The value of urban brownfield land in the UK increased by 4.9% in the final quarter of 2017, led by strong rises in Birmingham, new research shows.
The average value of English greenfield land edged up by 1.4%, while land values in prime central London dipped by 2.1%, according to the latest analysis report from property firm Knight Frank.
Overall urban brownfield land values rose 9% in 2017, the highest rate of annual growth since the third quarter of 2014 and greenfield land values climbed 2.6% over the year, but in London the annual fall was 2.1%.
Demand was strong in Birmingham from residential and commercial developers. The report points out that a number of large office occupiers have recently decided to move from elsewhere in the city, or relocated from other cities.
HMRC, for example, announced in September it had signed a 25 year lease in central Birmingham, where it will move 3,600 staff into a single location.
Overall, it also says that competition among house builders is notably strong for large sites close to transport links and within reach of major employment centres. Demand for housing is being underpinned by ultra-low mortgage rates and the Government’s Help to Buy Equity Loan and the report suggest that new policy measures to be outlined in Spring are likely to generate much attention.
Indeed, Housing Secretary Sajid Javid has said landowners can expect the Government to use a more muscular approach in an attempt to speed up housing delivery that may include greater use of compulsory purchase orders, use it or lose it planning permissions and a new land tax.
‘There are complex issues governing how and when house builders deliver new homes to the market, and the availability of land with consent is just one of them,’ said Justin Gaze, Knight Frank’s head of residential development.
‘Development is risky, and housebuilders need to anticipate market demand over several years. They must also manage the construction process in a market where skilled workers are in short supply,’ he pointed out.
The report also suggests that declines in land prices in central locations appear to have levelled out, whereas some more fringe locations with large supply pipelines may still see some further, modest declines in 2018.
‘Land transactions remain low as developers seek higher rates of return due to perceived risks in planning and construction. However, volumes of land purchases are likely to increase as the year progresses, along with some modest recovery in pricing, and pockets of outperformance,’ it concludes.
