Scala Land Group - Greenfield Investment
To someone wanting to invest in land in the UK, they’ll find – confusingly – that it comes in two colours, brown and green. Which is what you normally see as you drive through the countryside. But brownfield and greenfield, in land investment terms, don’t actually refer to what you see through the car window.
Brownfield land is land that has previously been developed. Hence, sometimes it is called PDL, previously developed land. Generally, this is understood to mean ex-industrial land, perhaps the site of a factory or a freight yard. Actually though, it covers many sites, such as land where previously there had been housing, farm buildings, office accommodation, lorry parks, boat builders, etc. It even covers sites that have always been ‘green’, like domestic gardens.
To an investor, or a planner, greenfield land is land which in the recent past – the last century or so – has not had buildings on it, nor has been attached to buildings. Commonly it is understood to be agricultural land, but it can include land like playing fields, parks and unfarmed areas like scrub and woodland.
When it comes to the possibility of building on land – the real point of interest for the smaller investor in UK land – the government’s preference is that new build should take place on brownfield sites. It has expressed a desire that 60% of its ambitious three-million-new-homes-by-2020 target should be built on brownfield land. If that target can be achieved that still means that 1.2 million new homes will be built on greenfield land. But there’s a strongly argued case that there is not enough suitable brownfield land to allow that 60% target to be hit.
In a paper issued by the Social Market Foundation (summarised here) the think-tank concludes that almost two million new homes will need to be built on greenfield land.
The Social Market Foundation, and others, including Natural England, have also said that not only should we consider building more on greenfield land, but also on Green Belt. For over 50 years, certain major towns and cities have been constrained in their growth by land – usually agricultural – which is protected by law from development.
However, the argument goes, preventing growth on the outskirts of existing centres of population creates two major problems. Firstly, the lack of residential development land on the edges towns put pressure on green space within the towns, meaning that areas like parks and playing fields are often sacrificed to the bulldozer. Secondly, because property development cannot take place within the green belt, it often leapfrogs it, causing new towns and villages to be built many miles away, and forcing an environmentally-damaging commuting culture on the residents of those new developments.
What does all this mean to the careful land investor. Primarily, that greenfield land on the edge of towns and villages where there is pressure for more housing holds the potential for good capital growth, if that land can be rezoned in local development plans. That’s exactly the sort of land that Scala Land Group acquires, and offers to its clients.
Tel: 020 7965 4747
