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Netflix show creator's £500M UK studio project seeks big investors


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Netflix show creator's £500M UK studio project seeks big investors

The southern French town of Cannes, home to perhaps the most famous film festival in the world, is exactly the kind of place one would expect to see the writer of a popular Netflix Inc. series holding court. What is harder to imagine is such a doyen of the showbiz world addressing his rapt audience about a real estate project he's keen to get off the ground.

Steven Knight, creator and writer of U.K. crime drama "Peaky Blinders," wants the Birmingham location in which the show is based to become home to a huge studio complex for the television, film and computer game industries. The idea, which came to him when the Brad Pitt-fronted and Knight-written movie "Allied" struggled to find an available U.K. studio in which to film, is close to becoming a reality, with a green light from the planning authorities and the finalization of a land deal expected soon.

"The experience with 'Allied' really brought it home to me that there is a shortage of studio space in the U.K.," Knight said in an interview. "We ended up shooting it in a converted Gillette factory in west London.

"I just thought there must be room for someone to build a purpose-built, state-of-the-art studio in the U.K.," he added, noting that filmmakers come from all over the world to shoot in the country, attracted by the generous tax breaks offered by the government.

Knight's vision has expanded and morphed since those early days. The project now includes a substantial residential element as well as office and retail space. "It's a studio within a neighborhood, so the neighborhood is the thing," said Knight.

"When I first came up with the idea four years ago, we were thinking, how are we going to get some residential smuggled into this project to make some money? And then everything changed. Suddenly the government wanted to build houses. So now, if anything, they are saying they want to build more houses."

In 2017, the U.K. government committed to increasing housing production to address the country's chronic housing shortage. It aims for production to rise to 300,000 new homes per year by the middle of the next decade from a base of 217,000 in 2016.

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The Mercian International project in Birmingham, U.K., will be centered around television and film studios.
Source: Mercian International

The residential element of Knight's project is where the expertise of his partners, Nikal Ltd., is expected to come to the fore. The Manchester-based developer, led by Nick Payne and Alan Murphy, has a history of delivering large residential developments, many of which are in Birmingham. The studio element of Knight's project was a big attraction for Nikal, said Payne.

"We are very keen on pursuing things that drive a community spirit and have some gross value added — things like film studios and such that give a different dimension to a city or a town," he said.

"We thought this would be a really good thing to get involved with to try and harness the digital media and movie sector as a way of enticing people to create small businesses, grow businesses, and to live within the sort of campus that a film studio might bring," Payne said, adding that a minimum of 1,500 homes are planned for the project.

Nikal and Knight signed a joint venture, Mercian International, to take the project forward, with Nikal providing a significant portion of the initial financing, Payne said.

Among the next crucial steps is attracting the type of investors that can spare around £500 million to bring the project to fruition. "We are likely to fund the project all the way through to getting a planning consent," said Payne.

"Our wish would be to partner up with a U.K.-based pension fund or overseas propco. And we are actually in discussions with those types of parties and institutions," some of which Payne spoke to at the MIPIM international property conference and exhibition in Cannes, he added.

Other vital decisions still to be made include a choice between two sites for the project, Payne said. The first is on the edge of Birmingham, the U.K.'s second-largest city, near its international airport. The second is in the center of Birmingham, near where the government's £55.7 billion High Speed 2 rail project, linking London with the U.K.'s Midlands and North, will arrive in the city. Ultimately, the project could be spread over the two sites, Payne said.

For Knight, the project should offer his beloved Birmingham and surrounding Midlands region a chance to make the most of the talent, skills and work ethic he believes have long been a feature of the people there.

In a region that has been overshadowed culturally by London and the northwest cities of Manchester and Liverpool recently, despite being home to such literary heavyweights as William Shakespeare, George Eliot and D.H. Lawrence, the studio project could go some way to helping it re-establish its place in the world as a hive of creativity and progressive thinking, he said.

"This development will have residential, bars and restaurants, a huge sculpture by J.R.R. Tolkien's great-grandson," said Knight. "It will be green, it will have grass areas on the studios, it will have no plastic bottles, it will have only electric cars. We will absolutely make a statement that this is what a studio looks like in 2020, not what it looked like 20 years ago. That will be our identity, and I hope it will have that effect throughout the Midlands."