Choosing the Right Location for Property Development

Location remains the cornerstone for property development success. Choosing an unviable site heightens risk while losing upside potential. This guide unpacks a rigorous location selection methodology enabling developers to optimise decisions. Analysing key factors from local demand drivers through to planning policies provides data-backed validation. Follow our strategic framework to reveal sites offering the strongest financial feasibility and future value growth.

Choosing the optimal location for property development requires analysing demand drivers, planning policies, comparable properties, accessibility, amenities, sustainability factors, and financial feasibility to determine projected returns across multiple scenarios that meet target hurdle rates for viability.

Strategic Property Development Location Selection Summary:

Importance of Location in Property Development

Location, location, location – the old adage rings true, especially for property developers. The geographic placement of a development site wields immense influence over nearly all aspects of a project. An optimal locale can spell success, while a poor one hampers a development from the start.

Understanding an area, its existing dynamics and future trajectory is arguably the most critical component of property development. The location impacts everything from the achievable sales prices and rental income to construction expenses and operational overheads. It also sways financing terms and future appreciation potential. In short, location is the cornerstone upon which the entire viability of a development rests. Get it right, and profitability often follows. Choose poorly, and no amount of clever design or savvy sales techniques can rectify the situation.

Impact on Sales and Rental Demand

Prime locations translate into prime pricing. Desirable neighbourhoods or up-and-coming hot spots allow developers to command higher sales prices and monthly rents. Buyer and tenant demand pushes values up in areas known for good schools, bustling high streets, green spaces and access to transit links. The premium prices in these high-demand zones offset increased land values and development costs, bolstering returns.

Assessing demographics and psychographics within a local area gives insight into target buyer and renter preferences to maximise sales or occupancy rates. For example, urban locations often appeal more to young professionals seeking vibrant city life with entertainment and nightlife options.

Meanwhile, suburban settings tend to attract families looking for larger living spaces, gardens and good schools. Creating the right product to match an area’s occupant profile is essential to drive uptake. Failing to align a development’s design and features to local demand risks units remaining unsold or vacant.

Influence on Construction and Operational Costs

The development site heavily influences construction costs. Land values differ substantially between regions, so securing appropriately zoned land in an opportune growth area makes good financial sense. Developers must also account for local labour expenses, permit fees and materials pricing, which fluctuate by area.

Operational costs over the lifespan of a project also vary by geography. Service charges, utility rates, property taxes, insurance premiums and routine maintenance differ across councils and counties. Understanding these key location-based factors is vital when projecting rental yields to ensure the numbers stack up.

Astute developers like Beech Holdings even consider the local climate when assessing heating and cooling requirements to reduce future energy bills. Situating properties to maximise natural light and installing energy-efficient glazing also helps minimise tenant utility costs. Keeping outgoings in check makes investment units more appealing to buy-to-let landlords seeking profitable income streams.

Impact on Financing and Appreciation

When evaluating development funding requests, lenders scrutinise location risks – essentially the likelihood their investment will be repaid. Prime spots with proven demand may secure more favourable terms like lower interest rates or higher loan-to-values. Sites in up-and-coming areas face more cautious lending.

These location-based assessments also consider factors influencing future value growth like planned infrastructure upgrades and wider regeneration schemes. Properties in areas earmarked for cross-rail links, new parks or waterside pedestrianisation often see substantial price inflation. Equally, the opposite rings true in zones designated for controversial developments like waste processing facilities or out-of-town shopping complexes.

Essentially, the old adage reigns supreme once more – location is everything in property. Choose wisely and opportunities abound. Select poorly and no amount of interior design can compensate. Understanding an area today and anticipating how it might evolve tomorrow is arguably a developer’s most critical skill. Get your location analytics spot on and success generally follows.

Market and Economic Analysis

Beyond physical attributes and location desirability, developers must also evaluate the underlying market dynamics and economic drivers when selecting sites. Just as failing to research soil conditions can undermine structural integrity, inadequately analysing demand drivers and financial forecasts can destabilise uptake and returns. The right location underpins success, but the market context cements it.

The best developers undertake meticulous market research, economic analysis and employment trend reviews before acquiring land. These studies indicate likely sales velocities, achievable values, operational costs and future appreciation to model project viability. A thorough understanding of who will buy or rent in an area and the financial landscape steering their decisions is essential.

Market Research and Demographic Analysis

Developers use granular demographic analysis to reveal the size and composition of buyer and renter pools. Studies show the number of households, average incomes, occupation profiles and lifestyle preferences in a given locale.

This psychographic profiling indicates what product types, sizes, features and amenities resonate. Beech Holdings’ market research revealed young professional singleton households drove city centre demand in Manchester, guiding its successful small-unit development strategy.

Equally, family-centric suburbs may call for larger, low-rise properties with garden space and parking. Affluent rural and coastal villages favour luxury finishes and facilities. Understanding differential preferences, even within the same region, is vital for show-home designs to generate buyer buzz and drive sales.

Economic Outlook and Growth Prospects

Savvy developers also evaluate leading economic indicators, infrastructure upgrades and regeneration schemes planned for an area. Robust employment levels, solid household earnings growth and low debt levels indicate economic vitality and underpin buyer capacity. Planned transport links, waterside pedestrianisation programmes or science park developments signal future investment and growth.

For example, analysis might reveal a new light rail connection between a commuter town and city centre employment hub is approved. This improved access and reduced travel time could substantially lift demand from first-time commuter buyers or tenants.

Equally, the scrapping of a controversial out-of-town shopping complex earmarked for green belt land reduces risk for nearby sites. Such reversals often increase values for schemes blending into the rejuvenated landscape.

Employment Market Trends

The local employment profile also holds clues to guide developers. Certain industries like technology, finance and healthcare see above-average earnings and projection growth compared to sectors like retail, agriculture or manufacturing. Buyer demand concentrates in areas feeding growing employers.

For example, the thriving tech corridor along Manchester’s Oxford Road drives professional rental demand. Meanwhile, UK cities losing major banking or legal firm offices face falling premium rents as relocated workers exit. Tracking job figures for key industries ensures demand aligns to supply across market cycles. Signs of congestion and low unemployment signal solid market capacity too.

In summary, the true test of a prime site lies not just in physical aspects like transport and amenities. Savvy developers undertake meticulous market evaluations, marry property plans to buyer preferences and follow the job figures. Macroeconomic analysis ensures demand exists while microeconomic studies match supply to consumer segments.

With household demographics evolving and generational preferences shifting, what buyers want morphs constantly. Aligning projects to emerging psychographic nuances through continual market research helps ensure show homes sell and units let quickly across market cycles.

Competitive Environment Analysis

Beyond studying macroeconomic trends, developers must analyse the microeconomic competitive landscape when selecting sites. The number, scale, positioning and performance of rival developments in an area significantly sway options. Understanding what competing projects offer, how they are priced and their uptake rates benchmarks expectations.

Research by Beech Holdings reveals that properties in Manchester buildings containing gym facilities let over 20% faster and achieve 10% higher rents than developments without. This insight guides the team member’s onsite amenity planning and forecasting.

Evaluating the strengths of existing developments provides clues on where product gaps exist while assessing weaknesses highlights pitfall areas to avoid. Just as astute shoppers compare grocery bills across stores, smart developers analyse sales rates and incentives between neighbouring projects when choosing locations.

Identifying Nearby Developments

The first step involves mapping out developments within a 1-2 mile radius that offer similar property specs in terms of type, size, tenure and intended occupant profile. The focus includes standing inventory along with units underway or in planning. Desktop reviews of agent listings and council planning portals combined with onsite area tours provide intelligence.

The competitive analysis grids number of buildings, total units, average sizes, property types, amenities, parking availability, developer profiles and operator details. A clear picture of what exists and remains in progress emerges.

Benchmarking Offerings and Prices

With the landscape mapped, developers compare amenity provisions, specs and critically pricing. Rates analysis indicates achievable sales prices per square foot and rental levels based on locale, property variables like beds/baths and provisions like parking.

Developers also study incentives like stamp duty contributions, free parking, furniture packages and guaranteed rents used to boost uptake. Such promotions signal possible consumer resistance areas to note.

For example, analysis might reveal family-sized units in a suburb routinely include lawn-mowing services and movie channel packages to attract tenants. Such finds shape expectations on standard offerings.

Analysing Up-Take Rates

In addition to physical product and pricing cross-checks, developers analyse absorption and sales velocities of nearby developments using agent data and company reports. High demand areas see properties selling within months of completion. Slow sales signal potential consumer disinterest.

For rental projects, uptake tracking provides essential demand and occupancy forecasts, guiding phasing decisions. Developments hitting 90%+ occupancy within 12 months indicate healthy appetite and positive cash flow potential.

While macroeconomic research provides the landscape view, competitive analysis supplies the all-important zoom lens. Sizing up neighbouring developments, feature offerings and crucially sales rates shapes site decisions and forecasting. Careful project analysis provides consumer insights to align differentiated designs and deliver better outcomes.

Accessibility Factors

Transport links shape site selection as much as amenities, employment hubs and schools. Let’s look at residential vs commercial property development. For commercial projects, access to customers and supply chains is critical. On the residential front, connectivity enabling relaxed commutes or airport access for frequent flyers is a key purchase driver.

While scenic rural sites offer tranquil respite, urban zones better serve people prioritising convenience and mobility. Analysing route options, congestion pinch points and parking provisions provides a well-rounded accessibility picture for location planning.

Transport Links and Connectivity

Developers analyse the proximate transport infrastructure available including highways, arterial roads, public transit lines and stations, cycling routes and footpaths. Proximity to international airports and travel times to domestic hubs also weigh on corporate relocation decisions influencing commercial demand.

For example, a mixed-use site bordering a tram station and major motorway allows rapid tenant access to employment centres. Such multi-modal connectivity and commuting convenience may justify slightly higher density and values. Equally, a poorly served village location requires cautious commercial development.

Congestion and Infrastructure Upgrades

In urban zones, developers must study peak hour traffic flows using council data or first-hand observations. While city centres promise growth, gridlock threatens liveability and access. Planned upgrades like smart traffic signalling, new metro lines or waterside pedestrian walks signal future congestion relief to consider when reviewing sites.

Beech Holdings’ Manchester development sites benefit from a new bus rapid transit route along the A6 corridor. This dedicated shuttle lane improves cross-city access from key feeder towns.

Parking Availability

Parking factors heavily in tenant decisions with districts offering few public lots or street spots commanding lower sales prices and rents. Developers analyse onsite parking capacity along with availability and prices of nearby public garages and on-street spaces accessed through online maps, city data and area visits.

Permit zone restrictions and allocated bay ratios in surrounding streets indicate likely future parking contention. Inadequate provisions require caution as occupiers may frustrate easily.

Buyers and tenants prioritise mobility as much as amenities today. Developers must analyse transport links, congestion hotspots and parking availability when locating sites. Neighbourhoods enabling seamless multimodal commutes, quick airport runs or hassle-free weekend retail access offer strong competitive advantage. Plot proximity matters but so do the paths leading to and from it.

Amenities and Local Services

While stunning views and architectural grandeur attract, convenient access to everyday services and attractions drives long-term liveability and buyer demand. Schools, healthcare, recreation, retail and community resources represent the lifeblood of neighbourhoods. Plot proximity to these lifestyle essentials enhances occupancy appeal.

Research reveals over two-thirds of tenants switch properties due to inconvenient locations despite initially loving the actual units. This amenity accessibility frustration churn costs UK landlords over £5 billion in lost rents and vacancies annually.

Understanding area infrastructure and identifying gaps early on allows developers to either select sites close to attractions or potentially fund new provisions benefiting the community longer-term.

Schools, Shops and Healthcare Access

Family buyers especially prioritise school quality, retail variety and health service proximity during their property search. Analysis of catchment options, stores and surgery wait times provides real-world insights on local offerings.

Visiting shopfronts indicates retail choice while school ratings narrow suitable family micro-markets. Areas with new clinics underway or planned attract strong demand as future care access improves.

Recreational Facilities Proximity

Developers analyse leisure provisions including parks, libraries, gyms, pools, playing fields and cycle paths. New city fringe sites beside green corridor upgrades often achieve premium prices as active lifestyle appeal grows. Equally, remote areas lacking recreational features command caution despite pastoral beauty.

Beech Holdings’ waterside plots adjoin Manchester’s expanding river walkway parklands. This supports strong tenant demand from sporty professionals valuing jogging routes.

Community Resources and Attractions

While purely functional amenities enable basic living, cultural attractions enrich community fabric to enhance appeal. Savvy developers catalogue assets like museums, galleries, heritage sites, performance venues and places of worship.

Areas steeped in history and home to quirky attractions hold a distinct competitive edge. Tenants happily pay higher rents for immersion in inspiring artistic communities. Sites next to new gallery or theatre projects indicate locations on the sociocultural upswing too.

Developers should analyse area amenities as the lifeblood of neighbourhoods beyond physical buildings. High quality schools, clinics, shops and community attractions differentiate prime sites from the rest. Yet convenience remains king - if residents cannot easily access offerings, frustration follows. Selecting or creating locations where people can happily thrive both today and longer-term is key.

Government Regulations and Incentives

Beyond physical and financial analysis, developers must review the regulatory requirements guided by local authorities when assessing sites. Council plans, zoning details, building codes and public funding opportunities all impact options.

Navigating development policies, understanding allowable density, uses and construction variables while seeking available assistance smooths project execution. Reviewing restrictions and incentives upfront minimises delays and objections.

Astute developers like Beech Holdings engage early with councils when identifying target land. Highlighting alignment with wider growth objectives and community benefits often eases endorsement. This collaborative approach enables prompt value creation.

Development Plans and Restrictions

Local authorities shape areas through strategic plans indicating sites for growth, regeneration or protection. Priority development zones may gain fast-track planning permission while protected green belts or heritage assets require sensitivity.

Understanding these broader land use policies and district plan priorities provides context. Developers analyse permitted sizes, building heights, density ratios and uses to assess site viability before acquiring land.

Reviewing master plan technical guidance gives further insights on suitable designs, materials and landscaping. Such details avoid misaligned schemes stalling at application.

Zoning Policies and Building Codes

Drilling down, specific plot zoning classifications list granular restrictions from setbacks to facade materials to tree protections that bind development possibilities. Highly restrictive zones demand creative solutions to realise potential.

Building codes also govern construction requirements for aspects like energy efficiency, accessibility, fire safety and waste. Council development plans reference applicable standards that tie schemes.

Financial Incentives and Public Funding

Finally, authorities also offer incentives to catalyse desired development types. Tax reliefs, grants or low cost land for community facilities, affordable housing or sustainable builds exist in growth areas.

Seeking such assistance where eligibility criteria apply gives developers a valuable edge to enhance profitability. Authorities also jointly fund supporting infrastructure from new highway access to green space upgrades.

From broader district plans down to site-specific zoning codes, development possibilities take shape within local policy frameworks. Leveraging incentives, navigating restrictions smoothly unlocks value.

Sustainability and Environmental Factors

Beyond financials and aesthetics, sustainability steer locations today. Developers must consider environmental regulations, incentives and ethos when selecting land.

With the UK targeting net zero emissions by 2050, green credentials growing reputational and commercial advantage. Energy efficiency, renewable adoption and waste reduction signal future-readiness to eco-minded councils, buyers and tenants. Environmentally friendly property development is not just a trend but a strategic imperative. It involves integrating eco-friendly practices throughout the entire development process, from construction to ongoing operations.

Understanding applicable sustainability rules and assistance schemes unlocks advantages. Plot decisions aligning to community environmental priorities also ease planning endorsements.

Emissions Reduction and Energy Efficiency

Developers analyse policies around carbon emissions, renewable energy, EV charging and building efficiency when reviewing sites. Stricter council's mandate standards beyond national building codes to drive progress.

For example, plot proximity to district heating networks using waste heat or solar farms enables low carbon supply integration. Sites where EV charging or renewable installation earns rebates also offer value creation edge.

Commercial demand increasingly concentrates in energy efficient spaces too. Beech Holdings’ targeting of Lancashire’s enterprise zone benefits from discounted business rates for zero carbon buildings.

Waste Management and Water Usage

With the EU Landfill Directive cutting disposal and the UK prioritising circular economic principles, construction waste, recycling and water usage matter more.

Developers assess council requirements for waste processing, water conservation like rainwater harvesting and stormwater management when selecting locations. Recent approvals stipulating rigorous downstream procedures indicate stricter future scrutiny.

Green Building Regulations and Incentives

Let’s talk about building regulations. Finally, developers identify sustainability codes like BREEAM, applicable planning permissions and policies referencing percent renewable or EV capacity requirements and crucially incentives available.

Tax reliefs, fast-track approval and increased development rights for net zero or smart buildings offer advantages from the start. Sites in districts actively driving progress through assistance simply enhance viability.

Sustainability not just enables future-proofing but increasingly delivers competitive edge. Developers targeting plots where green priorities align with incentives and assistance access in-built value growth tailwinds.

Case Study: Beech Holdings' Riverside Tower Development

To showcase the immense impact optimal site selection wields, we will analyse Manchester-based developer Beech Holdings’ recently completed Riverside Tower project. This award-winning 36-story apartment complex overlooking the River Irwell demonstrates how apt location analysis and planning unlocks widespread positives.

Overview of the Riverside Tower Development

With Manchester’s population projected to grow 25% by 2035, Riverside Tower adds much-needed young professional rental housing stock. The development delivers 210 high-spec studio, one and two bed units across 275,000 square foot GEA.

Construction completed in late 2021 after 2 years. The project pioneered Beech Holdings’ “Rent Then Build' model with half the apartments pre-let during the build phase, enabling higher day one occupancy. The building comprises gym and rooftop garden amenities along with coworking spaces.

Location Selection Process and Analysis

Beech Holdings conducted extensive analysis on over 25 plots before selecting the 1.1 acre former industrial site. While regeneration schemes improved aesthetics, the area still contained many underutilised spaces.

Key factors making the riverside plot optimal included:

• Proximity to revamped commercial district and new rail link promising strong young professional tenant demand

• Pre-construction market research confirmed the strong desire for transit-linked luxury rentals

• Significant capacity for larger development and higher density than zoning allowed after value-add engagement with planners

• Purchase terms allow deferred payment till approvals are secured, reducing the risk

Outcomes and Impact of Location

The optimal site selection delivered immense success, validating Beech's diligent analysis.

By opening, Riverside Tower leased 87% of units, exceeding forecasts by over 20% for the area. Rents achieved premium levels 30% above underwriting.

Strong uptake by young finance and tech professionals confirmed tenant profiling. With Manchester's economy thriving, occupancy hit 96% within 9 months creating waiting lists.

For investors, the project delivered equity returns above 22% over the 2-year development timeline, ranking top decile for the regional market.

The site's strategic riverfront location, views and connectivity also create strong future value appreciation potential, providing investors with tails of profitability.

Riverside Tower's performance underscores the potency of optimising site selection. For Beech Holdings, meticulous location analysis and planning continue to pay dividends.