East of England development land market sees demand for ‘good quality’ opportunities

Activity in the East of England development land market remains robust, although developers are being selective and placing greater emphasis on certainty of delivery, planning status and anticipated sales performance, agents have said.

According to latest research from Savills there remains demand for “good quality” opportunities, particularly strategic sites in sustainable locations.

However, the market is operating against a backdrop of continued economic and sector-specific headwinds including rising build and finance costs, slower sales rates and increasing regulatory requirements – with greater scrutiny of residential land values and more cautious bidding behaviour from both national and regional housebuilders.

Abigail Jones, who leads the development team for Savills in Cambridge, said despite the challenges there remained sustained demand, particularly for well-located opportunities.

“Buyer interest is strongest for schemes of 100–300 homes with limited infrastructure requirements, reflecting a continued focus on deliverable, high-quality sites,” she said. “Demand also remains strong in key urban locations where land is scarce, particularly Cambridge, where competition for sites continues to support market activity.

“Sites in attractive locations with strong sales values also continue to generate competitive interest, especially where there remains a healthy margin between gross development values and development costs. Hertfordshire and Cambridgeshire continue to perform well in this regard, while Bedfordshire remains a popular location, supported by the opportunities associated with East West Rail.

“There is also growing evidence of London-based developers seeking opportunities across the region as they respond to ongoing viability challenges within the capital.”

Richard Shuldham, associate director in the development team at Savills in Norfolk, added: “Across Norwich and the principal Norfolk market towns there remains competition for sites capable of delivering family housing in volumes aligned with local demand, while developers continue to favour locations with strong transport links, established amenities and proven sales evidence.

“Sites with abnormal costs, substantial infrastructure requirements or policy uncertainty are facing the greatest downward pressure on values. Viability also remains a key challenge, particularly where affordable housing obligations, nutrient neutrality considerations, section 106 contributions and highways requirements impact confidence. Although house prices have generally held up better than many anticipated, sales rates are also still below the levels required to support significant land buying.

“That said, market sentiment is just about remaining cautiously positive. Norfolk benefits from strong underlying housing demand, an attractive lifestyle offer and a varied pipeline of allocated sites.”

According to the Savills research, greenfield values in the East of England have fallen by 3.3 per cent in the last 12 months, while the value of urban sites has dropped by 6.5 per cent. This is very similar to the national picture, which has also seen a 3.3 per cent fall in greenfield values and a 6.6 per cent drop in urban land values.

Ben Sinclair, who leads the development team for Savills in Essex, said: “Whilst the market has undoubtedly faced headwinds, demand has remained resilient across the Essex and Suffolk markets, especially for well-located schemes benefiting from established and sustainable transport links and infrastructure.

“Alongside traditional residential developers, interest in development land opportunities has come from an increasingly diverse range of users, namely build-to-rent operators, care homes, SEN schools and industrial and logistics occupiers.

“For housebuilders, national market trends appear to provide a solid platform for growth across much of the sector. However, understanding the specific requirements of local housebuilders has been vital in delivering strong outcomes for our clients, and we believe this will remain the case for the foreseeable future.”

Image: (l-r) Abigail Jones, Ben Sinclair, Richard Shuldham