The real estate development market - UK

As of 2020 and beyond, the global real estate development market has experienced various trends and shifts. The sector is characterized by a high level of profitability, with EBITDA often exceeding 30%. However, the UK market saw a significant decline in sales in 2016 due to new tax measures like stamp duty, leading to a 23.4% drop. Despite this, the demand for housing, particularly from the private sector, has regained momentum, with the aggregate value of new homes built showing an average annual growth of 13.8% between 2012 and 2018. Non-residential buildings, specifically warehouses due to e-commerce expansion, have seen remarkable growth of 19.7% in value. Meanwhile, construction costs have climbed by 14% with regional variations, and the average prices for both detached and apartment homes have risen, indicating a persistently high market demand. Market leaders such as Barratt Homes and Taylor Wimpey have diversified through vertical integration, while new financing models like crowdfunding have emerged. However, the market is cautious about the rapid adoption of technology, with developers slow to consider automation and 3D printing as major disruptors. Additionally, Brexit and its implications pose uncertainty, with potential impacts on market trends yet to be fully understood..### Market Analysis: A Look into the Fluctuating Real Estate Development Sector in the UK In the realm of property development, we've seen a curious mix of halts and opportunities. The real estate development market, a vibrant amalgamation of residential, commercial, and leisure/public facility segments, underwent a noticeable setback in 2016 due to the imposition of new taxes. These taxes contributed to a significant slump in sales, particularly in property development, a sub-segment noted for its financial profitability in the past decade. Despite these challenges, the UK market saw average annual growth rates soar above 10% from 2010 up until 2015, only to face a downturn attributed to changes in stamp duty tax. This tax, which varies with the property type and buyer status, instigated a sharp 23.4% drop in sales. Amidst the fluctuations, the diverse offerings of large property developers like Barratt Homes, Taylor Wimpey, and Persimmon Homes, with sales reaching several billion pounds, reflect the industry's resilience. The residential property market showed signs of vigor, with private demand reaching pre-2008 crisis levels. A tangible growth in the aggregate value of new homes built, achieving an impressive average annual growth rate of close to 14%, signals a market that's rapidly recovering from its past woes. On the flip side, the non-residential buildings segment, a larger contributor to the construction market, bounces back with developments in private industrial buildings and storages as e-commerce giants like Amazon elevate the demand for vast storage spaces. As for funding these ventures, borrowing rates are escalating once again, with a noticeable increase from a little over 3% to approximately 3.8%, a factor that may well influence investment decisions. Nevertheless, the number and value of new home loans have seen a hike, suggesting a market that, despite borrowing costs, remains on an upward trajectory. As the industry strives forward, the concentration of nearly 40,000 property development companies competes in a market that has witnessed continuous growth in corporate revenues. Big players are not only involved in development but are capturing a larger slice of the value chain through vertical integration, reflecting a robust market organization. The ever-evolving landscape of real estate development continues to challenge industry stakeholders, with surging construction costs and regional disparities that can't be ignored. While building a detached house or an apartment fluctuates in cost, the rising average prices indicate a market responding to broader economic pressures. Finally, grasping the intricacies of this market demands an understanding.### Key Players in the UK Property Development Landscape The UK property development market is characterized by a dynamic blend of seasoned giants and emergent firms, each playing a pivotal role in shaping the ever-evolving real estate canvas. Among them, a select few have established commanding eminences, galvanizing the industry with their innovative projects, expansive portfolios, and substantial market share. Here is an overview of the notable players who are central to this bustling sector. #### Barratt Homes Barratt Homes stands tall as a leading light in the UK's real estate development domain. Known for its commitment to building quality homes, Barratt has carved out a stellar reputation for its sustainable development practices and a customer-centric approach. Their broad range of properties caters to diverse demographics, from first-time buyers to seasoned investors, making them a go-to name for residential projects. #### Taylor Wimpey As another major force on the UK property scene, Taylor Wimpey is revered for its extensive collection of homes which are as aesthetically pleasing as they are comfortable. Their projects span across the nation, offering a variety of living spaces that appeal to different lifestyles. Their dedication to community development and an unyielding adherence to excellence places Taylor Wimpey among the echelons of premier property developers. #### Persimmon Homes With a solid foundation in the UK market, Persimmon Homes is acknowledged for delivering high-end residential dwellings that radiate sophistication and functionality. Their expertise extends to crafting vibrant communities with an emphasis on local architectural styles, hence enriching the nation's cultural fabric. Persimmon's strong track record in customer satisfaction and innovation continues to drive its success. #### Galliford Try Distinctive in its dual focus on construction and property development, Galliford Try is a versatile enterprise adept at navigating the complexities of the real estate industry. Their comprehensive service range covers the entire development cycle, from planning to construction, endowing them with a holistic perspective on property development that few can match. #### Bellway Completing the constellation of distinguished property developers is Bellway, an entity recognized for its diverse portfolio that includes everything from luxury apartments to spacious family residences. They are celebrated for their bespoke developments that honor the local character and integrate seamlessly with the surrounding environments, thereby endorsing sustainable living and enhancing the quality of life for residents. Together, these titans of property development represent the driving force behind the UK's vibrant and diverse real estate market. Each contributes uniquely to the industry's growth, underscoring the importance of innovation

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• Number of pages : 30 pages
• Format : Digital and PDF versions
• Last update : 31/05/2021

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Summary and extracts

List of charts

• Size comparison of major real estate markets
• Property development sales and EBITDA
• Aggregate value of new homes built
• Number of housing starts and average house prices
• Value and 5-year average annual growth of non-residential building construction
• Number of new mortgages granted each month
• Value of new mortgages granted each month
• Number of real estate development companies
• Sales by real estate development company
• Difference in construction costs by region
• Financing sources for real estate developers
• Technological innovations that promoters consider potentially disruptive

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