Savills: Value of serviced land in UK to grow

LONDON: Savills Research expects the value of serviced plots and serviceable land in the United Kingdom to grow over the next few years, as supply of this type of land is likely to become increasingly constrained following uncertainty and hiatus in the planning system.

However, it noted that the outlook for value growth of bulk land at the national level is poor.

The research house did not foresee any significant recovery in the value of this type of land in the medium term, with so many large strategic regeneration sites unworkable in the current climate.

“Location is key. Funding will only be forthcoming for the best sites where local housing demand will sustain targeted new delivery. Difficult sites in lower value areas requiring any kind of major remediation will remain off the development radar for some time to come,” it said.

The real estate research house said opportunity lay in adding value to bulk land by converting into serviceable land, or fully serviced plots in the short to medium term. Players will need to actively invest in land to maximise values, delivering an easy-to-develop, de-risked serviced product to the market.

Meanwhile, Savills Research also said there are signs of a “second slip” in the residential market in the United Kingdom and the land market is becoming increasingly polarised.

“For the second consecutive quarter, the rate of growth in greenfield land has slowed. It was up 2.4% in the third quarter of 2010, while urban land values grew by just 0.2%,” it added.

This situation, it noted, reflects not just underlying weakness in the housing market, but also the dearth of debt funding, uncertainty around the localism agenda and shortage of long-term equity.

With public sector austerity measures now taking effect and, weak recovery in the economy at best, house builders and developers remain vulnerable and selective in their land purchasing activity.
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