A Little Gold Mine!
Property Investors and developers are the more usual Ortus clients, making use of our full project services; however, savvy land and property owners often recognize the value we can provide and get in touch.
A landlord in South Devon contacted us following an approach from a property developer wanting to buy one of his properties. Without going into detail on value, let’s just say the developer had offered him market value for the building as a going concern. As a professional landlord, our client was comfortable, he knew the value of his building but wanted to know, if he was looking at it with a developer’s eyes, what would he see?
The Property Polaroid gave us the first step, then onto a more detailed analysis.
All developers and investors are looking for the best return on a site, but they often have a brand or a niche that defines the approach, you’re unlikely to find McCarthy & Stone building student accommodation. With a landowner, on the other hand, there are often very different motivations in play so its important not to assume it’s just bottom line. Though in this case, it was!
So, we’re looking at a town centre site, where residential development is the obvious solution, but flats, houses or a mix, what's the context, the market and the local demographic? Do we take the planning risk of demolishing the existing building, in a conservation area, or re-purpose it? What are the implications of affordable housing? Our client wanted detail to make an informed decision on how, or if, to proceed so Ortus provided it for him in the form of a development viability comparison.
A market analysis showed that one, or two, bedroom properties were the best solution. No real surprise there but showing the data keeps investors happy. This then informed five feasibility designs with base line development costs, and design specific exceptional costs, applied to each proposal. The resulting report presented and compared five development appraisals, showing the planning and construction risks, development costs and GDV’s in each case.
These comparisons demonstrated, to our client, that the most profitable solution, giving the best site value (just short of 40% more than was offered) was, unsurprisingly the option with the highest planning risk and development cost, however, a 36% uplift in site value could be achieved by a solution with much lower costs and risk. In the words of our client, we gave him ‘a little gold mine’.
Ortus works with a wide array of landowners, property owners, developers and investors and the common thread between all our clients is their understanding that having the right information, at the very beginning, puts them in the very best position.