Oxford partners with Legal & General on £4 billion development plan

The University of Oxford is partnering with Legal & General on plans to build 3,000 homes and two science parks, with the firm putting in £4 billion and describing the venture as a model for how other UK universities could attract finance to modernise cities.

Times Higher Education revealed earlier this month that Oxford had chosen an unidentified private sector partner for a major housebuilding plan, using university-owned land to provide homes for postdocs, postgraduates and staff in one of the UK’s most unaffordable cities.

Now Legal & General, which manages over £1 trillion of assets, has been announced as the partner. Oxford and Legal & General will create a 50:50 joint venture company, with the firm putting in £4 billion of money over 10 years via its Future Cities fund.

Nigel Wilson, chief executive of Legal & General, told THE: “Whilst lots of our other industries [in the UK] have fallen behind and can’t be thought of any more as being world-class, our universities are definitely world-class.”

But he added that the cities in which UK universities are located have, London excepted, experienced “under-investment for 20, 30, 40 years, particularly compared to the best cities in the world and indeed compared to London”.

While London “has taken a lot of the capital required” for modernisation in recent decades, now other cities “are going to get more capital to help them grow”, Mr Wilson said. Legal & General previously partnered with Newcastle City Council and Newcastle University to build the Helix housing, research and office space development.

Mr Wilson said of the partnership with Oxford: “We do see it as a model for other universities or other cities to follow.”

The “initial business plan” for the Oxford joint venture is to build 1,000 units of “graduate accommodation” in the city, 1,000 subsidised rental homes for university staff to the north of the city at Begbroke and 1,000 “regular homes” for sale on the open market. The money will also finance the building of two science parks featuring academic space, commercial space and incubation space for university spin-out companies, plus an expansion of the Bodleian Library’s bookstore at Swindon.

David Prout, Oxford’s pro vice-chancellor (planning and resources) and former director general of the High Speed 2 rail project, told THE: “We just want to do our bit…to make life a bit better for our staff and also to help tackle the housing shortage that exists in Oxford.”

Mr Prout said the initial projects would take up a “substantial part” of Legal & General’s £4 billion investment, but would not state the precise sum. He added that there was scope for “future projects if the partnership goes well”.

The University of Cambridge is building 5,000 homes, mainly for staff and postgraduates, helping finance its plans with a £350 million bond.

Oxford has a £750 million bond already being used for other purposes. Mr Prout said there was “no need to take out more borrowing” when “we can attract a private sector partner…who will fund the developments in exchange for the rental income stream over a period of decades and then at the end of that period give the buildings back to the university free of charge”.

Oxford and Legal & General will “share the planning risk”, said Mr Prout. Cherwell District Council has allocated the land north of Oxford for housing, but planning permission is yet to be finalised. But the firm will “take the build risk and indeed the demand risk”, making the scheme “low risk” for the university, he added.

john.morgan@timeshighereducation.com