Tag Archives: construction
Public land could deliver as many as two million new homes in England
Up to two million new homes could be delivered on public sector land holdings in England to help with the current housing crisis, according to a new analysis from real estate adviser Savills. The firm’s estimate is based on detailed analysis of public records of the Central Government Estate and the land holdings of the Greater London Authority (GLA) as well as market knowledge of the potential for development on NHS and Local Authority land. It is widely recognised that England is facing a housing crisis and that surplus or underused public land could play a vital role in delivering new homes, which are currently being built at only half the rate needed to accommodate the country’s growing population. However, the analysis report points out that a lack of transparency regarding the totality of these assets remains a major drawback in assessing the full potential, despite huge progress by the Government in this area, and limited public data currently makes it impossible to conduct a comprehensive analysis of all public land. The public estate held by central and local government in England is worth £370 billion according to figures from the Cabinet Office, but there is little clarity regarding what form these assets take. The Savills residential research team has conducted detailed analysis of 250,000 hectares of land held by the Central Government estate in England, for which data is available. The team estimates that 13,000 hectares (5%) are most suitable for residential development and that these sites could deliver 600,000 homes. Further analysis of assets held by the Greater London Authority (GLA) shows there is space for at least an additional 100,000 homes, bringing the known potential to 700,000 homes. However, these sites are only part of the public land story. A lack of data means that large parts of public land holdings are impossible to measure. NHS and Local Authority land, which Savills was not able to include in its analysis, has significant potential. In the absence of public records, the capacity of Local Authority land is not clear, but the firm estimates that this might be around one million, if assets are actively managed and estate densities are increased. Similarly, little data is available regarding NHS Land. However, based on market experience the firm knows that these sites include many prime developable locations with scope for intensification. Hence Savills best estimate for the number of additional homes that could be delivered through the reconfiguration and intensification of operational sites within the NHS estate could be 300,000. NHS Property Services, which controls just 11% of the whole estate, released 24 hectares of surplus land between April 2013 and July 2014 alone. ‘Big strides have been made to provide data on Central Government holdings but we urgently need to achieve a similar register of assets held by Local Authorities and NHS bodies,’ said Robert Grundy, head of housing, Savills housing division. ‘Only then will we be in a position to accurately assess the full potential both for… Continue reading
Industrial building driving UK construction growth, latest RICS survey shows
Industrial building is driving construction growth in the UK and the country’s office and industrial sector rents are expected to rise as their fastest rate since 1998 in the last quarter of 2014. Indeed, the UK has seen a sixth consecutive quarterly fall in office space availability nationwide with the decline at its fastest pace since the late 1990s according to the latest Commercial Market Survey from the Royal Institution of Chartered Surveyors (RICS). It also shows that the rise in transactions of commercial properties being sold with Permitted Development Rights (PDR) appears to be compounding the lack of availability, with two thirds of respondents to the survey suggesting that if PDR exemptions are not extended then availability of commercial properties will be impacted further. In London, 20% of respondents said PDR transactions had led to more than 10% of available commercial properties being earmarked for conversion into residential use and a net balance of 51% of surveyors reported a rise in demand for office, industrial and retail space. Across the whole of the UK, 32% more surveyors said availability across office, retail and industrial properties had fallen, while demand had risen to a net balance of 44%. RICS says it is significant that demand for industrial property grew on the previous quarter from a net balance of 49% in the second quarter to 56% in the third quarter and surveyors in London also saw a large rise in prospective overseas investors in the industrial sector of 73%. The picture across the UK appears increasingly upbeat, with the firmer tone spreading beyond the capital as the economic expansion gains greater traction. This is being reflected in rental expectations which are now in positive territory in all parts of the country in the office and industrial sectors. Retail remains something of a laggard with a flatter rental trend away from the more dynamic parts of the market. For the next 12 months a net balance of 71% surveyors are forecasting an increase in rent levels in London across all segments of the market, compared to 36% in the North of England. ‘The third quarter results provide further evidence that the economic expansion is becoming more broadly based with tenant demand for space picking up in all parts of the country and the need for landlords to provide inducements diminishing,’ said Simon Rubinsohn, RICS chief economist . ‘There are also now clear signs that investors are casting their nets wider in a bid to find better value in the market following the steep drop in yields on prime property in the capital,’ he added. He also pointed out that while permitted development rights is helping in a small way to boost much needed housing supply, the latest survey suggests that it is also having the unintended consequence of contributing towards a shortfall of office space in some parts of the country. ‘Feedback from members suggests that this is particularly marked in London and adding to the upward pressure on rents. Moreover, there is… Continue reading
Residential development land growth in England and Wales moderates
Residential development green field land prices in England and Wales rose by 0.2% in the third quarter of the year but the growth rate is moderating. According to the latest figures from Knight Frank the annual increase in the third quarter of the year was 3.7%, down from the 5.6% annual rate of growth in the second quarter of 2014. The firm says that while the appetite for the best sites is still strong, rising material costs and a shortage of skilled labour is starting to weigh on prices. Prices in London are still advancing faster than the rest of the country, the average annual rate of growth for sites in prime central London slowed from 18.9% to 18.7% in the third quarter. ‘While house price growth is starting to slow, there is still room for more growth in development land, especially in commuter zones around London and other key cities,’ said Grainne Gilmore, head of UK residential research at Knight Frank. ‘However the disparity between the best sites and those that are compromised may become more entrenched and competition for good development sites remains strong throughout the country. But there is no doubt that developers are becoming more selective about the sites they consider,’ she explained, adding that this has been reflected by a slight slowing in sales volumes in recent months. Mirroring the trend in house prices, there has been a ripple effect from central London, with sites in key commuter towns close to the capital proving the most alluring for developers. ‘While planning remains a thorny issue for developers and house builders, these concerns have been somewhat overshadowed of late by the rising cost of construction and the difficulties in sourcing workers with suitable skills to build out sites,’ said Gilmore. ‘Shortages of material have contributed to rising prices, and this, a well as the shortage of labour, can be dated back to the financial crisis, when construction activity all but ground to a halt,’ she pointed out. ‘The very moderate growth in house building in the years following the zenith of the financial crisis were not enough to power up the industry for the sharp rise in activity seen over the last 18 to 24 months. So the delivery of materials and a workforce with the necessary skills is now proving problematic,’ she added. The report also shows that there has been a sharp rise in the number of respondents to the RICS survey saying that labour shortages and rising material costs are limiting levels of construction activity. These factors are now starting to weigh on development land prices, with developers being cautious about future material and labour costs in such an environment. ‘While the rising cost of materials will directly impact margins, difficulties in accessing suitable labour could add to the length of time that elapses before units can be sold, which will also, in turn, push up costs,’ said Gilmore. ‘As a result, buyers are applying downward pressure to offers for development land…. Continue reading
