Development Market Gathers Strength

Continued Growth in Values.

The prime Scottish development markets continue to strengthen, however the secondary markets will remain restrained until we see further recovery in the mainstream housing markets.  New sources of funding will also be critical for any real market improvement outside the prime markets. We anticipate continued value growth to both land and property over 2014, however location will remain the key driver.

Prime Edinburgh locations trading well

Ben Brough and the Edinburgh team have been involved in the sale of in excess of 800 residential units in and around the city during 2013 with competitive closing dates and prices in some instances approaching the highs of 2007.  Housebuilders continue to seek opportunities in areas with strong market fundamentals with rate of sale and local schooling being key considerations.

The team has recently won some key instructions including a significant residential development site at Cammo, Edinburgh and an instruction to dispose of the first phase of a 2000 unit site in Perth.  Another key highlight is the sale, for the third time since 2007, of the Former Edinburgh Academy Boarding Houses which will shortly be developed into one of Edinburgh’s premier residential addresses.

After a period of limited supply within Edinburgh, prime new build properties are coming on to the market in increasing numbers and trading well, with pent up demand from downsizers, professionals and second-home buyers making up a significant proportion of buyers.

New Homes Manager Shonagh Morgan is finding high quality specifications, attractive and practical design, teamed with good locations to be a winning combination on a number of niche new developments. The team are seeing increased levels of enquiries and off-plan reservations with consistent rates of sale being achieved.  Sales prices on desirable new stock are increasing and generally prices per square foot achieved are much improved from those of 2012. Developers are keen to capitalise on this increased activity and are actively pursuing sites throughout the City with renewed vigour and implementing strategies to launch new schemes to the market in early 2014.  

Sales incentives aimed at tackling the challenges buyers face are still widely available on many developments, including part-exchange and cash-back, and we are seeing added momentum across the market spurred on by the availability of Help To Buy Scotland.  The scheme is improving transaction levels and buyers are motivated to buy now before the increased demand pushes prices up further.

The team is currently preparing for the launch of several exciting new developments, including a prestigious new build and conversion development on the site of the former Edinburgh Academy boarding houses at Kinnear Road, Edinburgh by Queensberry Properties and a contemporary development of apartments, penthouses and duplex family homes at 121-127 Bellevue Road, by New Age Developers.

Upswing in Glasgow’s development market

The market for development land has at last awakened in Glasgow, and we are now seeing renewed interest in sites from many housebuilders as well as a number of equity-backed smaller builders. On the development land front Jamie Doran and his team have successfully sold land at Ravenscraig, Motherwell, to Taylor Wimpey and in Paisley to MacCarthy and Stone as well as concluding an option on a 110 acre site to CALA and Barratt Homes. They have also sold East Dunbartonshire Council’s former planning office in Milngavie for a boutique high quality residential development. On top of this they have now put under offer a further four sites, exemplifying the upswing in market activity and commitment.

 Savills is also actively working on the sale of several residential investment portfolios. One such project of 23 apartments at Charing Cross in Glasgow sold last month and we have a further portfolio in Hamilton now under offer.

In the new homes market the team launched the eagerly awaited Buchanan Gardens apartments in mid summer on behalf of Land Securities. Of the 49 one, two and three bedroom apartments on offer only two now remain, a wonderful success story for the Glasgow market and Savills New Homes team. Following that success Savills launched the former home of Alexander Burrell, being carefully redeveloped by Spectrum Properties into four luxury duplex apartments in the West End of Glasgow. This again has attracted lots of buyer interest and follows on from the success at Lillybank Terrace in the West End, where 50% of missives have been concluded in the second phase of this redevelopment.  We have a further three developments in the pipeline and, with the advent of Help to Buy as a further sales stimulus in the market, we are looking forward to a strong 2014.

University sector opportunities 

The Scottish student accommodation market continues to grow, with the changes in the traditional rental sector being one of several factors increasing the demand for purpose built student accommodation. In the best locations, in multi-university cities, there continues to be a strong interest from investors in purchasing both trading stock and new developments. Savills Research team’s Spotlight on UK Student Housing 2013, ranked Edinburgh and St Andrews in the top 10 cities for investment. Copies of Savills research reports are available on request and via our website. 

In May of this year, Savills Student Investment & Development Team strengthened its profile in the Scottish student accommodation market, with the relocation of Cheryl Jackson to the Edinburgh office giving a permanent presence north of the border. The team has continued to build on its strong reputation for agency, valuation and consultancy work across the sector. They have been involved in £300m of transactions to date in 2013, including several in Scotland. The valuation arm consults on over £2bn of assets annually on behalf of banks and investors and the team also has a growing consultancy business, advising several UK universities.  New clients this year include Glasgow Caledonian University, University of Westminster and Middlesex University.

 
 

Key contacts

Ben Brough

Ben Brough

Director
Development

Savills Edinburgh

+44 (0) 131 247 3730

+44 (0) 131 247 3730

 

Jamie Doran

Jamie Doran

Head of Development (Glasgow)
Development

Savills Glasgow

+44 (0) 141 222 5878

+44 (0) 141 222 5878

 

Cheryl Jackson MRICS

Cheryl Jackson MRICS

Associate Director
Residential Capital Markets

Savills Edinburgh

+44 (0) 131 247 3726

+44 (0) 131 247 3726