Out-Law / Your Daily Need-To-Know

Growth in UK public-private property partnerships expected

Out-Law News | 14 Oct 2020 | 12:56 pm | 2 min. read

Real estate sector experts have tipped public-private property partnerships to grow in popularity in the UK over the next five years to meet the increased demand for housing and challenges the sector faces such as around climate change and sustainability.

International law firm Pinsent Masons and commercial real estate advisers Avison Young asked people who have advised and delivered on public-private partnerships (PPPs) in real estate earlier this year – two-thirds of those surveyed said that they thought there would be an increase in the amount of partnerships brought to market over the next five years.

The respondents, who between them have over 500 years’ experience and who have worked on more than 100 deals collectively valued at over £30 billion, identified the opportunity to share risk, gain access to skills and better focus on the delivery of projects as the biggest drivers of public-private property partnerships.

Bowden Anne

Anne Bowden

Partner

When local government and the private sector work in collaboration, the results can be truly exceptional.

"Partnerships offer real benefits to the public and private sectors if they are efficiently established and operate well," Pinsent Masons and Avison Young said in their joint report on modern partnering. "Given the time, money and effort that goes into each and every partnership there is a desire across public and private sectors for more engagement and sharing around good practice, industry trends and networks related to modern partnering. Together, more than ever, modern partnering needs to deliver social and economic outcomes and not just real estate outputs."

Some of the traits respondents associate with successful public-private property partnerships include strong leadership and a clear vision, "quality and continuity" of the teams involved, the need for "thorough preparation" before partnerships go to market, and trust between partners.

Common reasons why some public-private property partnerships fail include "inconsistent thinking" permeating the project; an assumption that agreeing a partnership will in and of itself automatically lead to profitability; and partners pulling in different directions.

"Persistent confrontational or unrealistic requirements by either party risk eroding the trust and respect that will be needed to make sure that partnership works well together once in place," the report said. "Respondents highlighted the need for both parties to not lose sight of this in the way that bids, negotiations and representations are conducted."

Anne Bowden of Pinsent Masons, the law firm behind Out-Law, said that local authorities and property companies that recognise the ingredients for successful modern partnerships and work hard at the outset to avoid problems later materialising are best placed to deliver real estate that the UK needs.

"The challenges facing us across the UK and beyond, through Brexit, climate change and Covid-19 to name a few, have not dampened enthusiasm for property based PPPs," she said.  "In fact we are seeing a growing appetite to create resilient structures which will be able to adapt to the unprecedented economic, environmental and social changes that are undoubtedly heading our way.

"When local government and the private sector work in collaboration, the results can be truly exceptional: the results of our survey show strong support for carefully created and managed partnerships, where lessons learned are used to create real additionality," she said.

Modern Partnering 2020 (10-page / 672KB PDF)