Residential Development

Feel good factor continues

Residential development in Scotland is moving forward at a great pace, as the economic feel good factor continues to ripple out from prime hotspots in central Edinburgh, Glasgow and Aberdeen.  Low interest rates and government incentives such as Help to Buy are helping to fuel the development market.  There has been a good take up of the scheme by housebuilders, and around 70% of sales can be attributed to it.  The increased availability of mortgage lending by banks has also helped to support the sector.  However increased controls put in place to guard against irresponsible lending practices should help to maintain more sustainable growth of the sector than we have seen prior to 2007.

Niche developers and large housebuilders are now eating through their existing land supplies at a greater pace than forecast, and are looking for new sites.  Those which are oven-ready, in that they have planning consents in place and are free of major infrastructure, are like gold-dust.  They are attracting premiums from competing housebuilders keen to take advantage of improving market conditions.

Land values are inflated in certain locations and have risen by as much as 40-50% in 12 months within prime areas of the cities.  Savills has recently put the former BBC Headquarters under offer in the desirable West End area of Glasgow. The site has attracted multiple bids in excess of the £10m asking price, including interest from international funds and local developers.

We have also seen an explosion in values for development land in locations like Renfrewshire, where family housing sites with consents have attracted an increase of up to £200,000 per acre in the space of just 12 months. Similarly in Edinburgh good quality city centre flatted development opportunities have jumped in value, as have good quality family housing sites on the outskirts of the city, through lack of supply and increasing demand.

There is a real lack of new homes available for people to buy in prime areas like the city centre and the desirable suburban areas of Edinburgh.  Meanwhile there is bourgeoning demand in Glasgow’s West End, Southside, Bearsden and Milngavie.  This is due to the freeze on development of the past five years or so.  Those who have bought in the down turn are now making a good return on their properties and there is good demand, particularly from downsizers who have been sitting in their family properties, waiting for the market to return.  Internationals are also very active, particularly those buying for investment purposes.

 
 

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

 

Marcus Collings

Marcus Collings

Director
Development

Savills Edinburgh

+44 (0) 131 247 3787

+44 (0) 131 247 3787