Residential development land has dropped by a third in value over the past year, and by up to 15% in the past quarter, as problems among housebuilders have accelerated the devaluation of increasingly fallow land banks.
The losses in land values around the country are worse than many had feared, according to Knight Frank’s first annual development land index. The property consultancy expects values to continue to fall, predicting that 10% could be further wiped off prices over the next 12 months.
However, there are signs that so-called vulture investors are entering the market to snap up bargains among the numerous forced sales of distressed builders. 'Speculators' now represent a fifth of buying activity nationally, and half in London, where development sites are traditionally in short supply.
There are worries that the fall in land values could have a knock-on effect for many regeneration schemes. Agents have suggested, for example, that the resale value of the Olympic park in Stratford could fall well short of the government’s estimate, which could influence the funding equation behind the 2012 games.