Uncertainty in Land Market after Brexit
A recent report published by Savills UK Residential Research shows there is currently some caution in the UK land market due to uncertainty after the EU referendum. This has led to falls in land value in some areas over the past three months, according to its development land index. UK greenfield development land values fell by 0.4% in Q3 2016, whilst urban land values only increased by 0.1% in the past three months.
Caution from some land purchasers has led to decreased developer interest and a reduction in the number of bids for sites. However, there are areas of the country where there is still high demand for land, namely outer London, the South and central Birmingham.
The central London market is behaving very differently from the rest of the country and has seen the greatest falls in land value. A number of factors are at play here, including the referendum, and falling house prices, which means land values for residential development have dropped significantly. In the past six months they have decreased by 8.9%, the largest falls seen since 2008/09.
Land values for proposed office development in central London have also fallen, suffering a 5.9% decrease in the past six months, mainly due to the risk of occupational demand as a result of the Brexit vote.