Despite current political and economic uncertainty, the UK remains a highly attractive place to invest, thanks to its universal ‘language of business’, reliable justice and welfare systems, high standards of education and ongoing investment in infrastructure. In light of the above, do residential developers have quiet cause for confidence? asks Andrew White in an exclusive article for CoStar News.
At the end of 2018, Colliers International decided to survey over 100 top developers, housebuilders and public bodies to find out. It should come as no surprise that the survey showed Brexit has – and continues to have – an impact upon residential development.
Over 80% of respondents answered that Brexit would not be beneficial to the building of new homes in the next one to three years, reflecting the concerns of many in the construction industry who feel Brexit may create a shortage of labour, an inability to attract new talent and a potential increase in the cost of materials.
However, what was positive is that almost half of those questioned, over 47 per cent, believed Brexit would have no impact on – or be beneficial to – long term housing delivery.
The take-away here is that, despite current, short-term obstacles, developers need to be progressive in their approach to residential land buying. Although Brexit, as well as increasing labour costs and the rising price of steel, are temporary barriers to delivery, the fundamentals driving investment and development in London and the South East remain – and will continue to do so post-Brexit.
Low performance in the housing market over the last 12 months is primarily in response to a lack of urgency and a ‘wait and see’ approach being adopted by house buyers. While this is not conducive to delivery in the immediate future, in the long-term it suggests pent-up levels of demand are forming below the surface.
Those developers looking to take advantage of this situation should continue investing in development land despite the current climate. A mindful developer must prepare for the future, ensuring a sufficient pipeline today in order to enable delivery tomorrow.