• New report from SHW finds developers turning increasingly selective as viability pressures mount across the region.

Planning delays, rising information requirements and elevated debt finance costs are continuing to suppress site prices and dampen development activity across the South East, according to SHW's Q3 South East Development Focus report.

Developers are becoming more selective, prioritising prime locations unless a non-prime opportunity offers a clear and compelling upside, the report finds.

Peter Coldbreath, Partner at SHW, said residential developers are navigating a fragile market. "Developers are being more selective and focussing on prime locations, unless there is a significant upside on considering non-prime locations," he said. "House price indices are largely flatlining and there is little expectation of change while volumes traded remain subdued. The uncertainty spilling into market sentiment from global conflicts continues to overshadow UK performance, and we are now watching closely to see whether the new administration can shift both sentiment and the underlying metrics."

Across London and the South West M25, delays in pre-application and planning processes continue to stall deals reliant on consent, with overpriced sites failing to transact. In Croydon town centre, consented permitted development rights schemes are set to deliver around 1,600 new homes, though Gateway 2 requirements have slowed starts on site.

In Kent, Surrey and Sussex, smaller sites remain the focus for family housing, while flatted schemes face persistent viability challenges.

Richard Plant, Partner at SHW, said demand across boroughs including Croydon, Bromley, Sutton, Lewisham, Southwark and Greenwich remains strong but buyers are increasingly price-sensitive. "Developers are finding sales rates significantly below pre-2020 levels, particularly for higher-density apartment schemes," he said. "For most South London schemes, the main challenge is not planning permission but development viability."

In the commercial sector, demand for prime industrial and logistics sites remains robust where pricing is realistic, with storage and distribution accounting for around 80% of occupier enquiries. Planning is frequently taking twelve months or more, even on allocated sites. Nearly all schemes now target EPC A and BREEAM Very Good or Excellent ratings.