Question: What does Bengaluru, India, have to do with the North East of England? Answer: The need for good transport infrastructure.
My question was sparked by a new research report from the Royal Institution of Chartered Surveyors (RICS). Called 'Sectoral and Spatial Spillover Effects of Infrastructure Investment: A Case Study of Bengaluru, India', it comes up with some interesting conclusions for the region formerly known as Bangalore that could apply equally as well to North East England.
To grow the regional economy we need to ensure the North East is easy to get to and from and to move around within. With England's regions competing on an international stage for inward investment, it could well be what sets us apart from Bangalore!
The report's key findings make interesting reading. While infrastructure improvements have influenced development of commercial and residential property in both existing and new areas, development growth has lagged behind the completion of infrastructure improvements, in some cases severely, because of market constraints. These bottlenecks are described as mainly regulatory framework, government controls and other institutional constraints.
The rate of growth depends on the strength of demand in each sector. In Bangalore, the rate of industrial development was slower than residential or office development. I expect to see a more rapid growth in the industrial sector, since we have a shortage of good quality industrial space where it is needed.
The most notable effect of infrastructure investment is seen on land value (and speculative land holding) across the city of Bangalore. There has also been an increase in the supply of property across all three sectors (residential, office and industrial) but with strong growth in IT supply in this sector has been outpaced by demand and in consequence values have increased.
In contrast, the relocation of the international airport and delays in other infrastructure development had an adverse impact on values in the immediate area.
The report underpins the importance of accessibility to property performance and highlights that bottlenecks in obtaining consent and in construction causes a lag in supply which can force up values as demand increases and supply is restricted.
Back in our region, the North East Local Enterprise Partnership is bringing together funding for the improvement of infrastructure. The amount will be finite and choices will have to be made. It is imperative we avoid the bottlenecks and constraints they have suffered.
:: Kevan Carrick, of JK Property Consultants, is the RICS North East Policy spokesman.