PBL103 - Site with PP nr Hastings DEFAULT (Partial Recovery)
Jun 2, 2016 16:35:33 GMT
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Post by harvey on Jun 2, 2016 16:35:33 GMT
This is very interesting because I live in East Sussex not far from St Leonards and I also know this site by sight and I read the local papers and keep abreast of things like this and I can tell people here that people have been trying and failing to develop this site for as long as I can remember. It's been there unchanged through several property booms and still it's never been viable to build it.
As others have said St Leonards is very run down now. When it was built in the Victorian era it was the posh residential end of Hastings but all those big grand buildings have been carved up into Flats and bedsits and there is a large immigrant population and lots of transient people and frankly there are all the associated social problems with things like drugs. In general it's not considered a very desirable area and it's not the safest place I wouldn't want to be out around there at night on my own. Consequently there isn't a lot of demand for property and that's why property values are so low. Have a look on Rightmove and you can see how cheap you can pick up a flat in St Leonards.
This site has always been blighted because it's not level and steep and requires piling and basically a lot of abnormal development costs.
I have to say that I would be very surprised if any developer would start such a development in an area like that with all the abnormal costs for only a 17.5% profit at the end of it if it all goes to plan. Personally I would suggest that a developer would be looking for a higher than average profit to reflect the higher than normal risk for a residential development. I would say such a scheme is only borderline viable in the now. In a year or two time if we have the slightest downturn which looks likely then I can't see that site being saleable at all.
I appreciate the valuer has done a detailed residual valuation but those sorts of valuations are so sensitive to the slightest change in the numbers and percentages you enter that you can almost end up with any answer you want.
It looks like the value has been put into the site because of the view that the near 30 year old planning permission has been implemented and is thus still valid and therefore you wouldn't need to build the usual proportion of affordable housing which drags the viability of a scheme down.
However notwithstanding the numbers which I respect the valuers professional opinion on, my own personal opinion from my knowledge of the area and the fact that site has been dormant for the best part of 20 or 30 years and no developer has felt able to do anything with it despite the council having it allocated for residential development for ages and ages, my opinion is that 3 million pounds for that site if you sort it in that area of St Leonards seems an awful lot and I'd be amazed if anyone in the real market would pay that for it in the event it had to be sold. I wonder if a local valuer with local knowledge and expertise would have used a lot more judgement rather than rely on a spreadsheet to turn out an answer.
In summary I am going to have a little bit of this but I won't be holding it anywhere near until maturity because I fail this one is very high risk and in fact I will be quite surprised if this site gets developed in my lifetime.
As others have said St Leonards is very run down now. When it was built in the Victorian era it was the posh residential end of Hastings but all those big grand buildings have been carved up into Flats and bedsits and there is a large immigrant population and lots of transient people and frankly there are all the associated social problems with things like drugs. In general it's not considered a very desirable area and it's not the safest place I wouldn't want to be out around there at night on my own. Consequently there isn't a lot of demand for property and that's why property values are so low. Have a look on Rightmove and you can see how cheap you can pick up a flat in St Leonards.
This site has always been blighted because it's not level and steep and requires piling and basically a lot of abnormal development costs.
I have to say that I would be very surprised if any developer would start such a development in an area like that with all the abnormal costs for only a 17.5% profit at the end of it if it all goes to plan. Personally I would suggest that a developer would be looking for a higher than average profit to reflect the higher than normal risk for a residential development. I would say such a scheme is only borderline viable in the now. In a year or two time if we have the slightest downturn which looks likely then I can't see that site being saleable at all.
I appreciate the valuer has done a detailed residual valuation but those sorts of valuations are so sensitive to the slightest change in the numbers and percentages you enter that you can almost end up with any answer you want.
It looks like the value has been put into the site because of the view that the near 30 year old planning permission has been implemented and is thus still valid and therefore you wouldn't need to build the usual proportion of affordable housing which drags the viability of a scheme down.
However notwithstanding the numbers which I respect the valuers professional opinion on, my own personal opinion from my knowledge of the area and the fact that site has been dormant for the best part of 20 or 30 years and no developer has felt able to do anything with it despite the council having it allocated for residential development for ages and ages, my opinion is that 3 million pounds for that site if you sort it in that area of St Leonards seems an awful lot and I'd be amazed if anyone in the real market would pay that for it in the event it had to be sold. I wonder if a local valuer with local knowledge and expertise would have used a lot more judgement rather than rely on a spreadsheet to turn out an answer.
In summary I am going to have a little bit of this but I won't be holding it anywhere near until maturity because I fail this one is very high risk and in fact I will be quite surprised if this site gets developed in my lifetime.
