Understanding Viability and Development Economics in the Real Estate Sector
Explore crucial aspects of viability and development economics in real estate, including profit-making strategies, site identification, risk management, land valuation, and sustainable practices discussed in a seminar featuring guest speaker Ian Storey from Storey Homes. The event delves into the importance of profit in development projects, residual land valuation, capturing extra profit, comparison of past and present market dynamics, and delivering viability in line with NPPF/CIL guidelines.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. Download presentation by click this link. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
E N D
Presentation Transcript
Viability and development economics 5th and 6th June 2013 www.pas.gov.uk
VIABILITY The Developer s Perspective Ian Storey Projects Director
SHOULD A DEVELOPER MAKE A PROFIT? You re only doing this to make money!
WHY DO WE NEED TO MAKE A PROFIT? Site identification Site acquisition Options Conditional Contracts Purchase Promotion of Sites (Up to and including Planning Applications/Appeals) Risk
RESIDUAL LAND VALUATION PROFIT S A L E S BUILD COSTS V A L U E S106 MINIMUM LAND VALUE PLANNING LAND
EXTRA PROFIT FANTASTIC !!!! SALES VALUE TIME
EXTRA PROFIT? We ll have some of that! PGS capture a proportion of increase in land value Alternatives? Code for Sustainable Homes Affordable Housing Wider infrastructure requirements CIL Outcome seems that almost everyone is happy Cake is getting bigger, everyone still getting their fair share
Comparison past v present PRICES DOWN BY 20% PROFIT S A L E S S A L E S BUILD COSTS V A L U E V A L U E S106 PLANNING LAND 200 Pos
Delivering Viability PROFIT S A L E S PROFIT BUILD COSTS BUILD COSTS PLANNING V A L U E MINIMUM LAND VALUE S106 PLANNING S106 LAND LAND
NPPF/CIL Para 173: sustainable; competitive returns (landowner/developer). Para 174: local standards; national standards; economic cycle. Para 175: CIL should support and incentivise. Para 176: necessary safeguards. Para 177: planned infrastructure.
CONCLUSIONS Developer profits are under pressure because of a drop in sales values Land owners still require a return on their land otherwise they won t release it for development Regulatory requirements need to be balanced to ensure delivery However: There remains strong underlying demand for new homes Obtaining permission is (arguably) becoming more difficult
And Finally The Golden rules of viability testing: Transparency Evidence based Simple Guidance
Contact us Email gilian.macinnes@local.gov.uk pas@local.gov.uk Web www.pas.gov.uk Phone 020 7664 3187 Simon Drummond-Hay Email simon@drummond-hay.co.uk Phone 015242 76205 / 07989 975 977 David Carlisle Email david.a.carlisle@urs.com Phone 020 7821 4194 / 07827353558
