We may be in the icy grip of a downturn but developers need to prepare for the inevitable bounce.
Many land owners and residential developers that have scaled back their activities during 2008 will be looking ahead to 2009 as the year draws to a close. There may be many who believe that the current difficulties are set to continue and that a cautious approach is still required.
King Sturge planning partner Elle Cass believes that a combination of factors over the last few months and the ongoing generation of Local Development Frameworks presents opportunities not to be missed for those who are willing to take a long term view and plan strategically for the future.
She advises that the planning system in the UKis very slow moving and that residential developers and landowners who want to add value to sites need to act now.
“We have seen the effect that the ‘Brown Bounce’ has had on the Labour Government and the ‘Obama Bounce’ in the US and we may well see the ‘Land Bounce’ in the residential property market in 2009.
“The number of homes changing hands increased for the first time in five months during October with the number of properties sold rising by 5.4 per cent, the surprise move by the Bank of England to cut rates by 1.5 per cent in November and the emergency economic rescue package announced in the pre-budget report all offer hope that some confidence may be returning.
“If the disparity between what sellers will accept and what buyers will offer is closing and deals are starting to be done again, then the added boost of falling interest rates may inject some life into the housing market,” she said.
“This is not to say that we will see a significant improvement next year, but the market will improve eventually and those who have continued their planning activity will be in a much better position than those who have not.
“The fact remains that we need more houses to be built and developers must continue to add to their land banks, especially as landowners will now have increasingly more realistic aspirations about the value of their holdings.
“Developers who delay, will not only miss out on opportunities to add value to their land but they may not have enough sites ready to satisfy demand when the market changes and are likely to have to pay more to acquire land at that stage.”
Cass believes that the current situation provides a unique opportunity to influence the debate on greenfield land.
“Urban renaissance is a great theory, but so many city centre sites have now been developed for homes, offices and retail and leisure uses, that the supply of economically developable brownfield land is reducing and unlikely to meet the aspirations of Central Government.”
Cass is convinced local authorities will be forced to accept that greenfield locations on the edge of cities and towns can be developed and this presents a rare opportunity for greenfieldsites to be reviewed within the new generation of Local Development Frameworks.
“The consultation process is still underway at many Local Planning Authorities and landowners and developers should be putting forward sites that they wish to be included in the Strategic Housing Land Availability Assessment (SHLAA).
“Identification within the SHLAA will be the single most important factor in gaining planning permission for residential development. We strongly recommend that landowners pursue planning permission now even if there is no intention of building for the foreseeable future; the time to act is now.
“The changing nature of our economy – combined with a different mindset from Central Government and planning authorities – means that the industry will need to adopt a more balanced approach to greenfielddevelopment if targets are to be reached. While at the same time the release of brownfield employment land will also continue to be important.
The challenge to unlocking such sites differs from strategic greenfieldpromotions, but the need to identify such sites at an earlier stage remains the same. Couple with this bringing in both technical specialists and project management to offer cohesive solutions to companies looking to relocate is key. These deals are very complex and King Sturge has the specific expertise to meet the challenge.”
Cass believes such a joined-up approach is vital for anyone looking to prosper in the current economic climate.
“At King Sturge we have the benefit of being able to work closely with our other departments so that our planning experts work alongside specialists in development, industrial and residential.
“Developers, landowners and advisers need to think long term now,” she said.” The strategic planning process has time horizons in excess of 15-20 years and therefore not acting now and missing the chance to have a say on issues such as the greenbelt review could have a negative affect on the development value of assets.
“Those who miss out will have to work much harder to make a return on their investments when the market improves.”