Cordea Savills announces that the Serviced Land Fund has completed its investment programme a year ahead of schedule. The fund, which was launched at the beginning of 2006, focuses on obtaining attractive returns by sourcing and improving the value of land for housing development. The success of the fund means that Cordea Savills is considering the launch of a second version of the fund later this year.
The fund's strategy is to maximise returns through the "enablement" of land, based on obtaining or refining planning consents, parcelling land and selling it as serviced sites to developers. Target returns are 15% per annum. The fund attracted considerable interest from intermediaries, who were particularly enthusiastic about the returns that can be generated by this area of the residential market.
Steve Taylor, Head of Wealth Management at Cordea Savills, commented: "The assets we have purchased have excellent upside potential and we are eager to move ahead and develop the sites. The timing of this fund could not have been better. Property developers are less inclined to hold large land banks because of the low house price growth, but the price of land with planning consent is substantially higher than the value of land without. The land market remains buoyant because of the under-supply of housing. This illustrates the validity of the serviced land approach to investing in property."
The final asset purchased for the fund was a 200-acre former colliery site known as Fernhill, which lies at the head of the Rhondda Valley, South Wales. The land will be prepared for sustainable mixed use development that will add commercial, light industrial and residential uses. The area was ranked by Royal Bank of Scotland as the UK's seventh most desirable first-time buyer property hotspot.
The fund's first purchase was a 7.8-acre site in West Costessey, near Norwich. The purchase price was approximately £7.6m for the land, which already has the benefit of planning permission for residential use. Interest has been shown by national housebuilders in buying the site at levels considerably higher than the purchase price.
The second asset purchased by the fund was an option to buy over 100 acres of land at Bethwines Farm in Fishbourne, near Chichester. The site will be promoted as a major mixed use development within Chichester's emerging Local Development Framework.
The fund manager of the Serviced Land Fund is Cordea Savills, while the asset manager is Cofton Limited, a company that specialises in the regeneration and delivery of land to the house-building industry.
Source: Cordea Savills