Continued high build costs, planning delays and debt finance costs have impacted prices being paid for sites across the South East, according to SHW’s Q3 2024 Development Focus.
Tim Hardwicke, SHW’s Partner and Head of Agency, comments: “Despite this, there is activity in both the residential and commercial development markets, although developers are being more selective and focussing on prime locations unless there is a significant upside on considering non-prime locations.”
In London and around the M25, demand for ‘oven ready’ sites continues to remain high for residential development, due to increasing delays in pre-applications and planning applications being processed. House prices in London and the South East appear to have stabilised, however, high build and finance costs have also impacted development activity. Well-priced unconsented sites are generating good demand, particularly in affluent towns.
In Sussex and Surrey, developers’ preference is for housing schemes with gardens over flats, however volume builders remain cautious. With the anticipated fall in interest rates following the inflationary target of 2% having been met, an increased demand for product and development is expected in the second half of 2024 as the cost of borrowing begins to ease , confidence grows and there is more political support for housing targets to be met.
For commercial property, good demand continues for prime logistics sites at sensible prices. Tim adds: “Planning risk continues to be an issue for development with delays and red tape increasing development costs and frustrating developers. But all news schemes are still aiming for EPC A / BREEAM Very Good or Excellent, due to occupier wishes and ESG requirements.”