SCSI Building For Better Conference 2019

29 November 2019

Our National Conference took place in a crowded Mansion House in Dublin on November 6.

Over 300 delegates from all branches of the profession heard from an impressive array of speakers on the conference theme of ‘Building for Better: Better Buildings, Better Communities’.

Conference MC Valerie O’Keefe introduced SCSI President Johanna Gill, who gave a warm welcome to those present, saying she hoped they would find the conference “enjoyable, beneficial and a bit inspirational”. She said that there was a lot of knowledge in the room and encouraged delegates to interact with each other, saying that everyone should use the networking opportunities provided by the conference to talk to someone they didn’t know.

Johanna spoke about the changes Ireland has faced in the last 20 years, and what the next 20 might bring. She emphasised the importance of looking at how the profession can turn these challenges into opportunities. One of the biggest, she said, is sustainability, which is no longer about lifestyle/personal choice, but affects every section of society. This means that we need to be ambitious in our plans for buildings, because ‘better’ is not all about being green – how we use spaces and buildings will change, and “everyone in this room will be affected”.

She said that better buildings are better for all stakeholders – owners, occupiers and investors – as well as the environment, and surveyors are well placed to be part of the change that is needed. She asked delegates to consider getting involved in the SCSI, even in a small way, saying that it can be challenging and tiring, but is very rewarding. She thanked the event’s sponsors and exhibitors, in particular main sponsors Cushman & Wakefield and The Irish Times, and finished by asking those present not to sit back and wait for others to do better: “We need to think big, be ambitious, start doing, make a difference”.

Better rental

Iain Murray of LIV Consult was the first speaker of the morning, with a presentation on the build-to-rent market. Iain said that this market has exploded in the last five years, and that Ireland stands to benefit from coming relatively late to the market, as it can learn from experiences in other countries. Build-to-rent only makes up 5% of the market at the moment, and Iain was keen to point out that it should not be seen as an elite product. Diversity is key to build-to-rent – the market must supply every tenancy type from five-star to affordable rental, and every stage of life, from student accommodation to co-living, family homes and retirement housing.

Iain had some fascinating slides about the generational divides in society, saying that the generations build-to-rent is being designed for are Gen Z and Gen Alpha. These people require on-demand services, and build-to-rent is about providing these. He said that specification changes are not enough to meet these requirements (you can’t just flip a traditional residential model). Build-to-rent complexes will need services in the building, from yoga rooms and lounges to storage, built to a high standard. Happy customers who enjoy where they live will not want to move.

He discussed the long-term nature of the investment in build-to-rent, another game changer in an industry where the investment often ends when a property is finished and sold. He talked about a 30-year life operating model, and how this requires a lot of planning and investment at the front end.

He said the process involved in getting from A to Z on a build-to-rent project is very complex, but praised An Bord Pleanála’s Strategic Housing Developments (SHDs) as having been helpful for the sector.

Better data for operation

Enda McGuane of Winters Property Management was up next to talk about managing building facilities through technology. He spoke about the importance of building information management (BIM), and the level of planning needed from the very beginning of a project in order to use BIM to its full potential. He pointed out that in the traditional build-to-sell model, property and facilities management professionals typically come into the process at the end, and by then much valuable data has been lost.

Enda said that what is needed is a life cycle approach. He agreed that this is especially important in build-to-rent, where investors are building to hold the property. In purpose-built student accommodation (PBSA), build-to-rent, and retirement accommodation, 80% of the cost is usage over the life cycle, and this is where savings can be made by BIM, if information can be gathered and analysed.

Like Iain Duncan, he said that demographics are also important: Gen Z will have more jobs, more careers, and will look for options such as co-living (which he defended from recent strong criticism in the media). With our ageing population, retirement living is also a huge issue.

Our rising population has again raised the topic of density in our towns and cities, and Enda said that the surveying profession can contribute to this debate by providing data. He said that a clear link between design, construction, occupation and maintenance is needed – a holistic approach. In Ireland we have BCAR, NZEB, etc., to provide standards and certification, but the question remains as to how we maintain these over time. For Enda, smarter integration of information is key, and every professional group of the SCSI has a role to play in making sure that the right data feeds into the right environment. He said that we should be looking at buildings not just as physical assets, but as data assets, and recommended that the SCSI work to develop a business case for clients on the benefits of BIM.

 

Building better communities

Oonagh McCutcheon of IE Domain Registry explained how rural communities are fighting back against the challenges of depopulation, and planning for their future. SMEs are the lifeblood of small towns – the plumber, the pharmacist, the local shop. Oonagh said we must challenge the idea that online is a threat to the high street; Irish businesses need to grasp online and see it as an opportunity.

She said that IE Domain Registry acts as a digital advocate for SMEs who are not maximising the potential of online, and discussed the Digital Town 2019 project, which was set up to harness this potential by collaborating with citizens, businesses and local councils. She gave examples from Gorey and Sligo, where businesses are responding to the customer revolution, such as in ‘Silicon Sligo’, where local tech companies, instead of competing for staff, formed the Tech North West tech cluster to market the region together as a place with great employment and work-life balance. Sligo is also home to workshops aimed at helping older people to use technology.

In Gorey, a ‘de-commute’ programme used billboards on the N11 to advertise the fact that there are jobs in the town, and ask people to come back to work in Gorey, rather than commute to Dublin. Oonagh also discussed co-working spaces, a concept that features in the SCSI’s report on rejuvenating Ireland’s small towns. These repurposed buildings make use of previously empty space and provide networking and support opportunities for businesses, with benefits that spill over into the high street and the community.

In conclusion, Oonagh said that we need to maximise the infrastructure we have and not wait for perfection. She said that the Digital Town project will expand next year, and asked delegates to speak to her if they wished to be involved.

 

Building a better profession

The second segment of the conference began with Gerry O’Sullivan of Mulcahy McDonagh and Partners, and Sarah Sherlock of Murphy Surveys, who presented on the new international measurement standards.

For BIM to work, it needs consistency in measurement and reporting, and these new standards seek to achieve global consistency in reporting area, cost and value. Currently, there are different values between and even within countries, making it extremely difficult to compare like with like. The lack of transparency and consistency has an impact on global financial planning and leads to inaccuracies. Therefore, a number of groups have come together to develop the International Construction Measurement Standard (ICMS), the International Land Measurement Standard (ILMS) and the International Property Measurement Standard (IPMS). Practitioners will be mandated to use these standards in future, so it’s extremely important that they familiarise themselves with them.

Gerry and Sarah summarised the main points of each standard. The ICMS builds in life cycle cost, and is benchmarked to help explain the cost difference between buildings. It will assist in capital and long-term facilities management. The ILMS is a due diligence framework for land, which uses a traffic light system to assess the quality of the measurement employed, e.g., Google Maps versus hiring a Chartered Geomatics Surveyor. The IPMS is already in use in Ireland, and arose from the need for a standard in property measurement.

Gerry and Sarah concluded by saying that these standards will give professionals the confidence to carry out their work. They tie in with UN development goals, and with international financial reporting and valuation standards. They said that the SCSI intends to provide appropriate training when the new documents are launched next year.

Balance and diversity

Anne-Marie Taylor, Programme Director of Balance for Better Business, talked about narrowing the gender divide at senior levels in Irish companies. “We have an imbalance”, she said, and explained that An Taoiseach launched Balance for Better Business to examine the current situation and set targets to improve it (not quotas, although these might come in future if targets are not met). She said that the business case for gender diversity – “the power of parity” – is well proven, leading to better financial returns, access to a larger pool of talent, diversity of thinking, and improved governance. She pointed out that 70% of consumer decisions are made by females, and that investors increasingly prefer companies with a more diverse board.

Balance for Better Business engages with companies and the media, and carries out significant research. The picture presented by this research into gender diversity on Irish boards is not good. Among Irish listed companies (as of March 2019), only 16.4% of directors are female, 8.8% of executive directors, and 19.3% of non-executive directors. In the real estate and construction sector, only 19% of board members are female, and this shrinks to 5% of executive directors.

Anne-Marie said that Ireland ranks 17th of 28 EU countries in terms of gender divide on boards, and the gap is widening. The target set by Balance for Better Business is 30% female membership of boards of ISEQ-listed companies by 2023, and 20% for other companies. Worryingly, she pointed out that according to their research, almost 30% of boards had no female members. She said that Balance for Better Business asks companies to set action plans to achieve targets, and broaden their search for board members. 

Better Ireland

John Moran, Interim Chair of the Land Development Agency (LDA), gave a wide-ranging address on how Ireland urgently needs to plan strategically to meet the challenges coming our way in the coming decades. Responding to the previous speaker, he made the case for diversity on boards to be geographic as well, saying that if 50% of board members were from outside Dublin it would have major implications for companies’ investment decisions, etc.

John asked the question: where do we want Ireland to be in 2040? Using a series of maps, he demonstrated different options for how we could plan to develop infrastructure in different parts of the country to address the over-concentration of jobs and people on the east coast. He pointed out that 1.8m people live within a 45-minute drive of Dublin city centre, a number that increases to 2m within 60 minutes, and 2.5m within 90 minutes. This is clearly inefficient, and a counterbalance is needed. He said that we need to work together to create new centres of activity, but we need to decide where these will be because the LDA needs to know where it should be buying land/building houses. He said this means moving away from the ‘parish’ mentality – cities and towns need to work together.

There is huge change coming to Ireland, and a gradual response will not be adequate. The population is projected to increase by 1m people by 2040, with the four regional cities expected to grow by 50% (e.g., 50,000 more people in Limerick alone). This means that we need to look again at density in our towns and cities in order to create communities where people can live, work and play. He said that Ireland has acres of space in our cities, and much of the infrastructure is already there, but developing it and leveraging these resources, even if done efficiently, will be very expensive – he estimated at least €100bn.

He had some sobering figures to illustrate the difficulties of funding this kind of major undertaking. There is currently €108bn on deposit in Irish banks, but €90bn of that is in use as credit, and we need €131bn to build houses. The LDA wants to build 150,000 houses by 2040 – 7,500 a year – but with €1.25bn in funding, the scale simply isn’t there. Outside investment and borrowing is going to be essential, and in order to get that investment, we need a clear message on strategy. Ultimately, all actors in the process need to work together.

This session ended with a panel discussion chaired by Johanna Gill, which included John Moran, as well as Marian Finnegan of Sherry Fitzgerald, Iain Murray of LIV Consult, and Brian Moran of Hines. Topics covered included: the need for coherent planning for the country as a whole; how to fund massive infrastructural development; the need for density, but that this does not necessarily mean 10 storeys; how to address the housing crisis; and the need for Ireland to look beyond the UK to how other countries in Europe, such as the Netherlands and Denmark, approach these issues.

Better legacy – better succession

After a well-earned coffee break, delegates returned to hear Derry Gray of BDO Ireland speak on succession planning in owner-managed and family businesses. He said that succession planning should start at an early stage, as family interaction is important, but adds unpredictability to the process. He shared the fascinating statistic that only 30% of family businesses survive to the second generation, and only 10% to the third.

Derry briefly outlined some of the options. He said it was common to think that it might be less stressful to sell the business, but that it can be difficult to find buyers. A management buyout is another option. Passing the business on to children can be complicated by a number of factors. Business owners sometimes need to make decisions about which child or children will take over the business, and what their roles will be. He stressed the need to be mindful of family hierarchy in order to avoid significant disruption to family relationships.

Derry said that the second generation rarely succeeds by replicating the founder’s approach; they need to push boundaries and build a new growth strategy, often seeking to further professionalise the businesses and its governance (he cautioned against doing business at the Sunday lunch table). He talked about the need to bear in mind that owners/founders often feel defined by the business, and may find it extremely difficult to step back and hand over power to the next generation (although he said that female founders seemed to be less affected by this).

He strongly recommended seeking outside expertise to assist with the transfer. He advised that there may be significant tax implications to business transfer that need to be addressed, and cautioned that the new owners also need to be sensible in how they handle their new role and responsibilities.

Better environment

Tim Bennett of the University College of Estate Management (UCEM) outlined research into two housing developments in the UK, Fairford Leys in Buckinghamshire and Poundbury in Dorset. These developments were built to a high specification, with architectural design that sought to create a sense of sustainable community, encouraging diverse populations and cutting down on car use. The aim of the research was to see if housing developments that are trying to produce sustainable communities retain their value over time, and how and why this might be the case.

Tim discussed 12 key qualities of sustainable urban environment, including: mixed use; mixed housing; public transport; architectural quality (adding value); walkable neighbourhoods; sustainable buildings; open space; and, high density. What the research found was that these two developments have retained their value, and compare very favourably to other housing in their respective areas, with strong residential development values (RDVs). Comments from residents were also extremely positive about the experience of living in these developments.

RDV is important to developers, and this research shows that this is retained, and that these developments are resilient to market cycles. In short, communities where new homes are high quality and harmonise with their surroundings are sustainable, and retain their value.

Rachel Kenny, Director of Planning at An Bord Pleanála, spoke about what makes good planning. Better utilisation of land, especially when trying to create social and green infrastructure, is vital. She emphasised the importance of mixed-use planning, saying that people follow jobs, so An Bord Pleanála needs to get jobs into a location, and balance housing and jobs with quality of life and the character of an area.

She said that all aspects of planning – local, regional, national – need to work together, and that they currently don’t (although the appointment earlier this year of a Planning Regulator will help with this). Over the last 10 years there has been an effort to create a national planning and policy perspective. The National Planning Framework (NPF) is vital in terms of linking planning and funding. With so many stakeholders involved in the planning process, there need to be shared goals, but this can be impacted by many factors, such as national versus local strategic planning.

An Bord Pleanála can’t do this alone: consultation, collaboration and engagement is required from the professions, the public, and Government to persuade people, for example, of the advantages of high density.

Planning and development can be challenging; she discussed strategic housing planning, where 17,000 units are planned around the country, and in 100% of cases, objections have been made by third parties and/or local representatives. She said there are lots of reasons for planning refusals, but that many of these should have been addressed before applications were submitted. She touched on compulsory purchase orders, saying that these are very complex, involving time, money, and litigation.

An Bord Pleanála’s role is to make robust decisions leading to good development, and to improve timeliness and consistency. She said the private sector is responding positively, especially in Dublin and Cork, but that we need to learn from other markets, not just the UK.

Better investment

The next segment looked at better investment, beginning with Dara Deering, recently appointed CEO of Home Building Finance Ireland (HBFI). Dara outlined what HBFI is doing to fund the building of new homes in Ireland. Lack of funding has been a barrier to new home supply, so HBFI provides this finance. HBFI has a national remit, and can work with developers who may have been refused funding by the main banks.

Dara said that HBFI has robust due diligence, and the application process looks at factors such as demand in a given area, economic viability, and the experience of the individual seeking the finance. HBFI has initial funding of €750m, which could potentially fund up to 7,500 homes over the next five years.

She outlined HBFI’s criteria: developments must have a minimum of 10 units; planning must be in place or close; developments must be commercially viable; HBFI only lends to corporate entities; the maximum funding is €35m over a maximum term of five years; and, 20% equity is required from the borrower.

Since its establishment in January 2019, HBFI has had 145 expressions of interest, which have led to 48 full applications (90% outside Dublin). A total of €102m in funding has been approved for 513 homes across 15 schemes. Construction has begun on four of these and the first homes will be on the market before Christmas. HBFI is active in 11 counties so far, financing houses and apartments in the private and social sector.

Ross Keeling of HSBC spoke next on the evolution of sustainable financing. He said that this is a young market; green bond principles were launched in 2014 and are gaining traction, with green loan principles launched in 2018. Green loans are broader than the bonds; they have no minimum size and a potentially wider audience. He outlined the types of green instruments, including green bonds, social bonds, and sustainability bonds.

Green loans must meet four criteria: they must be used for a green project (this can be quite broad); they must have a defined process for project evaluation and selection; there must be strict management of proceeds to avoid ‘green washing’; and, there must be reporting of the environmental benefits (via annual report, etc.).

He gave the example of the Dublin Landings Development by Ballymore Oxley on the north quays, the first of its kind on Ireland. HSBC financed phase two of this development, which gains its green credentials through achieving LEED platinum status for the offices.

Ross said that it is easy to incorporate green products into existing financing, but recommended the use of external expertise. He outlined the benefits of using a green loan: the importance of the sustainability agenda; the marketing benefit; and, the fact that these loans are attractive to banks. He said that HSBC has made a significant commitment to green loans, as have other financial institutions.

Better organisations

For the final session of the conference, leadership lecturer Dr Jack Golden talked about leadership and talent management in organisations. He said that improving businesses is about having the people and the structures to run the business now and in the future, and that these lessons apply to big and small organisations.

He discussed the evolution of leadership thinking, from Machiavelli’s theories of courage (and that it was good to be feared a little!), right up to today’s emphasis on distributive leadership, where leaders give staff training and autonomy, so that there is more than one decision-maker. He said that this can carry risks but also rewards.

Jack said that developing leadership talent requires robust recruitment practices, to find personnel who can adapt to how the business will change in future. Staff need to be given support and recognition, and responsibility from an early stage (supported by senior management). This is how we create the leaders of tomorrow.

He outlined an extensive process undergone by CRH to assess organisational capability in order to see how best to develop talent in future. CRH used external expertise to carry out a systematic process of interviews and psychometric testing, which assessed executives from the top down, and included internal feedback. He said that both individual participants and the organisation benefitted from the process. It showed that the organisation had many strengths, and highlighted the areas where work was needed to build resilience for the future.

He concluded by pointing out that the rapid pace of change in the world today, with urbanisation, and demographic and social change, as well as the rapid growth of new markets outside the traditional markets of the US and EU, has huge implications for businesses and their leaders, and wondered what the implications of this would be for Ireland.

Jack also chaired the final panel discussion, which included Lorraine McNerney of Ordnance Survey Ireland, Derry Gray of BDO, Dara Deering of HBFI, and Aidan Gavin of sponsors Cushman & Wakefield. There was a lively discussion on leadership and management, and the need to balance issues such as confidentiality with the need to be as open as possible with employees about developments in the business, particularly in hard times.

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