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A year of two halves

The Covid-19 pandemic has undoubtedly been the leading force challenging the development land market in Scotland and we see 2020 as a year of two halves.

In the early part of the year, the lockdown measures stifled the market and there was very little activity with development site sales slowing significantly. The message coming from the major housebuilders was of a cautious approach to buying sites until they had greater comfort and could see a clear path out of the situation.

The lockdown created significant pentup demand which led to a very busy period in the second half of the year once restrictions were relaxed from July to September. This aligned with the development sites opening up and construction starting again, resulting in an increase of activity in the development land sector. 

In addition, the attitudes of developers have changed with many actively seeking to secure opportunities to fill their book of sites for 2021 and beyond. We’ve seen this in a recent closing date for Phase 4,  South Gilmerton where we received an encouraging number of offers where headline offers were slightly ahead of where they were 12 to 18 months ago.

It is difficult to predict the direction of travel for the development land market. While the rate of house sales is currently high there are uncertain times ahead with fluid lockdown measures and significant relaxation unlikely for the remainder of 2020. Across the UK, unemployment figures are on the rise and if there is a contraction in the sales rates and people are unable to afford or do not have the confidence to buy houses, this will have an impact on activity in the development land sector. 

The strategic land sector, however, continues to perform strongly, due to the long-term nature of the planning process. Accordingly, it is not as susceptible to acute social and economic changes brought on by the pandemic. We are seeing that the developers are willing to take a long-term view in the expectation that by the time strategic sites under option come to fruition the world will be in a better place. We have also recently experienced developers willing to take a speculative approach by taking on challenging sites cleanly at a suitable level and then seeking to work away at the planning issues over a period of time in the anticipation that there will be a significant uplift in value. 

Galbraith handles a considerable number of option and promotion agreements across Scotland and the North of England and we’re currently involved in the promotion and marketing of development land, extending to more than 1,500 acres and approximately 7,000 units