Strategic land – risky gamble or safe bet?

29th October 2020

The idea behind strategic land deals is pretty simple – find a patch of land outside the boundaries of a town, get planning permission, watch the land’s value skyrocket, build new houses.

Everyone wins.

Of course, behind that simplicity is an incredibly complex process of managing stakeholders and securing that planning permission.

It often takes drastic changes, or serious need on the part of local authorities, to make a strategic land deal happen.

Well, what more drastic a change can you get than everything that’s happened in 2020?

So, in the brave new world of post-lockdown housing, could strategic land be a safer bet than ever before? 

 

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Five factors that could impact strategic land post-Covid

1) The country is still desperate for new houses

First things first – the housing crisis hasn’t just gone away. In fact, Covid has made matters worse.

Even before lockdown, many areas were already missing their housing targets (check out our heatmap of England and Wales to see the areas doing well, and those doing... less well). Then the entire construction sector being forced to lockdown for a few months didn’t exactly help. 

Factor in the fears and pressures of wider economic implications of the pandemic, and it’s likely we’ll see fewer houses being built, at least in the short term.

That means local authorities will be eager for any project that could help them build more homes, and get closer to those targets.

And many will be open to strategic land projects if they help to get them there.

Strategic Land

2) Where buyers are looking has changed

The lockdown brought with it remote working. Now people who could work from anywhere have realised just how do-able it actually is. Many won’t want to go back to the old commute now they’ve seen the alternative.

For some that will mean working from home a few days a week, making a longer commute (on the days they have to) much more bearable. And the data seems to hold this up, as interest in the London commuter belt saw the biggest jump when the stamp duty holiday was announced.

But others might plan to never work in the office again. Fully remote working means people can work anywhere, and therefore buy their home anywhere. And, it seems, they are. Even remote places like the Hebrides and Skye are seeing house prices being affected by post-lockdown interest.

When people are no longer tied to an area for work (or at least not tied as tightly), that means demand in other areas could creep up, and with it the need for strategic land.

3) And what buyers are looking for has changed, too

One criticism of commuter-zone strategic land developments is that they’re often full of young professionals travelling into work every day. That means the development is mostly empty Monday to Friday, from 8am-6pm.

Now? With more people working from home, greater flexibility around working hours etc. these developments could feel drastically different. People were stuck in their houses for months, and as a result many have a renewed desire to be part of a community.

Instead of simply plonking more houses into already-overburdened communities, strategic land offers a way to start with something completely new. 

Let’s not forget that the very reason people want to leave cities is to get access to more green space. 

Strategic land can be seen not as trying to urbanise greenfield space, but as working with that green space – being more open, rather than cramming as many houses as possible, building communal gardens, cycle paths and the kind of spaces that people moving from the cramped cities actually want.

Strategic land work

4) Environmental impact of building

One criticism of strategic land is often the environmental impact – after all, it often involves building on the green, leafy parts on the outside of town, so will it really be a good option to help achieve a ‘green recovery’?

There’s a real risk that there’ll be a lot of abandoned office space with so many people working from home in the future – wouldn’t it be better to tear these down and build houses on that space instead?

In actual fact, 35% of the total emissions for an office building are from the construction. For residential, it’s an incredible 51%.

With so much going into the initial build, repurposing space is vitally more important than tearing it down to start over.

And it doesn’t have to be either/or. You can repurpose existing spaces while building new spaces. 

And with things like modular construction, eco builds, better-organised developments and more emphasis on green spaces, strategic land really could be a great green play.

5) Plus deals take a long time

Just like with land assemblies (the other post-lockdown play we looked into), a strategic land deal takes time.

That means for people looking to shore up their accounts in the short term, it’s probably not going to be the right play.

But for those with a longterm plan, the ability to secure land in any future crash (whether that’s buying outright, getting an option or working with landowners on a joint venture), then selling again when prices are on the up, can mean big profits.

And even if the market remains pretty flat? The uplift from the planning permission alone is more than worth it.

Strategic land build

 

The future will be different.

The only question is how different...

So it’s almost impossible to know what’s happening in property at the moment, let alone what will happen in the future.

And that’s to say nothing of the longterm social changes from lockdown. Where people want to live, where they plan to work… everything is up for change in a way it’s perhaps never been before.

Some things may stay the same. Young people are likely to still want to be near the hustle and bustle of a city, for instance. But then, when they’re thinking about starting a family, their options might not be as limited as before.

That could mean big opportunities in strategic land in the not-so-distant future.

If you take the gamble and get it right, there’s a lot of money to be made.

 

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Calum is a Sales Manager for LandInsight. He is the proud owner of Malcolm, the lovable cockapoo (half Cocker Spaniel, half Poodle) who you may hear in the background every once in a while if you call the office. Malcolm, that is, not Calum.