Residential land values in London have consistently outperformed the rest of the country, driven by investor demand for flats in central London, forward funded by overseas sales. London residential land values have grown by 87% since their low of March 2009, and now, on average, exceed their 2007 peak.
London residential development land remains in strong demand, with an ever increasing number of purchasers competing for a limited number of permissioned sites.
In addition to the PLC housebuilders, developers and property companies, recapitalised smaller and medium sized players are also seeking opportunities. Demand is hottest in travel zones one and two, while the outer zones offer more sites with long-term potential.
The changing landscape of land trading
Demand for larger sites grows
Trading of development land saw a marked shift toward smaller, oven-ready sites in the wake of the wider market downturn. The average site size of land traded has fallen significantly since 2006.
By 2011, with appetite for long-term strategic land reduced, this average had dropped to six acres as buyers focused on easily deliverable sites. The average site price paid fell as smaller sites traded.
Last year saw an uptick in the average size of site traded, along with price paid, reflecting growing values and demand for larger sites as housebuilders and developers looked to secure land pipeline in an improving market.
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