Taylor Scott International News
Urban development land values across the UK have continued to increase more than those for greenfield land, according to the latest research. Urban land values increased by 1.5% in the fourth quarter of 2015, up from 0.2% in the third quarter, taking annual growth to 7.1% while greenfield land values increased by 0.7%, up from a fall of 0.1% in the previous quarter and year on year by 2%. The latest residential development report from real estate firm Savills says that the increase in urban land values reflects a rise in demand due to an improved economy, stronger markets and increased viability. Additionally, the report says that urban values have greater scope to increase than greenfield values because they are further below their 2007 peak, an average of 42% below peak compared to 21% below peak for greenfield land. In general, development land values are linked to the supply of land and the demand from developers. The largely stable values of development land are in part due to the increase in supply of new permissions with the annualised number of planning permissions in Great Britain up by 21% in between 2010 and 2015. And it adds that a lack of new players in the market and 46% fewer house builders registered with NHBC in 2015 compared to 2005 has reduced competition for sites. Savills agents report that there is increasing demand for land in urban locations close to good transport links on which, more commonly, apartments are built such as Birmingham and Coventry in the Midlands. This is reflected in the shift in the type of new homes built. Between 2008 and 2014 houses accounted for an increasing proportion of new build homes, however, since March 2014 this trend has been reversed and we are seeing flats accounting for higher proportions of delivery at 35% in the year to March 2015 up from 29% the previous year according to data from the Department of Communities and Local Government. The report explains that the change in type of home being built reflects the improving viability and ability to finance denser sites. Immediately following the economic downturn, housebuilders focused more on developing houses because they require less upfront capital, can be built one at a time and sold as they are finished. However, now that market strength is picking up, there is greater appetite to take on the risk required to build a block of apartments where, apart from off-plan sales, flats are sold only when the whole block is complete. But not everywhere is seeing growth. For example, sentiment for development land in Aberdeen has become less positive and has impacted negatively on the overall Scottish greenfield development land index which was down 0.5% in the final quarter of 2015. Indeed, land values in Aberdeen have fallen 2.9% in the year to quarter four of 2015 for greenfield land and this is due to the continued low oil price and uncertainty over the future of the… Taylor Scott International
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