwilling to sell at a reasonable price - Land that is designated for agricultural use is worth much less than when approved for residential or commercial purposes. An existing landowner may be aware of that valuation difference, and get greedy when pricing the land for sale. Seasoned property fund managers would know the level of price tolerance to make asset growth feasible - and be willing to seek land investment opportunities elsewhere.

Real estate is very reactive to economic downturns - The drop off in home sales and homebuilding in the UK after the 2008 financial crisis is a recent and clear lesson on how broader economics play a large role in real estate investments. Property investors who sold in 2007 saw great asset growth during the last of the bubble years, while those who were forced to sell in 2009 probably lost quite a bit. This is why shorter-term investments, such as those focused on strategic land development, at least enable the investors to have a clearer picture of market conditions when the development is complete.

REITs - The liquidity of real estate investment trusts make it attractive for the investor who is worried about the aforementioned economic downturns. But because it is traded on the exchanges, a REIT is also subject to even momentary fluctuations of the markets due to unrelated events. Also, due to a regulatory set-up that renders real estate investment trusts unsupervised by the Financial Conduct Authority (FCA), no complaints to this agency can be made, nor can compensation claims can be made with the Financial Services Compensation Scheme.

Ill-advised schemes such as "land banking" - While authorisations by the FCA provide due warning against this, there remain investments in what’s called land banking. This is where plots of land are purchased where planning permission is unlikely due to greenbelt status, remediation expenses on brownfield land, or simply being too small for development at scale.

It makes sense for would-be land investors to engage an independent financial advisor for guidance. A holistic review of an investor’s risk profile can help identify when real estate makes sense - be it through either a REIT, alternative investments in land or buying rental property.

What are the Relationships Between Land Fund Managers, Local Governments and Planning Authorities?

There are formal and informal ways by which investor-funded developers achieve land-use changes. But community relationships, and flexibility, matter as well.

From an investor’s perspective, property fund managers are the professionals with the skill set necessary to grow assets that are put into property development. They ideally make the calls that are needed to buy land at a low price and resell it at a much higher price – the higher the better.

This is about more than clever and strategic physical development. There are key negotiating skills required of the people who guide these alternative investments through the process, starting with negotiation of the initial purchase price on the land. But of equal value is the negotiation and management of the planning permission function.

Local planning authorities (LPAs) are critical to the land-value appreciation formula. Most work objectively, trying to satisfy the needs of their constituents with appropriate and manageable growth programmes. But their decisions are not made in a vacuum – there are several means by which they determine whether or not to approve a land use change:

• Formal - It is incumbent on local planning authorities to have a set development plan in place, with which use changes should be in compliance. This requirement is emphasized by the National Planning Policy Framework, which published new requirements in 2012. There, the NPPF stipulated that LPAs establish a development plan to promote a net growth in housing in a relatively short timeframe. This requirement was put forth to enrol local municipalities in the cause to increase the stock of homes, a critical national need.

• Informal - Unfortunately, only about half of towns and cities in England and Wales have developed their NPPF-mandated plans as of mid-2014. Among those that do not, the process necessarily defaults to what developers propose to the authorities. Those authorities can reject proposals for any number of reasons, however it stands to reason that they would be predisposed to a positive review of such proposals because of the critical housing situation. Here is where property fund managers need to be artful and convincing at communicating the benefits of the particular development they propose.

• Community engagement - The Town and Country Planning Association advises that community participation be at the core of planning outcomes. Certainly, when there is a well-organised opposition group that opposes development the community can be vocal and powerful. But experienced land fund professionals should be able to identify shared goals – and make adaptations and adjustments to development plans – that create alliances within those communities that can at least bring balance to the discussion.

As agents of government, planning authorities strive to find consensus while honouring differing opinions. In a similar vein, investment groups work to identify commonality such that development can ultimately move forward.

Individuals who consider land as an investment should themselves find an independent financial advisor to look at two factors. One is the prospect of the real estate investment itself, and the other is determining how real estate and other forms of real assets factor into the investor’s unique wealth portfolio. The relative mid-term returns of land use-based investments (18-60 months, typically) are part of that consideration.

Vetting Property Fund Managers: Whom Do You Trust with Your Land Investment?

When investing in land, most people need to work with experienced professionals. Every development is different, so check their skills, strategies and values.
The word "trust" has many applications in the world of finance and investing. And yet at its core it is about putting belief along with cash into the hands of others. It is deeply important and can be equally unnerving to even the most seasoned investor.

Property funds at least have the advantage of including a real, tangible asset. Investors can visit a site that is being developed, observe land features and the characteristics of nearby commerce and populations. It is possible to see how a property fund management firm can transform raw land into much-needed housing.

But how does an investor know which developers are going to do best with his or her money? In which firms can the investor know the best strategies are devised, the smartest property acquisitions made, the land use proposal is likely to achieve planning authority authorisation, and the property can be profitably sold to homebuilders and home buyers?

Independent financial advisors (IFAs) can access a firm’s track record, perhaps more readily than can an individual investor.  But regardless of how that information is found, past performance of a fund manager is an essential part of vetting who to trust with your pounds. Property funds could and should also be considered on the basis of at least three other factors:

• Fund leadership - What is the track record of individuals who make up the executive team at a fund? How adept might they be at adjusting to the variables of broader economic factors (such as the 2008 financial crisis and subsequent recovery), or to the specific features of past land development projects? How much time did executives and fund specialists spend in related industries, in tangentially-related industry sectors, and working with institutional investors?

• Property development strategies - The business of land, planning authority approvals, infrastructure development and building construction have many variables. Ask questions about how it will be done, what makes this management team likely to succeed where others may not, and how they plan to extract maximum value while creating saleable properties.

• Values - There are responsible and irresponsible ways to develop property, which, while based in intangible philosophies and ethics, can still impact the net financial results. For example, an environmentally sustainable development might involve upfront costs (but not always); with more sophisticated buyers, those sustainability features can be perceived as valuable and net a higher return. Ask the people who are managing your real asset investing about the newer analytical tools that assess the long-term value of “green” building and infrastructure features.

In a recent publication from the Urban Land Institute, "Emerging Trends in Real Estate Europe 2014," various property development leaders weigh in on who is funding the industry and how. The availability of financing has improved slowly since the financial meltdown of 2008, yet traditional lenders such as banks have been slow at increasing their participation until recently. Traditional financial institutions tend to avoid “time-consuming and tricky deals,” says the CEO of a multinational REIT – providing opportunities in the near term for alternative lenders such as institutions and the individual investor. For more guidance on this, contact an IFA.