After three years of parliamentary debate, HS2’s first phase cleared its nal hurdle last week when the £50bn project received royal assent, quelling fears in the wake of the EU referendum it might not go ahead.
Now the high-speed rail link between London and Birmingham the local property market is rubbing its hands in glee over the potential upsides - although it acknowledges there will be downsides too.
Its proponents say the scheme will bring investment to the West Midlands, which has lagged behind other regional capitals in recent years – but the huge cost and demolition works associated with making HS2 a reality mean the project has also come up against fierce opposition.
So how will the scheme’s approval affect the regional property market?
David Smeeton, head of the Birmingham investment team at Cushman and Wakefield, says royal assent has quelled fears in some circles that the scheme might not go ahead.
“After Brexit, I had two main worries: that HS2 would be cancelled and that 3 Snow Hill [M&G and Ballymore’s office development] would be cancelled. Neither of them have been,” he says.
Mark Hall-Digweed, head of infrastructure at Carter Jonas, adds that royal assent indicated a “clear confidence in connecting Birmingham and the wider region”.
“It will act as a launch pad for further investment that will spur more growth in the future, which of course makes a strong case for phase two of HS2,” he adds.
The nine-year construction period – which past experience of major infrastructure projects suggests could be even longer – is not inconsiderable, but the region is confident that it will be able to maintain momentum.
“The Midlands won’t have to wait for the finished product before it starts reaping the benefits, as construction processes create a certain amount of positive momentum in their own right,” says Hall-Digweed.
“Whilst nine years seems like a long time, the benefits that come with the process are often felt much more quickly.”
Kathryn Ventham, a partner in the Solihull office of planning consultancy Barton Willmore, says that development in the region has already started in anticipation.
“Because it has taken a while, places like Birmingham and Solihull have had time to plan around it,” she says, pointing to the fact that the development of Curzon Street, the area around the HS2 station, is already being planned.
“The local authorities have been working on the basis that it was going to go ahead,” Ventham adds. This was illustrated by the fact that a delegation from Birmingham council visited Qatar to court further investors for the project last month.
But those hoping for a sudden flood of inward investment now the scheme has been officially approved are likely to be disappointed.
“Has it immediately changed investor sentiment? No,” says Smeeton. “I don’t think we’re going to fully realise the impact for a couple of years yet.”
With a scheme as high-profile as HS2, there are also some concerns about delivery and how the construction process could disrupt the property market.
For Ventham, the biggest concern is whether the UK has enough skilled workers to deliver the project on time. “My concern is whether we have sufficient skilled workers to deliver it. Have we failed to tool up for the fact that the project is now actually going to be starting?” This, she says, could be an important lesson for the next phase.
“You need to keep to the timescale as best you can – if you don’t, that’s where the backlash comes and where the budget goes out of the window,” Ventham adds.
For the 800 businesses that are currently blocking HS2’s path, it is a different story. Some landlords will be subject to compulsory purchase orders from HS2 – the first of which could be served as early as this summer – while other businesses may lose access to their premises temporarily or lose footfall as a result of the works.
BNP Paribas Real Estate is acting on £600m of commercial property compensation claims for businesses affected by the first phase of the scheme.
According to Chris Selway, head of compulsory purchase and infrastructure at BNPPRE, getting the next phase through parliament more quickly would minimise harm to businesses.
“I look forward to phase two being processed more speedily so that our northern cities can plan for regeneration and investment on the back of this new era for the UK’s rail network,” he said.
Damaging as this is for the businesses involved, it could lead to a burst of activity in the property market. Jonathan Stott of Birmingham-based property consultancy Gateley Hamer believes there could be a “scramble for property in the Birmingham area” as displaced businesses seek new bases.
The consensus is that HS2 can only benefit the region in the long term. And while short-term disruption is inevitable, one thing is for sure: all the investment, development and letting activity will keep agents in the West Midlands busy.
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