Rise in northern land values ‘creating opportunities for investors’

New research has highlighted significant upward momentum in the value of land for residential development across the UK, with this positive shift representing a significant opportunity for investors.

UK estate agent Savills revealed this increasing trend for markets across the north of the country in particular, which now means investors could be shifting their focus away from London and the south to a more nationwide approach to securing the best returns for their capital outlay.

Here, Experience Invest takes a look at the appeal of property investment in the north of England.

Higher than average growth for the north

One of the standout elements of Savills’ report is the fact that greenfield land values in the north of England have outpaced levels of growth witnessed in other parts of the country during the last year.

North of England land values grew by 2.7 per cent on average in 2017, compared to 1.7 per cent for the UK as a whole. It means investment in these areas will deliver higher returns for developers when building work is completed but could place constraints on developer action if values continue to rise unchecked.

That said, a major factor driving land value growth in the north at present is the fact that house prices remain considerably lower than in other parts of the country (most notably the Greater London and commuter belt area).

This disparity in value is unlikely to change anytime soon, and therefore the attraction of buyers to northern homes will no doubt continue to grow throughout the coming year.

Shift in attention for mid-size builders

Another factor that Savills’ research has highlighted as being a key driving force behind increased opportunities for investment in the UK property sector of late has been a concerted shift in attention by mid-size developers.

Medium-sized developers have now begun to take on larger plots in many parts of the country and this has helped push up housing numbers that are now coming to market. Overall, mid-size builders were creating an average of 72 plots per site in 2016, but this figure rose to 87 last year.

Furthermore, major developers across the UK are now increasingly acting to replace land they have already built out, with a renewed focus on enhancing development pipelines and the sourcing of permissioned land. It means the availability of investment opportunities for development-ready sites continues to rise, while positive completion numbers are being maintained.

Diversity in development is driving innovation

Finally, a diversification of developer activities is serving to boost land values as well, with a 54 per cent rise in mid-size developer land purchases recorded in 2017.

The report showed that many urban developers are now expanding into new areas outside of the UK’s major cities, with this rise in competition for rural and suburban land helping to push up values.

Meanwhile, larger housing associations were also shown to be more active in their pursuit of new development partners during recent months, which has led to new opportunities to develop sites that were previously unavailable.

Ultimately, the improving availability of finance for new developments was cited by Savills as playing a major role in the rising volume of new projects coming to the market at present, with investors into the market now viewed as key to unlocking the full potential of the UK land bank.

It means that a wide variety of options are now available to investors who recognise the opportunity to gain long-term returns from investment in UK land and associated developer activities across many parts of the country, with the north of England in particular a major hotspot this year.