03 Oct

''Vicious circle' threatens to derail development: Lendlease' by Hans Van Leeuwen, AFR

London | Lendlease and other property developers are often trapped in a “vicious circle” of conflict with communities and governments that could jeopardise their ability to deliver big urban regeneration projects, the property giant’s CEO Steve McCann has warned.

“Private companies, government and communities are all too often at loggerheads, locked in unhealthy battles played out in traditional and social media, and the dialogue is frequently polarised and politically charged,” Mr McCann told a conference in London late on Tuesday (AEST).

A new model of public-private partnership is needed, says Lendlease CEO Steve McCann. Peter Braig

“Mistrust is based on the perception that ‘regeneration is at our expense for others’ profit’ – and a lack of meaningful engagement. This creates a vacuum in which ideologically-driven opponents can whip up fear. As a consequence we see delays to development, and failure to build the communities our residents desire.”

Lendlease – which has an £18.8 billion ($34.2 billion) pipeline of development projects in Europe, including some of the largest and most high-profile sites in London and Birmingham – has had its share of bruising political encounters in Britain.

Its £2.3 billion Elephant Park redevelopment project in south London, which was signed with Southwark Council in 2010, drew sustained fire from campaigners at the time for not providing enough social housing to replace that lost in the demolition of existing tower blocks.

Meanwhile in north London, a hard-left faction of the Labour Party took over Haringey Council last year and cancelled a £2 billion regeneration joint venture with Lendlease – a dispute which briefly ended up in court before being settled.

In the same borough, a residents’ ballot will take place late this year to decide the future of another residential redevelopment scheme involving Lendlease.

Mr McCann told the Australia-Britain Infrastructure Catalyst conference that barriers to development would require greater trust between the private and public sectors, “built and based on the belief that urbanisation can be inclusive and equitable”.

He called for a “new form of partnership” that involved “genuine engagement” leading to “resilient relationships with people who will help co-create plans and solutions”.

“When people or organisations come together – from within business, communities and governments – to identify their common interests, look beyond the immediacy of their own needs and collaborate, then and only then can we achieve what is necessary and begin to imagine what might be really be possible.”

Mr McCann singled out Barangaroo in Sydney and Stratford in London as projects that had involved “long-term thinking and collaboration”.

The lessons of the Elephant Park project also showed what the new model of partnership might look like. The public sector needed to have "the right social objectives", and had to develop those into a shared vision with the private sector partner through "engaging early and sharing information".

There were also several financial features of the ideal partnership: first, a "prioritisation of the quality, safety, social, placemaking and community outcomes ahead of financial outcomes"; second, "a shared and sensible approach to risk"; and third, a financial structure that helped the private sector take a long-term view: this had "targeted lower returns in exchange for lower risk, but still provided enough incentive to attract investment capital".

Mr McCann admitted that in the Elephant Park development, Lendlease’s first interaction had been “a difficult one”. Community concerns about green space led Lendlease to redraw the masterplan to retain trees and create a new park.

“Trees have not been the only challenge at Elephant Park – there have been many critics and detractors – but the team has never lost sight of its objectives,” Mr McCann said.

He praised the “resilience” of the leaders of Southwark Council and the “commitment and duration” of their public-private partnership with Lendlease.

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