A £500,000 development site is not necessarily cheaper than a £750,000 one.

The cheapest piece of land is rarely the cheapest development opportunity.

A low acquisition price gets attention. For a developer looking at several opportunities, a site priced below expectations can look like the obvious commercial choice.

But the purchase price tells you surprisingly little about whether the development will make money.

Planning restrictions, contamination, neighbouring interests, finance costs and delays can turn an apparent bargain into an expensive problem. By the time those issues become obvious, significant capital may already be committed.

Following our recent Planning Series, I am revisiting one of my earlier webinars on identifying and assessing profitable development opportunities, with a particular focus on land, planning and finance.

The price of the land is only the starting point

When assessing a site, the first question should not be, “How cheaply can we buy it?”

The better question is, “What are we realistically able to build here, and at what total cost?”

Planning permission sits at the centre of that assessment. 

A site might appear attractive based on its location and purchase price, but if planning restrictions reduce its development capacity, the commercial position changes quickly.

Existing planning permission also needs proper scrutiny as having permission does not automatically mean the proposed scheme works financially.

You need to understand what has been approved, what conditions attach to the permission and whether the development those conditions permit supports your intended return.

Cheap land often comes with expensive complications

The physical and legal position of the land matters just as much.

Contamination is an obvious example, remediation work adds cost, affects funding requirements and potentially extends the programme.

Land assembly presents another issue. 

Your proposed scheme might depend on acquiring neighbouring land, securing access or obtaining rights from another landowner. 

Suddenly, the price agreed for the original site is no longer the true cost of securing a developable opportunity.

Neighbouring interests also deserve attention early. Development does not happen in isolation, and overlooking the rights or interests surrounding a site can create significant problems later.

These issues should influence valuation before acquisition, rather than becoming costs you try to absorb afterwards.

Finance changes the calculation

Funding a development is about more than raising the money required to buy the site.

Lenders will consider the viability of the wider scheme, the risks involved and the credibility of the assumptions behind your appraisal.

Alternative lenders have increased the financing options available to developers, but different funding structures bring different costs and requirements.

Then there is time.

Planning takes longer than expected: construction programmes move, economic conditions change and interest continues to accrue.

A scheme which looks profitable across an optimistic timeline can look considerably different when completion moves six or twelve months.

Assess the development before you buy the opportunity

This is exactly what I will be exploring during the webinar.

We will look at how developers, investors and construction professionals should assess development opportunities before significant capital is committed, including planning permissions, land assembly, contamination, neighbouring interests, valuation, funding and the effect of changing economic conditions.

The objective is straightforward: to help you identify the risks which affect development capacity and profitability before they become expensive problems.

A low purchase price does not make a site a bargain.

If you are assessing development opportunities based heavily on what the land costs today, this webinar should challenge how you run the numbers.

Join me for the session and find out whether the “cheap” site on your desk is genuinely a profitable development opportunity.

Register your interest here: https://www.linkedin.com/events/7501621042897920002/