Angles To Profit From A Land Investment
It will come as no surprise to those investing in land that achieving planning permission on a UK land site is where lies the most lucrative investment land returns, but there are other ways to make money from a land investment, writes Alex Way.
As a very broad guide, UK land which is reclassified for residential development within the UK land planning framework rises tenfold in value (ie land with planning permission is worth ten times more than a similar piece of land without planning permission). As such few other assets have the same capital growth potential as investment land. That is not to say that the average land investment returns 1000% to investors since to achieve growth on that scale from buying land would require that you undertake the project from start to finish yourself.
And many, if not most, people investing in land with a view to taking it through the land planning framework will need to employ somewhere down the line the services of UK land specialists, whose expertise does not necessarily come cheaply. However it is entirely possible to achieve investment land returns of the order of 350-600% because land developers are opening-up their projects to private investors.
The latter in effect provide partial land development funding to these firms in return for which those investors receive a pro rata proportion of the new value of the development land with planning permission. For the purposes of this article we will set to one side this fairly recent phenomenon (recent in the UK, at least - private land development finance is a well-established practice in the US), in order to consider other ways of profiting from investment land.
For more information Contact Nigel Walter at Connaught Asset Management.
