Savills UK Residential Land Report

Earlier this month Savills released some interesting research highlighting a change in the property industry’s demand for new housing sites as developers focus on developing ‘easier sites’ giving land values a boost.

Savills Logo

Savills has said that rising competition in the development land market is pushing values up following a slump over the past two years. The research shows the annual increase of Greenfield land and urban land has increased by 16.6% and 14.1% respectively. This increase has been helped by the decrease in demand for Brownfield development sites as the cost of developing these sites is generally very expensive and requires lump sum capital investment which most developers are not happy to commit due to the current financial market.  

Savills Director Patrick Grincell said: …large Brownfield regeneration sites will struggle as “the risk is far higher, particularly where there is an expectation of a Homes and Communities Agency grant, over which there is a question mark”.

Example of Brownfield Site

The task of cleaning up large Brownfield sites ready for development is very expensive as many are contaminated and require specialist clean ups to make the land safe.  This can require millions of pounds of investment so it’s in the best interest of the developers to find cheaper alternatives in the current market so they are now looking at smaller Greenfield and urban sites known to be ‘low risk’.  Because these kinds of sites are rare developers are now prepared to pay a premium but as demand goes up and supply goes down values rocket!

Savills findings showed that an ‘easy low risk’ site in an area where there is a shortage of housing could sell for up to 20% more than in 2007 when land values were at their all time highest!  Those investors savvy enough to invest in land rather than property could be in a very positive position if they buy land in the right place.

This opinion is backed up by an article from Planning Daily which concluded ‘that mostly speculative city centre apartment buildings for buy-to-let are a thing of the past. The most viable sites are those that can be developed into high-density family houses.’