As the property market has continued to grow over the last 5 years the search for sites offering developers and investors value has become ever more competitive. Off market deals are fewer and further between. Greater access to data and new technology has enabled developers and investors to pin point with ever greater accuracy sites with the strongest development potential. Owners of target sites are often identified much earlier in the search process. They can expect to receive multiple approaches.
Against this background, traditional off-market approaches to sites are becoming more popular. Landowners receive multiple contacts from developers and speculators looking for sites. This background noise can be off-putting.
A growing trend for developers is to look at alternative means of sourcing sites. We are seeing more sites being acquired through Property Buyouts. Broadly, a Property Buyout is where the buyer acquires the company or trading business that operates out of the target site. Correctly structured, a Property Buyout can be very attractive for both seller and buyer. For businesses owners it can offer an effective means of planning for their business succession, relocation or exit. For site buyers, it can enable them to get a head-start on the rest of the market. There may also be some tax savings, as well as timing advantages as the seller and buyer work in a coordinated way.
For developers who are interested in Property Buyouts there are advantages in starting discussions with the target early. Frequently, it may be necessary for the target business to undergo an element of restructuring or demerger. There may also be governance and funding issues that need to be resolved before any transaction can go ahead. Nevertheless, with the right approach and careful planning Property Buyouts can work very successfully.
(article linked below highlights continued demand for new housing)
According to Haart’s National Housing Market Monitor for July, the number of tenants entering the market across England and Wales rose 9.2 per cent on a monthly basis and 23.1 per cent year-on-year. The average rent was reported to be down 0.4 per cent when compared to June, and by 4 per cent on the year, sitting at £1,239 pcm across England and Wales. Focusing on the capital, tenant demand in London was suggested to have increased by 16.1 per cent month-on-month and 40.1 per cent year-on-year. London rents were reported to be up 1 per cent on the month and 6.6 per cent on the year. The average London rent now sits at £1,887 pcm. When you also consider that London has experienced an annual 37 per cent supply drop, then it’s inevitable that additional pressure is being placed on rental prices in the capital. A fiscal squeeze which is likely to cause further concern for tenants, many of whom are already paying a vast chunk of their monthly income in rent. And with demand continuing to outpace supply in many parts of the UK, this is not just an issue limited to London. So, what is the answer? It’s no secret that we need a far greater volume of affordable housing being built and more encouragement being given for all types of property investment. Sadly, there are no quick fixes to this issue.