Ongoing planning delays, plus a raft of additional information needed to obtain a planning consent, together with debt finance costs have impacted prices being paid for sites across the South East, but there is still a development market according to SHW’s Q3 2025 Development Focus.
Tim Hardwicke, SHW’s Partner and Head of Agency, comments: “Despite this, activity remains positive in the commercial development markets. Developers, however, are being more selective and focusing on prime locations, unless there is a significant upside on considering non-prime.”
Although prices are starting to increase from the ‘new norm / low’, price aspirations are often higher than an appraisal will justify. Non-prime sites continue to transact, but at lower levels.
Good demand continues for prime logistics sites, with 80% of occupier interest continuing to be for storage and distribution.
Tim says: “Planning risk remains an issue on sites - even those with an allocation - due to the increasing planning delays, increased surveys required and red tape increasing development costs. This is frustrating developers with planning taking at lease 12 months and often much longer to secure.”
Richard Plant, SHW’s Partner in Residential Development Agency, comments: ‘In London and the South West M25 area, price sensitivity continues to drive the market with overpriced opportunities not selling and developers are preferring housing schemes over flats. Housing associations are in need of funds to unlock sites, with the G15 group of leading housing associations reporting a 66% drop in the number of new affordable homes being built in London over the last two years.”
High build costs have continued to impact activity for developers and appetite for strategic land has increased following recent planning policy changes, especially for grey belt sites in the South East.
In Surrey and Sussex, smaller sites are mainly for family houses trading. Viability challenges remain, especially for flatted schemes where cost side pressures remain uppermost in buyers’ minds. House builders here are looking at strategic land opportunities in readiness for anticipated upswing in sentiment.
For more information and a copy of the report, please get in touch with any member of the SHW team.