Intelligent Land Valuation

Simon Perry - Principal Consultant & Rachel Lambert - Consultant

Is there such a thing as an undevelopable site?

There are a wide range of factors which affect the development potential of sites but with increasingly sophisticated tools and measures at our disposal, difficult sites are becoming more viable. This fact, coupled with the renewed competition for premium development sites, means that it is now more important than ever that developers have a fundamental understanding of the constraints, threats and opportunities of prospective sites. These factors will impact the development potential of the land and a proper understanding of these at acquisition stage is therefore highly advantageous.

Quantifying and managing the opportunities and constraints faced by a development can broadly be broken down into four phases (these have been mapped and presented here below).  These are:

1. Development purpose

The aspirations and needs for the proposed development site must be understood and the associated costs must be considered, along with the market it is intended to serve. 

2. Development Opportunities, Threats and Constraints

Once the aspirations for a development on the site are understood it is essential that an understanding of the threats and constraints (which may affect the viability of the development) along with the opportunities (which may assist) be appraised. These are generally centred on the following areas:

Environment:

• Is the site accessible?
• Are there any utilities that affect the ability of the site to be developed?
• Is the site located next to a main road or other extraneous noise source which will require mitigation?
• Are there underlying contaminated land issues?
• Is the site at risk of flooding?
• Are there any ecological features which may hinder development?
• Are there ecological and landscape features that could be used to make the development more attractive?

Planning:

• Is the development in line with policy?
• What is the political appetite for development on this site?
• Does this development meet national and local needs?

Community:

• Do the local community want this development?
• Is this land valued by the local community?
• Will the development bring local benefits?

3. Constraints management

By identifying the constraints it is possible to plan for the management of these issues and to understand the financial implications.  It also enables a strategic assessment of how well the land fits within a wider development portfolio.

4. Maximise opportunities

As well as constraints, understanding the opportunities enables development value to be maximised by ensuring the opportunities are fully realised.

Informed purchasing can be achieved through these steps. Difficult sites can be developed as long as the opportunities, constraints and issues are understood, although these sites in the final analysis may not appeal to all. Even sites which on the face of it appear to be simple can become problematic if proper analysis is not done at the earliest opportunity. Effective planning at the acquisition stage minimises the probability of nasty surprises later on in the programme and ensures opportunities are maximised and realised at an early stage. 

Build costs going through the roof...

Ben Harris - Technical Director

The recovery is bringing its own challenges. As the market picks up the development opportunities increase but everyone wants to build at the same time. Costs are increasing as the market adjusts to new conditions and it leaves us looking at the price of land in a different light. These pressures are greatest in the South East with London topping the chart of most expensive places to build in the world [1]. A skills shortage may slow the growth of the sector but what can be done to keep developments on track?

Tightening up on material and resource costs has helped many to maintain margin and the use of more efficient building techniques not only reduces material use but can also reduce onsite labour. To make the most out of sites and the talent in the industry do we need to rethink how and what we build?

Planning how we use materials and how their use affects programme and budget have been common in large infrastructure projects for a number of years and the savings are significant. Off-site construction and management plans for materials, carbon, waste and water have all contributed to lower costs and are now common in value management. After getting over the initial hump of implementing BIM, the projects that use it are also seeing savings, particularly in early clash detection.

Often it is left to the contractor to kick off these techniques to manage their own costs. Could more developers make use of these tools to make more out of their sites? Instead of tucking in a wall here or reducing a quality specification there could we revisit the design completely? What if, from the outset, we looked at the development from a focus of low construction cost brought about by reducing time on site, using higher value techniques and minimising the use of materials?

Resource Management Planning is an effective way to engage the whole supply chain in using resources efficiently and saving cost. Housing and commercial developments can expect to realise a cost benefit of up to 2% [2].by taking this approach. 

If you would like to reduce the cost and environmental impact of your resources, speak to our Technical Director, Ben Harris on 0207 394 3700.

---

[1] http://www.arcadis.com/Content/ArcadisGlobal/Docs/publications/Research/9110_International_Cost_Construction_Report_FINAL_WEB.pdf

[2] WRAP Cost Benefit Analysis

MIPIM - The True Survival Guide

James While - Account Director

Turn the clock back only a few years and stories of excess and indulgence on the French Riviera are stuff that would make some rugby tours look like a tea party.

As with all these things however, many, not all, of these fables were apocryphal; handed down from generation to generation of developer and embellished each successive year with another jewel of dubious veracity.

2009 was a watershed for many of us in our behemoth industry. Crashing stocks, bank uncertainty and the evaporation of liquidity conspired to turn the thriving MIPIM legend into a beachfront as bare as an icy Blackpool in January.

However, as with all of the best slimming regimes, MIPIM emerged the other side, leaner, fitter for purpose and hungry for action.

Focus is the key word; one grain of wisdom replacing a myriad of excess, like rice versus confetti, and, if you’re taking the trip down, embrace that focus. Our advice is be prepared, concise, purposeful and know why you’re there.

The biggest pitfalls are gametes of meaningless appointments, fertilised with a good degree of Apprentice-inspired irrelevant sales-speak; language that would have you fired by Lord Sugar before Nick Hewar could even frown.

So, when faced with that chance to pitch your elevator (pun intended) look at it from the client side; think about what they NEED, the first, second and last principle of any form of selling.

Here’s Temple’s view on how to approach this; 

1. Tell your client why what you do works.

Know your product and portfolio; show examples and schemes that provided clever solutions to difficult development problems. And tell them how you worked it out and what the benefit was. They want to know how you think first and then what your schemes look like afterwards. How you think is what makes you different from other consultants. Your projects are the result of someone else’s brief.

2. Don’t tell them you do everything.

Please don’t tell them you’re a Masterplanner when all you have in your portfolio of built projects is residential developments. You might have the skills, but they will be very unlikely to hire you to masterplan a 20-acre site if you can’t show them a project you have already done. Be honest. Pitch to work on a job you can show you can do. Get to know your client and grow your work that way.

3. Show  good pictures and tell a story!

Don’t show plans or black and white elevations. If it’s all you've got, then you should have invested in some decent renders or CGIs. Your clients are only human; seduce them by beautiful pictures that show benefit - both esoteric and commercial; if you’re having a discussion about technical detail and it would help to pore over a plan, bring one as a backup. Even worse are hugely detailed slides, mostly about sustainability systems showing tree, sun and cloud symbols, arrows, flow charts and statistics. Impenetrable, boring and something best left to the detailers.

4. Talk about people.

Architecture and property development is only about one thing. People. How are they going to live, work and play in the schemes we design. How are places going to be economically and socially sustainable for the people who live in them? What will they enjoy about what we design? Tell your client about the people who are going to be their customers. Without people there is no need for property.

5. Do your research before you come.

Your clients are specialist, mixed-use regeneration developers. It says so on their website, right at the top. They won’t be interested in resi conversions, sheds, hospitals or country houses. So don’t waste your time either showing those things or going to see them if that’s what you specialize in. You would spend your time so much more profitably with another developer who does what you do.

Having said all of the above, MIPIM is a broad church; people are there to meet, and forging relationships through the mutual pain of sandblasted  eyes and throbbing feet produces bonds that are durable.

But don’t expect commercial miracles simply by just turning up; this is about hard work and seeding capital for relationships; fertilise those seeds and cultivate the roots you put down and your following year could be something very special indeed.


Temple are heading to this year's MIPIM, find more information here. If you're interested in booking a meeting with our team, please contact; marketing@templegroup.co.uk. 

Carbon verification – Taking a leaf out of the accountant’s book

Erica Ward - Senior Consultant

Would you invest in a company based on unaudited accounts? When a company publishes its financial accounts we expect these accounts to have been fully audited and assured for accuracy. We need to have the confidence in that company and its performance. We are accordingly shocked when companies and their financial auditors get it wrong, and investments take a tumble, as recently happened when with a major UK retailer.

So why is environmental data any different? According to research commissioned by the Global Reporting Initiative and Accounting for Sustainability the majority of investors and analysts (77%) rate external assurance of ‘extra-financial’ reporting as very important or important[1].

Verification of environmental data, however, is still very much a minority activity. In 2013, fewer than 40% of UK FTSE 350 companies independently verified their organisational carbon footprint[2]. This is startling given that this group of companies should be leading the environmental disclosure agenda.

When comparing the risks of investment in otherwise similar companies, having verified data may make all the difference to an investor, and in time could have an effect on stock prices. Greater disclosure and particularly verified disclosure by environmental professionals only goes to help investors make the decision to invest. Whilst environmental reporting is still evolving, it is no longer an excuse when it comes to carbon; the general consensus on approach to undertaking a carbon footprint coupled with international standards (e.g. ISO 14064) enable us to compare organisations directly if their reporting mechanisms comply and are verified. In a similar way, waste and water reporting have also become more standardised.

Now that carbon and other environmental reporting have grown up as it were, the benefits of verification are clear. It means internal decisions-makers can take long term environmental risks into account and be confident that they are responding to the most important risks for their business. Today’s increasingly sceptical investors will also have the assurance that disclosures of environmental data can be confidently relied on when they analyse the impact on value creation and risk. Verification of emissions reductions and other improvements help create certainty regarding progress against targets, whether they are for an organisation or an individual project.

We’d be interested to hear your views and experiences of non-financial verification; if you’d like to get in touch please contact Martin Gibson on 0207 394 3700.

[1] Radley Yeldar (commissioned by Global Reporting Initiative & Accounting for Sustainability), 2012, The value of extra-financial disclosure: What investors and analysts said.

[2] Figure based on 52% of the 260 FTSE 350 companies that disclosed under CDP, from: Carbon Disclosure Project, 2013, Are UK companies prepared for the international impacts of climate change?