Matching development type with location to meet investor demand
In a recent article, I discussed two of the key issues currently facing property developers – rising land prices and rising cost of the build, and how they may affect your business plans when coupled with growing demand for homes in urban centres.
Here at Castlereach, we take a different approach to investor sales. We target investors first, aiding their knowledge of the UK property market and helping them understand which properties to invest in. This means that when you want your property sold at an early stage, we already have property investors on our books who are likely buyers. This approach is a major factor in our success in off-market sales.
So, given the current conditions, what type of property investment opportunities are our investor clients seeking? This information could help you as you search for available land at prices to yield sensible returns on your investment.
Urban brownfield sites
The availability of urban brownfield sites is increasing in the UK, partly thanks to government policy enabling local authorities to speed up planning processes. These are great options for residential property developers. However, there are hurdles for developers to jump. The cost of preparing such sites can be prohibitive, and homebuyers may baulk at buying on a previous industrial site.
Our investors aren’t looking for a quick flip. They are seeking long-term buy-to-let properties, and brownfield land is ideal for this type of opportunity. Renters aren’t locked into living on once-upon-a-time industrial land but benefit from the lifestyle advantages of location.
Offering a higher proportion of these sites to investors rather than homebuyers could produce faster and more profitable sales for developers.
We’re finding that redevelopment of current urban locations, especially when combined with regeneration, is extremely appealing to investors. These sites often benefit from a highly attractive location, with proximity to transport hubs and retail of great appeal to investors (people want to live for convenience and lifestyle).
Sites that face green space and those that are river facing are very popular. These tend to provide the best potential for the higher rents and capital growth that investors are seeking.
The government has planned for development on greenbelt land, offering property developers greater potential to meet the housing needs of a growing population. We’ve seen land prices rising on the greenbelt, too (probably something that the government hadn’t anticipated).
However, while we do see some investor appetite for these developments, there are some roadblocks that inhibit investment opportunity. For developers, the costs of development could be inflated, making for a less affordable residential property.
For investors, the key is for such developments to be close to main transport links, and with developments providing for retail convenience. Where these conditions are met, the rural location becomes more appealing for a wider variety of residents, and this provides investors with greater peace of mind.
Where are we seeing highest investor demand?
In terms of geographical location, we’re seeing demand for residential investment property in every region right now.
For reasons that have been well documented, London is no longer at the top of investors’ wish lists. However, we believe that this will prove temporary, and London will, in due course, become a favourite investment location. Notwithstanding this, we still have many investors who want to take advantage of the slowdown in London property price growth.
For our investors, regional cites are flashing brightly on their radar. Particularly, cities like Manchester, Leeds, and Birmingham, where the approaching High-Speed Rail will be transformative. Boroughs, districts, and nearby towns to these cities are also in demand.
Northern towns and cities that offer incredible affordability, with growing local economies and estimates of higher-than-average population growth, are also attractive – for example, Newcastle and Bradford are two locations with keen interest currently.
And, of course, the commuter towns and growing commuter towns serving London. Places like Bedford, which also benefits from being in the heart of the planned ‘brain belt expressway’.
To connect your development with waiting investors, ready to buy today, all you need to do is contact Castlereach. Then let us do the rest.
Call us today on 0207 923 5680.
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