22 January 2024
SOUTH EAST DEVELOPMENT FOCUS
Commercial, Development, Residential, SHW News
Activity remains positive in both the residential and commercial development markets for prime sites across the South East, according to SHW’s Q1 2024 Development Focus.
Tim Hardwicke, SHW’s Partner and Head of Agency, comments: “The market remains positive across the South East, although developers are being more selective and focussing on prime locations as continued high build costs and debt finance costs have impacted prices being paid for sites.”
Demand for development sites with planning permission remains high due to ever increasing delays in pre-applications and planning applications being processed. Based on the latest indices, in the residential market, house prices in London and the South East appear to have stabilised, however with construction costs remaining high, this has led to a downward pressure on land values.
Tim adds: “Interest in ‘oven ready’ sites remains strong, with well-priced, unconsented sites also generating demand, particularly in affluent towns. As Bank of England base rates have stabilised the easing of inflationary pressures, domestic mortgage lenders are now offering products at less than the current 5.25% base rate, suggesting optimism for the future.”
Although there has been a fall in development site sale volumes as developers slow down purchases due to onward sales slowing, it is expected that, if interest rates were to fall, the brakes would be let off and sale volumes would increase.
In the commercial development market, good demand continues for sites located in prime logistics locations where planning for warehouse us is guaranteed. Planning risk remains an issue due to cost and time delays to obtain a suitable planning consent. Though non-prime locations are transacting, these are at much lower price levels.
Tim says: “Over 80 percent of interest is coming from occupiers looking for storage and distribution. There is demand from manufacturing occupiers, but this is generally specialist manufacturing as the UK remains a comparatively expensive location.”
Please contact Tim if you would like a copy of the Development Focus Report.