Supporting Residential Developers in Changing Times
Tony Pleasants, director of our London office, considers the economic impact on residential developments in these uncertain times and explores how clients can be supported to achieve viable schemes.
No one confidently knows what the near future holds for the residential market post Covid-19. What will the impact be on house and land prices?
A potential reduction in house prices could be damaging to private developers that have undertaken financial appraisals based on the pre Covid-19 market.
It is clear that those that can keep up with and adapt to the changing market demands will be most resilient in the coming weeks and months. This will mean adopting a more flexible approach when appraising development sites to harness opportunities.
My team and I are currently reviewing existing schemes for our clients including those developments that have achieved recent planning approval and even those already on-site. We are establishing how we can maximise profitability to achieve the best outcome for all parties.
Working within the residential sector in London for the past decade, I understand the need for the continuation of high-density living in our cities in terms of meeting the need for more housing whilst maintaining financial viability. Local authorities need to be given greater flexibility to support denser schemes. It is increasingly important to build positive relationships with local authorities to reach agreements on the unit mix of residential buildings that not only meet the local plan but also provide a good return on investment for the developer.
The Only Way is Up
Over the past 10 years, it has been very apparent that ‘the only way is up’ in terms of achieving the best value in the redevelopment of an existing building. Many developers, contractors and indeed modular manufacturers have been adding storeys to existing buildings and developing roof spaces into living areas. These additional storeys can usually bring in higher premiums given the potential views and natural light available.
In re-evaluating a project, a good starting point is to query whether an existing structure can take the additional loads of new floors and if so, what changes are needed and what costs will be incurred. Working alongside structural engineers, we can appraise existing buildings to determine the possibility of additional storeys.
My team and I are currently working with an existing client on the development of apartments in south-east London. In anticipation of a potential reduction in house prices, I am looking at an amendment to the planning application to add one additional storey to maximise the potential of the site.
Modern Methods of Construction
Off-site construction can offer many benefits to residential schemes in terms of quality and reducing time on-site, however, I have found that it is more financially viable if the scheme has a degree of regularity and standardisation. Architects can lead the way in terms of creating buildings with the least amount of variance.
Working with modular specialists on an ongoing scheme, my team and I are delivering pre-built apartments on tight city streets in London whilst managing the site’s logistical challenges.
Flexibility is Key
Since lockdown, people have begun to embrace the idea of a degree of flexible working and working from home moving forward. The most desirable homes are likely to be those that provide flexible spaces that can be adapted for home working. It is important that we review interior layouts to provide maximum flexibility to support this trend.