Context 158 - March 2019

42 C O N T E X T 1 5 8 : M A R C H 2 0 1 9 other risk elements. Prior to the recession, banks were quite liberal with their lending on prop- erty projects as escalating property values would overcome most cost overruns. This approach had a habit of breeding hubristic behaviour but this does not work when values are static and costs continue to rise. A flat market will ensure that proposals are examined in forensic minu- tiae. The problem is that projects are unlikely to proceed where the minutia is unknown and no one wants to speculate. Other than prime locations, such circum- stances have essentially been the operating ground for the last 10 years. The finance market has become very wary of property lending and if it does participate, the level of diligence will be substantial. All this leads to a lowering of confi- dence and, therefore, activity. In locations where confidence is low, market failure can prevail over a lengthy period, increasing the likelihood of stigmatisation. This makes it all the more difficult to see how market-led regeneration can work without some form of state intervention. In previous market downturns, we have seen governments providing a stimulus to the sector through development grant subsidy as part of a regeneration/renewal programme but such support is now rare to find. If the state is not a willing participant in bridging the value/cost gap, projects struggle to operate. Unfortunately, since the recession there has been no long-term national regeneration policy or significant private development subsidy in Scotland. Scottish local authorities are left to decide their investment priorities at a time of limited resources and austerity budgeting, which inevitably means addressing immediate problems rather than adopting a long-term investment approach. Clyde Gateway Urban Regeneration Company has demonstrated that places can be turned around with public-backed investment with social benefits but such an approach is all too rare. While significant commitment has been given to funding affordable housing, little stimulus is provided to the remaining three quarters of the housing system. Property regeneration is much more than building houses. Successful long-term solutions have to come from a ‘whole-place’ investment approach, which provides confidence to local people and persuades other people to come into such areas. This can only be done by civic champions who have vision, leadership and commitment to generate wide-ranging confi- dence. A good illustration of public commitment and place-promoting leadership comes from Dundee City Council at its Waterfront Dundee project. This high-profile project has the benefit of a city centre and riverside location, but the challenge is for the state to play such a facilita- tion and investment role in smaller projects in more tertiary locations. It is encouraging to hear principal public offi- cials pronounce that ‘we are open for business’ but their words have to be backed by investment deeds. To this end one hopes that City Region funds, including a municipal equity commitment, will help liberate many of the projects that have been sitting dormant for the last 10 or more years. For years, public officials had a standard phrase of ‘risk transfer’. However, in areas of market failure the private sector has effectively reversed that risk transfer to the state calling on it to get more involved directly proactively. Without state participation, fund managers are likely to look to place their investments elsewhere. Short termism will not correct market failure, nor will it transform our rundown places and property. To get ‘inclu- sive growth’, Scottish Government, with its public partners, has to step up and bridge the gaps.They need to act as municipal entrepreneurs leading and promoting a commitment to a patient-capital approach that is based on a long-term vision and direct participation that will restore our heritage, our buildings and, most important, give confidence to people in the renewal of our places. Steven Tolson is a chartered surveyor and property economist. The new V&A Museum under construction on Dundee Waterfront in 2017. In the foreground is the Discovery, which took Scott and Shackleton to the Antarctic in 1901, its masts removed for repair (Photo: Laerol, Wikimedia)