Building Finance News:– An extra 21,000 new homes are expected to be built over the next 12 years in Newcastle under new development plans for the North East.
Lower, Middle and Upper Callerton, Kingston Park, Newbiggin Hall and Newcastle Great Park have been identified as key growth areas.
In May the mayor for the new devolved authority of Newcastle, North Tyneside and Northumberland will be elected. The new council is set to bring an extra £600m of investment to the region over the next 30 years.
Savills associate director for residential research, Emily Williams, said the authority’s new powers of land acquisition and disposal were likely to make the planning process easier.
“Our residential forecasts show areas which are more affordable have the greatest potential for growth. Newcastle has done well in housing delivery but there has been very little purpose built rental stock and this is important when it comes to thinking about who you are trying to attract in the city.”
Mixed use developments are key
She added that residential schemes in city centres with office, retail and leisure space were likely to make brownfield sites more attractive and spread risk. Developers seeking building finance for such schemes are expected to be in a relatively strong position.
Savills’ Spotlight on Newcastle: A north eastern powerhouse report identifies city centre schemes such as Helix, East Pilgrim Street and Stephenson Quarter as key to driving growth in the city.
Newcastle’s affordability ratio is the lowest out of the UK’s nine core cities of Bristol, Birmingham, Cardiff, Leeds, Manchester, Liverpool, Nottingham and Sheffield. In the last decade it has seen a 26 per cent rise in earnings growth with its nearest rival Leeds at 22 per cent.
Digital start-ups have increased by 154 per cent from 2011 to 2016 with a future £120m fund to help support 600 businesses and start-ups creating 2,500 jobs in the next five years. In 2018, Newcastle-based businesses attracted £27m in venture capital funding outperforming Birmingham, Leeds and Glasgow. Newcastle is home to the The Sage Group – the only FTSE 100 software company based in the UK.
Building Finance:- Room to expand
Savills advises the city should increase its grade A office supply which currently stands at just 175,000 sq ft. It warns that there is a risk of dynamic companies going elsewhere when they need to grow. Savills predicts rents rising by 10 per cent over the next three years from the current £23 per sq ft.
There is also a need for more industrial warehousing in the region as supply has fallen by 37 per cent since 2011. Savills says landlords and developers should consider speculative development of good quality industrial space or refurbishing second hand stock to bring it up to standard.
Around 14,000 new jobs are expected to be created over the next 12 years with the city’s population increasing by 6 per cent to reach 310,000 by 2030. The regional population is also expected to increase significantly reaching 2.75 million in the next ten years.
About 299,000 people currently work in the combined urban cores of Gateshead and Newcastle with 45 per cent travelling to work from outside these two local cities.