Greenfield and urban land value growth in Scotland over 2007 is forecast to exceed the national forecast of 8 per cent and 3 per cent respectively, as demand for family housing and site scarcity continues to drive up values.
In Scotland, greenfield values have risen on average by 17.1 per cent over the past decade compared with an all regions increase of 11.6 per cent per annum over the same period.
Glasgow has been the principle driver of greenfield growth. Over the past decade, values have increased on average by 19.8 per cent per annum. Edinburgh has recorded the lowest levels of growth at 12.5 per cent, reflecting the fact that its land values are the highest in Scotland, therefore leaving little room for further uplift.
The main driver behind this uplift in value is the competition for the easier-to-develop greenfield sites. This has emerged on the back of the demand for family housing, particularly around Glasgow and has been exacerbated by the limited supply of developable greenfield sites.
According to Savills land indices, Scotland has been the only region to withstand the recent downturn in urban land values seen elsewhere, as a result of a surplus of city centre flats combined with thinning demand seen in some locations. Edinburgh and Glasgow suffered to some extent from a surplus of large two-bed flats, which depressed unit and land values, although they have bounced back this year.
Urban land values in the region have increased already by 8.1 per cent this year. On the whole it has been land value increases in Perth, Stirling and Aberdeen, which house builders now see as safe alternatives to Edinburgh and Glasgow that have been driving this growth.
Peter Allen of Edinburgh Development commented: "The potential for residential value growth, combined with relatively cheap land values and healthy levels of demand for flats in these locations, has assisted in attracting house builders."
However, the uplift in values has been limited by uncertainty associated with land buying and development as the planning-gain consultations continue combined with unprecedented rises in build costs.
Urban land value growth has exceeded that of new build flats over the past three years with increases of 3.3 per cent and 1.1 per cent respectively. This out-performance has been fuelled by the restrictions placed on greenfield development, forcing developers to buy brownfield sites.
Savills forecasts urban land values to continue to see healthy levels of growth into 2007. This will be driven by a forecasted upturn in the city centre flat markets in Edinburgh and Glasgow as smaller and more affordable stock becomes available, inducing greater activity in the owner-occupier market and continued demand from investors. Site scarcity which has kept values buoyant will also continue to drive value growth as developers compete for an ever dwindling supply of good, easy sites in city centres.
