There are some who criticise local government as being bureaucratic and lacking in creativity. In reality, local councils are being highly innovative in plugging the income gaps left by ongoing austerity and there is something of a renaissance in municipal investments.
APSE and CIPFA property services set out to identity the scale, scope and advantages of municipal investments and the results of our research have found councils taking a measured approach to investments designed to balance risk and rewards. In many ways asset investments allow councils to convert capital investment into revenue - helping them to sustain local services.
Our research also provides a ten-step guide to approaching investment opportunities. A key step is to establish what properties you already have. Councils may have some properties that they want to keep regardless of returns because there is a different value to those properties in terms of regeneration or sustainability. Equally before embarking on new ventures we would expect councils to look at the performance of their existing portfolios; this should typically include a true reflection of costs such as energy, maintenance and support to gauge the true return on investment. Once you know where you are with your current properties it is time to take stock of your strategy. Are you doing this purely for a financial return or will your strategy be linked to local aims and outcomes.
Funding is also critical. Will the investments be financed by borrowing or from reserves? The skills and capacity of the people charged with delivering your strategy is critical to success. A delivery model that utilises your existing staff skills and capacity brought in as and when needed appears to be a popular option. It goes without saying that councils should acquire investment properties carefully, does an opportunity meet all of your investment requirements?
Acquisitions tend to move quickly when investment properties become available and again this will potentially need a more dynamic approach to the traditional models of decision making in councils. Finally, portfolios need to be proactively managed to ensure the maximum return on your investment and any changes in the market are identified.
As ever with any investment values can go up as well as down but with current borrowing rates low and with a sensible approach towards risk, then bricks and mortar investments could deliver the money that local councils desperately need.