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MARKET OVERVIEW

1.1 Definition and scope of the study

Real estate development activity is the design and construction of real estate, residential or non-residential, for sale to purchasers who will then either rent it out or use it directly. It must be distinguished from land development activity (developer, land developer) whose objective is to acquire large tracts of vacant land, then to divide them into subdivisions to install numerous infrastructures (sewer, aqueduct, etc.). Real estate development thus includes all the means and actions implemented to acquire a piece of land, to build a building, and finally to have it acquired by a client.

 

The real estate development market can be segmented between :

  • The housing goods (apartment building, detached house...)
  • The business goods (offices, restaurants, shops, warehouses, factories, hotels...)
  • The goods intended for leisure and/or public use (gymnasiums, swimming pools, stadiums, hospitals, town halls...)

 

Property development activity in the UK came to a halt in 2016 as a result of new taxes introduced by the British government. On the other hand, there are many opportunities for developers, including new technologies, diversification of financing and an upward trend in the value of acquisitions.

 

 

1.2 The global and European market

The real estate market is, according to MSCI This was mainly driven by the United States (***), Japan, the United Kingdom, Germany, China, France, Hong Kong, and Canada.

Source: ****
According to Stone Paper With New York in first place, ** cities account for **% of the global commercial real estate market. Among the top ...

1.3 The UK market in decline

In the United Kingdom, the construction market was worth ***.* billion euros in **** according to Eurostat, the European Union's statistical agency. [***]
Real estate development, which is a sub-segment of this market, generated a turnover of **.* billion euros in ****, or *.*% of the total. The sector is particularly profitable financially, with EBITDA (***) in excess ...

DEMAND ANALYSIS

2.1 Demand for housing

In real estate development, it is important to address demand, which is multifactorial. It depends on the health of both private actors (***) and the public sector. Borrowing rates and the phase of the economic cycle are also elements that can encourage, or discourage, developers.
This first part looks at the demand ...

2.2 Demand for non-residential buildings

The most important part of building construction in the United Kingdom is not related to housing but to infrastructure and other buildings (***).
It is possible to represent the evolution of production in non-residential buildings according to their type over the last ** years. The construction of private industrial buildings, which experienced difficult ...

2.3 Borrowing rate increases again

Interest rates on real estate loans are particularly important. When interest rates are low, they encourage individuals and businesses to invest, since savings are less attractive. Conversely, higher borrowing rates can make it difficult to repay loans.
Over the last two years borrowing rates have increased again, from *.**% in **** to around ...

2.4 Some trends identified in the market

CBRE a real estate consulting firm, offers in its **** report some trends that are expected to affect the real estate development market in the coming years.
Owners of medium-sized shopping centres (***) should invest to redevelop their size to increase their profitability. The demand for warehouses and, more generally, industrial buildings is ...

MARKET STRUCTURE

3.1 Organization and market dynamics

There are currently almost **,*** companies in the real estate development market according to data from Eurostat . Between **** and ****, nearly **,*** new companies have been created in the segment.

Source: ****
However, these creations did not prevent the turnover per company from growing by around **.*% each year between **** and ****. On the other hand, since ...

3.2 Value chain

The property developer is not isolated, on the contrary the act of property development requires the intervention of many actors upstream of the project, during the project, and downstream. The main ones are as follows
The master builder. This is the project sponsor, the one who defines the specifications. In construction, ...

3.3 Conduct of a real estate development operation

The criteria for success are rapid commercialization and, above all, the conformity of the final result with the budget forecasts. To achieve this, a real estate development operation always follows the same steps
Launch of the project after studying the opportunities. Mastery of the land on which the project will be ...

3.4 Financing of a real estate development operation

Real estate development projects can take time to get off the ground, and the income generated usually arrives quite late, so it is the need to find funding to carry out these projects. There are four main sources of funding:
Pre-sale of dwellings or buildings for companies makes up about **% of ...

ANALYSIS OF THE OFFER

4.1 Products and/or services

A real estate developer is mainly aimed at individuals, investors, and companies with a real estate project. Generally, they offer real estate development services, but also many other services surrounding their core business
In terms of real estate development they offer contracts:
For Sale in Future State of Completion (***): in this ...

4.2 Prices on the rise

Over the past few months, the costs associated with the construction of new housing and non-residential buildings have risen sharply. With a base *** index in ****, construction costs have increased by **%. The rise in costs is gradual, and is expected to continue, and is greater for private industrial buildings than for private ...

4.3 Supply trend

According to a report published by Altus Group There are many changes taking place in the real estate development market today. In the face of these changes, some of the players are ready thanks to a set of measures that have already been designed, while others seem on the contrary to ...

REGULATION

5.1 Current regulations

Current property legislation in the United Kingdom was established by the Property Act of **** and was modernised in **** and ****. [***] The most important texts are the following:

Source: ****
For the process of developing or building new housing, the main thing is to obtain a number of agreements from the British administration in ...

POSITIONING OF THE PLAYERS

6.1 Segmentation

  • Barrat Homes
  • Taylor Wimpey
  • Persimmon Homes
  • Galliford Try
  • Bellway

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Analysts

chargé d'études économiques, Xerfi

Hugo Schott

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Associate Consultant

Mathieu Luinaud

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PhD Industrial transformations

Robin Charbonnier

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Analyst

Pierre Doussau

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President Ross Alumni Club France

Arnaud Walter

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Analyste de marché chez Businesscoot

Amaury de Balincourt

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Consultant

Pierrick Cudonnec

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Project Finance Analyst, Consulting

Maelle Vitry

Etudiante en Double-Diplôme Ingénieur-Manager Centrale

Héloise Fruchard

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EDHEC

Imane Essadiq

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Auditeur

Vincent Defrenet

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Eva-Garance Tison

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Market Research Analyst

Michela Grimaldi

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Azelie Prigent

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Market Research Analyst @Businesscoot

Cantiane Gueguen

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Consultant

Jules Decour

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Alexia Vacheron

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Emil Ohlsson

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Anna Oeser

Anna Oeser

Gabriel Salvitti

Gabriel Salvitti