Ensure your development meets buyers’ expectations in a post-Covid era
MSP’s Chris Wright, Valuation Surveyor shares an update and his views on the rising prices of development land
As we entered the start of 2020, which feels like a lifetime ago now, it was immediately apparent that there was a real energy in the property development market both in terms of land deals and sentiment. The subsequent interruption caused by Covid-19 then slowed transactions of development land significantly, as fewer new sites were brought to the market than normal. Although land deals continued to progress during the lockdown period, they continued at slower rates, and we also saw bid deadlines being extended.
However, following the end of the national Covid-19 lockdown, we’ve certainly seen evidence of a sharp rebound in land values, particularly as supply levels remain at, or near to, current low levels.
Shorter supply ensures higher competition and inflated land values
Some housing associations have been competitively bidding for land, supported by grants, while others direct funding towards the improvement of existing stock. Despite many housebuilders being constrained by lack of staff resources throughout lockdown, appetite for the right type of site hasn’t waned and many now have a greater workforce to look at new land opportunities.
Radical reform from the Government needed to support SME developers
Partly as a result of the effects caused by this pandemic, the Government has promised radical reforms to the planning system to get Britain building again Keeping Britain Building. Although some changes have already been announced, much more still needs to be done to encourage and support SME developers. Within the planning system itself, there appears to be a log-jam with planning applications being delayed and fewer new proposed sites receiving the green-light. Those who are fortunate to currently have consented development sites to sell, are in some cases, hoping to capitalise on a competitive market. In addition to this, many new sites that had been planned to be launched for sale have subsequently been held back, thus keeping an already low supply, at an even more minimum level. The lack of such sites thus inevitably inflates land values.
This certainly appears to be the case along the South Coast for where MSP predominately operate, as there remains a shortfall of housing land. As and when the planning system does become easier though and new sites come to the market, land values are likely to drop slightly and hopefully stabilise once again.
A room with a view inspires a positive outlook moving forward
There are reasons to be optimistic moving forward though. As a consequence of the pandemic, there has been a notable increase in the desire for some to move out of the main cities and into the suburbs or rural areas, which is thus helpful to those developers operating in these markets. With many developers returning to the land market as lockdown measures are lifted, those smaller, easily deliverable sites in prime locations, without large infrastructure costs, will be the first to benefit from this increase in demand.
If you’re currently looking over your options for your next build and wondering which property type to focus on, it’s definitely worth taking five minutes to look at the results of Knight Frank’s customer survey to ascertain what people are looking for in their future homes post-Covid lockdown.
Developers Take Note: How to maximise your development potential to meet the needs of the post-Covid era buyer
Knight Frank took a survey of 700 clients and reported the results post the major lockdown period and found the following:
After a period of confinement, the message, not surprisingly, is that buyers want space. Some 45% of respondents say they are more likely to buy a detached family home than they were prior to Covid-19, with waterfront homes (40%) and rural homes (37%) also in favour.
33% are more likely to want an annex for family members, or at least extra rooms to accommodate
64% stated that they were likely to continue working from home post pandemic so room for an office space is now essential
Throughout lockdown, those who were without gardens or balconies are considering a move with an outdoor area as essential
When researching what a brand new post-Covid house might look like for buyers, the following aspects have also been highlighted as important across numerous articles in the press:
- An extra bedroom in case of contracting the virus to self-isolate within
- Close proximity to amenities in case of another lockdown where the use of vehicles are not permitted
- Good sources of natural light
- An energy efficient home, to keep bills as low as possible in the event of working from home or another lockdown
Privacy has also been stated by many to be a main ‘want’ on their list. Especially households with children. Having that extra space to have a moment of peace or a playroom for separate activities is high on people’s agenda