LIVERPOOL DEVELOPMENTS

Viability Report for
Lanyork Road
Development
Prepared for Fieldtown Property Development
392106
3...
Contents
1. Executive Summary

Page 3

2. Introduction

Page 5

3. Market Research

Page 6

4. Planning Brief

Page 14

5....
1.

Executive Summary

Fieldtown Property Development is thinking of acquiring a plot of land for development,
they are un...
The finical viability of the site has to prove itself as profitable before a penny is spent. After a
full valuation the co...
2. Introduction
Fieldtown Property Developments have commissioned us (Liverpool Developments) to
produce a viability repor...
Plentiful amounts of warehouses, car showrooms and car garages fill the area. It is safe to say that
there is no need for ...
Starting from zero (peak of 2007) the percentage change was -6.54% when the recession
fully hit, and even though there is ...
Fig.4 – Liverpool Waters Parameter Plan,
Liverpool Waters (2011)

Fig.5 – Princes Dock and King Edwards
proposal, Liverpoo...
Liverpool vision who describe themselves as the city’s economic development company
have produced a new framework with key...
Retail
Liverpool is currently in the top five retail destinations with the £1bn regeneration scheme
and as a spokesman fro...
Fig.8 – Supermarkets in Liverpool, Google Maps (2013)
Below is a swat analysis on the sector highlighting key strengths, w...
Fig.9 – Office up-take in Liverpool, Liverpool Vision (2011)

Looking primarily at the central business district and parts...
Below is a swat analysis on office space.
Strengths
 Most active city in terms of office space
in 2009.
 2011 seen an up...
With only 3 houses up for sale within 1 mile of Lanyork (Fig.12) the majority of sales are in
flats (fig.13)

Fig.12 – Hou...
Liverpool council will be an outline planning application meaning not all details will be provided at
the time of the appl...
serious brake on growth and slowing the job market. The new planning system is called the national
planning policy framewo...




Density, not strictly operated but some goals need to be achieve. The character of the
surrounding area cannot be co...
An outline planning application with all matters reserved will be included in chapter 5. Using
the planning portal fee cal...
Fig.16 – Site Plan (2013)

19
The footprint of the site will be arranged in such a way to prevent disturbances to any
residents from the activities of T...
Figure.17 – Potential Residential Design, Marley Eternit Cladding (2013)
The building which will house the supermarket wil...
Implementation and Contracts
Procurement is usually referred to the process of acquisition of an asset, however within the...
With the development in its early design stages the cost to buy the land and its current use must be
value. As the site is...
Site Valuation

Unit 1
Unit 1A/B
Unit A1
Unit A2
Unit 3
Unit A4
Unit 5

Total Fh & Lh
Freehold
Leasehold
£762,031
£655,691...
Two Bedroom
Three Bedroom
Supermarket

Fig.21 – Rental Spread, Excel (2013)
The total build costs for the development incl...
When analysing which marketing strategy best suits the product it is important to assess how it will
be sold. A production...
Fig.23 – Example Brochure, Google (2013)
In the short and long term developments will help boost the local economy through...
In this situation funding will come from banks, internal finance and government bodies
(Fig.24). 10% will be from governme...
References
BBC LIVERPOOL, 2012. Liverpool Waters Plan Approved. [Online]
Available at: http://www.bbc.co.uk/news/uk-englan...
LIVERPOOL VISION, 2012. Strategic Investment Framework. [Online]
Available at: http://www.liverpoolvision.co.uk/City_Centr...
Appendix
1.

31
32
2.

33
3.

34
35
4.

36
5.

37
38
39
40
41
42
43
44
6.

Yield
£34,931
£375,000 x100
Evidence in Appendix 5a

=

9.3149333

Unit 1
Subject
Size m2
Lease years
Start
End
Clause...
Subject Valuation
Freehold
Term
Rent Recived
Less Management 3%
Net Income

£41,065
£1,231.95
£39,833

Yp @ 8.5% for 5 yea...
Unit 1A/B
Subject
Size m2
Lease years
Start
End
£/m2
Rent paid
Unexpired

170
1
2013
2014
£53
£9,000
0

Comparable
Size m2...
Subject Valuation
Freehold
Term
Rent Recived
Less Management 3%
Net Income

£9,000
£270.00
£8,730

Yp @ 8.5% for 1 year
0....
Unit A1
Subject
Size m2
Lease years
Start
End
Clause
£/m2
Rent paid
Unexpired

90
10
2002
2012
B/c 7th
£77
£6,300
0

Compa...
Subject Valuation
Freehold
Term
Rent Recived
External Repairs 5%
Insurance 3%
Less Management 3%
Net Income

£6,300
£315.0...
Unit A2 & A4
Subject
Size m2
Lease years
Start
End
Clause

72
10
2013
2023
B/c 7th

Comparable
Size m2
Rent
Lease

165
£11...
Unit A3
Subject
Size m2
Lease years
Start
End
£/m2
Rent paid
Unexpired

72
3
2011
2014
£75
£5,400
2

Comparable
Size m2
Re...
Subject Valuation
Freehold
Term
Rent Recived
Less Management 3%
External Repairs 5%
Insurance 3%
Net Income

£5,400
£162.0...
Unit 5
Subject
Size m2
Lease years
Start
End
£/m2
Rent paid
Unexpired

72
10
2005
2015
£94
£6,750
3

Comparable
Size m2
Re...
Subject Valuation
Freehold
Term
Rent Recived
Less Management 3%
External Repairs 5%
Insurance 3%
Net Income

£6,750
£202.5...
7a.
http://www.showcase.co.uk/#&&/wEXAQURV29ya2Zsb3dIaXN0b3J5SUQFJGY5YmQ1MmM3LWM2Y
jMtNDUxMy04ZTlmLTAxMzdlNzgwZjI2NcLKFv7/...
8a.

57
58
59
8b.

60
61
62
63
8c.

64
65
66
67
9.
Development Appraisal
Lanyork Road
Fieldtown Developments
Prepared by Liverpool Developments
Date 6th March
Valuation
2...
Professional Fees
Architect @ 4%
Quantity Survery @ 3%
Structural Engineer @ 2%
Building Surveryor @ 2%
Consultant/PM @ 2%...
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Transcript of "Liverpool Developments"

  1. 1. LIVERPOOL DEVELOPMENTS Viability Report for Lanyork Road Development Prepared for Fieldtown Property Development 392106 3/8/2013
  2. 2. Contents 1. Executive Summary Page 3 2. Introduction Page 5 3. Market Research Page 6 4. Planning Brief Page 14 5. Development Brief Page 18 Financial Appraisal Page 22 6. 7. Market Strategy and Funding Page 25 8. References Page 29 Appendix A Page 31 2
  3. 3. 1. Executive Summary Fieldtown Property Development is thinking of acquiring a plot of land for development, they are unsure of what would best suit the area. Liverpool Developments have been commissioned to produce a viability report which will include research into the site and the surrounding area. The site is 6,500m2 and is currently leased to seven tenants, potential problems which will be dealt with in an appropriate manor. The direct use of land around the site is industrial but with commercial and residential buildings a short walk away the scope of development is fairly large. Market research was conducted on the area to gain a well needed knowledge of demand; the research used was external and internal however, only secondary data used. When the economy shrank 0.3% in the last few months of 2012 there were raised concerns of a second recession. Liverpool however is doing better than the average city; even with the affects of the recession it was the fastest growing economy outside London increasing investor confidence in the area. The retail sector in Liverpool has grown due to recent developments and has become a top 5 shopping destination. Added with a catchment area of 4.7 million people the sector is very strong. Office space in city centres will always promote business, a beneficial feature for the city council. Liverpool was said to be the most active area in-terms of office uptake before the recession hit, it would be safe to assume these levels may return. Residential properties in the area had one clear choice; with land expensive on the fringe of the city centre it would not be efficient to build houses. The trend demonstrates this with multiple two bed and three bed flats in the area. Planning is an essential legal process which needs to be completed, any developments has to suit the area visually and environmentally. The site is in an area that is primarily used for industrial services so it is unlikely that a 40 floor high rise would be accepted. Traffic access to the site is exceptional through the junction on Leeds Street and Pall Mall lessening possible congestion and with Leeds Street a main road for access to Strand Street public transport is also exceptional. Past planning applications for the site ranges from advertising to large developments. Fortunately the development was accepted however the advertising was rejected. Site constraints which have to be overcome include:    Current Tenants Height of surrounding buildings Meseyrail line at the edge of the site These constraints have been dealt with in an appropriate manor. Analysing the planning guidelines, the UDP map shows plans to expand the city centre boundaries. This will eventually include the Lanyork Road site which is beneficial for the development. Supplementary planning guidance has also been assessed to aid the design process. The proposed use for the city has to be appropriate to be accepted by planning and prove profitable. As the requirements for the site was multi use the proposal will include 2 bed and 3 bed flats and a supermarket. The layout has kept both uses separate to avoid disturbances for the residents. The design will be red brick and aluminium cladding but will also include sustainable ideas such as water recycling and solar heating. As the time and cost are the two main priorities for the build the best procurement method for the development will be a design and build. 3
  4. 4. The finical viability of the site has to prove itself as profitable before a penny is spent. After a full valuation the cost to buy the land was set at £1,187,651. Rental income from the proposed development is estimated at £382,461 amounting to a freehold value of £6,360,981. Build costs including professional fees and finance is valued at £5,088,152 leaving a residual sum of £1,272,830, minus the actual cost of the land there is £85,000 left over providing a profit of 1.4%. A small amount when compared with the amount spent and the associated risk. To shift property to possible buyers a proper marketing strategy has to be researched and proposed. The strategy for this development will include local and regional advertising boards, spreads in newspapers and property magazines. A website should also be produces showing a 32 model and any particulars. Funding for the development will be through mezzanine finance at 30% internal (£1,882,740), 60% bank finance (£3,765,481) and 10% government funds (£627580). 4
  5. 5. 2. Introduction Fieldtown Property Developments have commissioned us (Liverpool Developments) to produce a viability report for a possible development around Lanyork Road (Fig 1.). The report is going to research the site and find the best use or uses for the area. The site is a medium sized plot of land and is within close proximity to the business district (Fig.1 Red Area) and the newly built residential towers (Fig.1 Blue Area) of Liverpool. Fig.1 – Lanyork Rd and surround area, Goole Maps (2013) Lanyork Road is located just off the junction of Leeds Street and Pall Mall making the site very accessible without congestion, the junction also offers routes to the City Centre and surrounding motorways. This will prove beneficial in both construction and handover phases of development. The plot of land is approximately 6,500m2 and houses seven units, all varying in size. Two of the units are currently empty but unfortunately five of the units are housing esteemed businesses. Further research into their lease terms will be required. Currently the site is fully enclosed and offers access through Lanyork Road, which is a cul-de-sac. One major problem at first glance is the railway line which leads underground on the west side of the plot; this may lead to problems with ground stability, planning permission or noise. All of which can be dealt with in an appropriate manor. As stated earlier, the site is only a small walk from the commercial district and the recently developed residential towers along Strand St. With so much mixed use in the area the scope of development and potential for the plot of land is fairly high. However, moving away from the city centre the main use of the area is industrial (apart from a community college and car parking). 5
  6. 6. Plentiful amounts of warehouses, car showrooms and car garages fill the area. It is safe to say that there is no need for such developments. 3. Market Research Market research is a vital process in the development process, it can identity a possible “niche” in the market. This stage will be imperative with such a large investment and can generally consist of:  External Research – Economic research looking at trends and forecasts Internal Research – Consumer research looking at current demands The research methods however can be split down into further sub sections:  Primary Data – Information found from questionnaires, interviews and observations Secondary Data – Information from existing research. This report will contain both external and internal research however the research method will only be on secondary data. Since 2008 the U.K Economy has struggled to keep ahead of its deficits and even in the final 3 months of 2012 (4 years after the recession started) the economy shrank 0.3%. This decrease in growth has as stated by BBC (2013) further fuelled fears of the possibility of re-entering another recession. Amongst further fears the recovery period for the current recession has also been allot slower and unstable when compared to past examples (Fig.2) Fig.2 - How Recessions Compare, BBC (2013) 6
  7. 7. Starting from zero (peak of 2007) the percentage change was -6.54% when the recession fully hit, and even though there is a slight increase, figures are still set at -3.35% 60 months on. When compared with past recessions, sixty months on and all other examples are far beyond negative figures. It is safe to say that the U.k economy is far from stable at this present time. However, not all is doom and gloom when looking at the economy. As Liverpool Vision (2011) stated Liverpool has the fastest growing economy outside of London. A revised economic forecast for Liverpool City (Fig.3) shows a decline in GVA (Gross Value Added) during the recession of 2008. Fortunately that changed to an incline representing growth in 2010, it is also predicted to last well beyond 2025. Figure.3 – Economic Forecast for Liverpool, Mersey Partnership (2012) The investor confidence is currently higher in Liverpool when compared with the average for United Kingdom, this which is evident in the multiple developments which have either finished or are currently in construction. The recently accepted development plan as stated by BBC Liverpool (2012) will bring new investors and new jobs to Liverpool through a 30 year build program as Liverpool Waters (2011) defined in a document called statement of key development principles. This development once finished is less than a mile away (Fig 4 & 5) from the plot of land on Lanyork Road and will eventually increase the value of any development on the site. 7
  8. 8. Fig.4 – Liverpool Waters Parameter Plan, Liverpool Waters (2011) Fig.5 – Princes Dock and King Edwards proposal, Liverpool Waters (2011) 8
  9. 9. Liverpool vision who describe themselves as the city’s economic development company have produced a new framework with key areas which can be regenerated. This document contains a map (Fig.6) which currently shows Lanyork Rod as outside the city centre boundaries, however it also shows the planned expansion which does include Lanyork Road as part of the city centre as developments continue. Lanyork Rd Fig.6 – Liverpool City Centre, Liverpool Vision (2012) With so many developments currently happening in Liverpool and with one major development on Lanyork Road’s door step, the site will become a prime location increasing the potential. With the potential for the plot of land so high, the decision for the best use of the land is very important. With thorough research and a swat analysis the most suited use can be found. 9
  10. 10. Retail Liverpool is currently in the top five retail destinations with the £1bn regeneration scheme and as a spokesman from LIVERPOOL ONE (2012) stated the catchment populations is 4.7 million making the retail sector very profitable. Retail sales during the month of December were up 29.4% from that of last year but this was predicted to be because of icy weather; however the figures still show a 6% increase from 2009 and a 14.6% increase from 2008. Visiting shoppers are definitely on the increase as PORTAS (2013) explained. With that said the majority of retail units are located within the city centre, a short walk from a vast amount of parking (Fig.7). Fig.7 – Retail in Liverpool, Google Maps (2013) Realistically, housing a large amount of small retail units would be unsuccessful for the area. The walk from the city centre would not warrant the investment, however the plot of land provides an adequate amount of space for a retail park, not to dissimilar from that at edge lane, which as stated by ITS LIVERPOOL (2012) is currently expecting a £200 million investment for expansion. Their aim at the end of their development is to donate any revenues produced to charities, helping the city benefit in other areas. Moving away from retail shops there is a small amount of residential properties around Lanyork road (Fig.10) which have no close proximity to a news agent, a fresh food supplier or a supermarket (Fig. 12). The potential for a supermarket if one was on the site would be extremely high with the added bonus of the Leeds Street ring road. 10
  11. 11. Fig.8 – Supermarkets in Liverpool, Google Maps (2013) Below is a swat analysis on the sector highlighting key strengths, weaknesses, threats and strengths. Strengths  Top 5 shopping destination.  Constant retail developments around Liverpool. Opportunity  Liverpool Waters development may shift the city centre more towards Lanyork Rd making it ideal for retail units.  Leeds street ring road makes the plot of land ideal for supermarkets or retail parks. Weaknesses  Fierce competition from other shops.  Site location not ideal for “window shopping”. Threats  £200 million investment in Edge Lane Retail Park and another £600 million around city centre. Office Office space in and around any city will always be a must; it promotes businesses and helps the economy. It is the same for the city of Liverpool and as THE COMMERICAL DISTRICT (2011) stated in an office market review, Liverpool was in confirmed to be one of the largest and most active regions in terms of office space in the U.K. Liverpool has however been hit by the recession, as with every other city. During 2007 (before the recession hit) the total take up in the central business district was 462,875sq ft as explained by LIVERPOOL VISION (2007). Looking at more recent figures there was an increase of 37,000sq ft in take up in 2009 as LIVERPOOL VISION (2009) stated, however in 2011 the figures decreased to 268,298sq ft as LIVERPOOL VISION (2011) market review showed but it still proved to be an increase of 29.3% from that of 2010 (Fig. 9). 11
  12. 12. Fig.9 – Office up-take in Liverpool, Liverpool Vision (2011) Looking primarily at the central business district and parts of the city fringe (Fig.10) there is office space almost everywhere within Liverpool with a broad choice of options (Grade A,B and C). However like that of retail once you cross Leeds Street the office space vanishes, mostly due to the nature of the area being so risky. With the Liverpool waters development this may change as they have incorporated 314,500sq ft of office space. Fig.10 – Office space in Liverpool, Google Maps (2013) 12
  13. 13. Below is a swat analysis on office space. Strengths  Most active city in terms of office space in 2009.  2011 seen an up take increase of 29.3%  Opportunity  Liverpool Waters development will help office space branch out from the central district. Weaknesses  Large decrease in office uptake when compared to 2009 Threats  Out of town office’s are able to offer better prices £/m2 Residential The residential market over the last couple of years has not been the gold pot that it used to be. With loan to value percentages slowly increasing back to the norm it has been hard for an average first time buyer to acquire their dream home as the Telegraph (2012) stated that the average age for a first time buyer is now 35. This has had an adverse effect on the property market decreasing property value across England (Fig.11). Average House Prices Around Liverpool £200,000 £150,000 £100,000 Avg Price £50,000 £0 7 years ago 5 Years ago 3 Years ago 1 Year ago Fig.11 – Average House Prices Around Liverpool, Zoopla (2012) With that said the property market is slowly recovering, CITY RESIDENTIAL (2012) showed in a report that prices are up 0.42% quarterly and 2.21% down over the year. Sales activity has also been strong between October and December. The rental market however is in a better state. With the average age for first time buyers 35, only 1 in 4 adults own their own property. This has had a beneficial impact on the rental market as it has continually grown and as the BBC (2012) stated it is predicted to grow an extra 4% in 2013. 13
  14. 14. With only 3 houses up for sale within 1 mile of Lanyork (Fig.12) the majority of sales are in flats (fig.13) Fig.12 – Houses, Right Move (2013) Fig.13 – Flats, Right Move (2013) The amount of flats around Liverpool will be partly due to the high cost of purchasing land but also the potential for more profit. That is a trend that has proved beneficial within the residential sector. Below is a swat analysis on residential property in Liverpool. Strengths  People want to live in the city centre. Opportunities Weaknesses  Mostly one type of property available. Threats 4. Planning Brief Planning briefs are usually prepared to illustrate planning information required for both the client and the planning officer. The objective of this chapter is to provide this required information along with site history, any constraints and planning policies. The briefing process is an unfamiliar process for the average person, however it is more simple than most would think, 4 key elements that are normally included are:    Who prepared the brief The consultation process The stage of development The status of the brief. Liverpool Developments have prepared this document in preparation for a potential development to commence in the near future. Once the application has been sent in for assessment, the public is able to view the documents and add any comments or doubts of the plan to the council. However the application is not at this stage and is still in early evaluation. The application to 14
  15. 15. Liverpool council will be an outline planning application meaning not all details will be provided at the time of the application. As the site is in an industrial area, the surrounding area predominantly warehouses and car showrooms. However the plot of land is close enough to the business district and Strand Street to warrant a range of uses. It also means the public transport for the site will be exceptional. Bus and train routes are both within a five minute walk. Leeds Street also promotes access via personal transport such as cars or motorbikes without causing congestion. The site currently houses a small amount of garages and a large warehouse, all of which receives utilities and will prove helpful when construction begins. Past planning applications for the site range from advertising boards to large development schemes. One of which included an 11 storey block and a 6 storey block apartments, a proposal that was accepted in 2008 (http://bit.ly/YJpdKN). A change of use has also been applied for. A change of use from industrial to a motor garage, it was accepted with conditions (Appendix 1). Generally advertising applications for the site are declined (Appendix 2). Site constraints for the site will be challenging to overcome but a re-course for each problem that arises must be found. Currently the site is occupied by five tenants, some of which have had their lease for an extended period while some are newer shorter leases. In order to start the development, the premises on the site must be vacant. All the leases have to be bought from the current tenants along with the freehold right of the land, a process which will add to the cost of the development. During the design stages, research into the surrounding buildings need to be incorporated into the final design. The height of the buildings, the materials used and the general layout all need to suit the area in order for the planning application to be accepted. As the majority of buildings around the site are one or two floors, the final design cannot be a 40 floor high rise. With the residential high rises a short walk, there will be some leeway in the height, but with every additional floor the chance of planning being accepted decreases. No more than 5 in the current market would be acceptable as previous developments had planning permission for 11 floors. With the site located on a junction between Leeds Street and Pall Mall it would not be acceptable to have the site entrance on this junction. Too much congestion would build up around the lights and the planning officer would predict this. The best entrance for the site with minimal affect on congestion would be on Pall Mall, either a new road or the use of the old road is advisable. The last major problem that we can predict is the railway line leading under the site. Fortunately it only covers the western side of the plot. Any designs will have to be shifted to the eastern side in order to sustain the integrity of the tunnel. Meseyrail will have to be informed of the development and a structural engineer will be required to survey the grounds. It is likely that Meseyrail will reply with some conditions such as a fence to stop plant and debris from reaching the railway line. All conditions are put into place to ensure the safety of its passengers; an example can be seen in appendix 3. The Meseyrail will also have a right to access the land in order to carry out repairs or to prevent an accident under section 14 of the Railway Regulations Act 1842. It would also be ideal to do further research even when completed, Meseyrail produce a Route Utilisation Strategy which may highlight problems in the unforeseeable future. The old planning system in the U.K was known to be slow but it also halted possible developments as COMMUNITIES GOV (2011) stated that the old planning systems is acting as a 15
  16. 16. serious brake on growth and slowing the job market. The new planning system is called the national planning policy framework and has removed the complexity and confusion of the old system. Some of the old documents that were used are now replaced with 1 document amounting to less than 60 pages. It has set key economic social and environmental objectives and has the same legal status of the old system. As of this moment local authorities are responsible for local plans, this local plan contains the Unitary Development Plan (UDP – Appendix 4). Any decisions for planning will be referred to the UDP until it is gradually replaced by the core strategy and the sites and polices plan. The UDP is also accompanied by Supplementary Planning guidance notes (SPG) which include:             House extensions Sheltered housing Residential care homes Childcare facilities Trees and development Conversion of buildings into flats and bedsits Car and cycle parking standards Shop fronts New residential developments Bed and breakfast and hostel accommodation Mersey tram lines Planning advice note on refuse storage and recycling facilities Planning advice note for develops on developing contaminated land The core strategy is currently in its draft phases, but the document has placed Lanyork Road in a priority housing and neighbourhood renewal area. The plot of land is also close to a long-term mixed use development zone and an employment and investment zone, however for the purpose of this development only the UDP and the SPG notes are of use. From thorough research into the concurrent UDP, the site has been listed as a primary industrial area and a business development area. It has also become evident that most industrial sites are protected from any developments for non industrial/business purposes; they intend to reserve the resources. This would halt any potential developments on the site, however Lanyork Road and the surround area are up for development as the waterfront, docks and hinterland have been addressed as areas for concentration. Other areas for development are the City Centre, Eastern corridor, Speke and Gillmoss as documented by LIVERPOOL GOV (2002). Below is section based on SPG’s which may affect this development in particular. SPG – New Residential Developments Within the guidelines all new residential developments are expected to have reasonable levels of privacy. Each planning application is assessed using standards but the council will however be flexible were appropriate. The standards will include:- 16
  17. 17.   Density, not strictly operated but some goals need to be achieve. The character of the surrounding area cannot be compromised as well as any site features either man made or natural. Design and layout, any new residential developments are required to help the urban environment with emphasis on scale, building lines, roofscapes and architectural features such as cladding. The layout needs to ensure a good level of security and safety from crime or vandalism whilst still providing amenity and visual interest. Any designs near a railway or main road require noise attenuation measures. The other standards only relate to housing and not flats which is a more likely choice for the area. SPG – Sheltered Housing Use class C3, defined as a self-contained accommodation with an alarm system and a warden. Once again it is split into categories of guidelines which include; location, size and scale and amenities. Starting with location the development need to be on flat ground with regards to the elderly, be free from noise and smells and have a pleasant feeling about the building. Size and scale incorporates density. Whether high or low the development should represent the characteristics of the site and surrounding area. Finally waste bin areas and gardens should be provided under the amenities requirements. SPG – Car and cycle parking Most development choices will require a minimum parking allowance, for the use class C3 the minimum required is 1 space per unit for residents and 1 space per 2 units for visitors. 1 stand per unit is also required for cycle bikes. For a supermarket the minimum parking is 1 staff space per 100m2 and 1 visitor space per 20m2. 1 staff stand per 500m2 and 1 visitor stand per 250m2 is also required for cycle bikes. Whilst there is a minimum amount of spaces for staff and visitors a minimum of 6% for disabled parking must be included at a size of 4.8m x 3m. Other parking bays should be 2.4m x 4.8m. SPG – Shop Fronts In the goal of making the city look attractive, certain loosely defined rules must be applied to any retail designs. These will include keeping any windows recessed behind the face, cash machine being integral with no advertising, the right choice of material for the area whilst still maximising their durability, a limit to the amount of displays with the brand name and interior security shutters which require no planning permission. Exterior security shutters have a lot less leeway and require planning permission. 17
  18. 18. An outline planning application with all matters reserved will be included in chapter 5. Using the planning portal fee calculator the total fee will £2695(Fig14 and 15). Fig14. – Planning Calc, Planning portal (2013) Fig15. – Planning Calc, Planning Portal (2013) 5. Development Brief The main aim and objective of this development brief is to set out the design principles for the site, different topic areas such as; appropriate uses, built form, layout plans, sustainability and build materials will be covered in this chapter. Implementation and contract will also be included as it is an integral part of development. Choosing an appropriate use for the site can prove to be profitable, but it can also end in a loss if the use is not ideal for the area. Residential properties will be the first choice but as shown earlier in chapter three. Individual houses such as detached or semi-detached houses are not prominent in the area it would be best to follow the trend and incorporate flats onto the site. The amount of floors will vary from one to four floors dependant on the amount of car parking the plot of land can supply, however providing car parking for the units at the minimum requirement will still deliver an added value to the property. The density of the flats will vary from two beds (94m2) to three beds (110m2) providing for a range of tenants needs, four bed flats would however be unviable for the property and the tenant pool. As the requirement of the site is a multiuse development the second option for the site will be a supermarket. A good anchor tenant for the site would be Tesco, ideally a Tesco Express which is smaller than the average supermarket. An average size for such stores are 400m2 but the design can go larger once again dependant on car parking. Access to the site will be through Lanyork Road however the residential flats will be split into a gated community whilst the supermarket will be open to the public. Pedestrian access will also be available but from the side of the supermarket, removing the risk element of traffic accidents. As the surrounding area is primarily industrial use, the conditions of the surrounding buildings are not of high quality and due to this the area looks neglected. Buildings of high architectural features would not suit the area, however there needs to be some quality in the design to help improve the area. A middle point needs to be reached for the best outcome. From researching recently developed buildings in the area the new Liverpool Community College on Vauxhall Road stands out the most. Use of brick and steel cladding is a design which would suit the site. 18
  19. 19. Fig.16 – Site Plan (2013) 19
  20. 20. The footprint of the site will be arranged in such a way to prevent disturbances to any residents from the activities of Tesco (Fig.16). To accomplish this Tesco parking will be positioned north of the site with the building further south. A small amount of space will be provided behind the building for loading products from delivery vans. The residential plot will be completely separated from Tesco by a fence and a hedge; this should reduce any disturbances whilst also providing privacy. With the Residential flats placed in the south eastern corner, it will be surrounded by parking and communal gardens. With the surrounding buildings being no more than 2 floors, the residential block will be three floors with the supermarket set out over one floor. Energy emissions have now become more important for the U.K, after the Rio summit and Kyoto new target were set for energy emissions. This has had an effect on everyone, reaching individual councils and developments. Liverpool has managed to save over the past 10 years as LIVERPOOL GOV (2005) stated that they have reduced annual energy and water costs from £11m p.a. to just £7m p.a. Additionally any Liverpool City Council procured buildings will look for all major works to obtain a BREEAM rating of good or very good. Although it is not a requirement for private investors to achieve this rating it would be advisable to reach close to these ratings. The BREEAM rating can add to the appeal of the building especially if it achieves an excellent rating. It will not however add to the value of the property but rather provide a saving (payback period) which will pay for the cost of itself. The payback period for sustainable innovation or materials will vary dependant on their use but the most widely used are heating related. Innovative ideas like extra insulation and solar heating can work together to provide a reduced energy bill. The government will pay people who use these incentives under the Renewable Heat Incentive (RHI). Other methods can involve recycling water or reducing water usage. Roof water runoff and grey water can both be collected and recycled for use in toilet water or garden water, whilst eco washing machines, toilets, taps and showers will reduce the yearly usage. With such a large amount of flats and even more tenants the water usage within the building will be extremely high, any innovative money saving methods would be advised. The materials that will be used for the residential flats will be a mixture of red brick and steel cladding (Fig.17). This will provide a contrast along the façade of the building which will complement the surrounding buildings. 20
  21. 21. Figure.17 – Potential Residential Design, Marley Eternit Cladding (2013) The building which will house the supermarket will also use the same materials to keep the integrity of the site. Figure 18 shows the potential design but extra windows will be added. Figure.18 – Potential Supermarket design, National Archives (2013) With the surrounding buildings built from red brick both buildings will seamlessly fit into the surroundings whilst the added cladding will add a modern and revamped looked to the site. With proper landscaping around both the supermarket and residential flats the view from the windows will be less like that of a rural area and more like a sub-urban area. 21
  22. 22. Implementation and Contracts Procurement is usually referred to the process of acquisition of an asset, however within the built environment when a new building is required, it is known to be the process of designing, constructing and commissioning a new building. When developing a procurement strategy there are multiple choices which must be decided. The first choice will be analysis what is required of the build, whether it’s built fast, cheap or has high quality the three never usually work together (Fig.19). Figure.19 – Procurement options, Google (2013) Different developments will require different things. One development may need a fast construction phase whilst still maintaining a good level of quality, in this example the cost would escalate. For the purpose of this development the budget has minimum leeway, the best two categories would be time and cost. Although the quality would still be average there is no need for a very high standard at the edge of the industrial area. Along with the time, cost and quality decision the right procurement route for the project has to be found. These routes will include:    Traditional Design and Build Management Contracting Construction Management Each has its own advantages which will benefit different types of builds and requirements. Traditional procurement involves all the development stages starting when the phase before it has finished. This produces a time risk element however cost and quality are low risk. Design and build involves the design and construction phases overlapping somewhat. Unlike traditional it produces a high quality risk but has low cost and time risks. Management contracting removes the development phase competition altogether, but this does bring its own risks into the route. Contracting Management is similar to management contracting but the contractors are in direct contact with the client. The design and build procurement route is best suited for this development. It provides a low cost and time risk and as quality is not high on the agenda the disadvantage of the route is less damaging. 6. Financial Appraisal Before a development can commence, the financial viability has to be assessed. With such large investment at stake the development has to worthwhile for both the client and the developer. 22
  23. 23. With the development in its early design stages the cost to buy the land and its current use must be value. As the site is not vacant and houses multiple tenants each tenant and their lease must be valued individually to assess their worth. Unit 1, which is the largest space on the site, is currently on a 10 year lease. At a price of £43/m2 the site was valued at £655,691 freehold and £106,340 leasehold. With such a large value to the lease the tenant will not require additional compensation. Unit 1A/1B is the second largest but is on a rolling short term agreement. This agreement will not offer any 1954 landlord and tenant act protection, however he will be offered a total £5,000. With the lease valued at £2,910 the tenant will be offered £2,090 compensation. The Freehold value is estimated at £128,544. Unit A1 is the third largest space on the site. The tenant has been holding over on a 10 year lease at a rent of £6,300. Although the tenant is holding over, the lease will still have landlord and tenant act protection. With the lease valued at £610 the tenant will be compensated with £4,390. The Freehold is estimated at £68,382. Unit 3 is currently locked in a 3 year IR lease at £5,400p.a. but it is due to end in 2014. With a short term left on the lease it has been estimated at £383. The tenant will be compensated with £4,616. The freehold has been estimated at £55,337. Unit 5 is the only lease that is not worth anything; however the tenant will still be compensated with £5,000 to encourage the tenant to move. The freehold has been valued at £53,759. Unit A2 and A4 are both identical and will be valued the same. With no tenants only the freehold has to be bought which amounts to £55,722. A breakdown of the costs can be seen in Figure.20. The full valuation will be included in appendix 5 along with comparable evidence for industrial property in appendix 7a and 7b. 23
  24. 24. Site Valuation Unit 1 Unit 1A/B Unit A1 Unit A2 Unit 3 Unit A4 Unit 5 Total Fh & Lh Freehold Leasehold £762,031 £655,691 £106,340 £131,454 £128,544 £2,910 £68,992 £68,382 £610 £57,847 £57,847 £55,722 £55,337 £384 £57,847 £57,847 £53,759 £57,908 -£4,149 Unit 1 Unit 1A/B Unit A1 Unit A2 Unit A3 Unit A4 Unit 5 Total with extra costs £762,031 £131,454 £68,991.98 £57,846.75 £55,722 £57,847 £53,759 Total Cost to Buy Land Additional 0 £2,090 £4,390 £4,616 £9,149 £1,187,650.68 Fig.20 – Site Valuation, Excel (2013) The total cost to buy the land is estimated at £1,187,651, this will include the freehold and leasehold costs as well as any compensation. With the land valued, the build costs and potential development value can now be estimate. With the annual net income of £382,461 achievable, the net realisation is set at £6,360,981 using an all-risks yield of 6%. Fig. 21 shows the spread of rental income on the site. Two bedroom flats are currently over 50% of the income whilst three bedroom flats and supermarkets are remarkable less. Comparable evidence which has been used to value the residential and commercial property can be found in appendix 7c, 7d and 7e. 24
  25. 25. Two Bedroom Three Bedroom Supermarket Fig.21 – Rental Spread, Excel (2013) The total build costs for the development including landscaping and demolition are currently estimated at £5,088,152 (Fig.22), BCIS examples which have been used to estimate the cost can be found in appendix 8a,8b and 8c. With the building costs set at £5,088,152 and the net realisation estimated at £6,360,981 the residual sum can be calculated, currently it is estimated at £1,272,830, however with the added cost of acquiring the land the new sum is £85,180. Net Realisation Total Cost Residual Sum Total Cost for Land Profit Profit % £6,360,981.60 £5,088,151.87 £1,272,829.74 £1,187,650 £85,179.74 1.4% Fig.22 – Residual Totals, Excel (2013) A full breakdown of the residual valuation will be included appendix 9. With the development fully appraised it has proven that it can provide a 1.4% profit, this is estimated at just over £85,000. This however is a low percentage when presented with the risk involved. Decreasing the contingencies or the quality of the property may increase the profit but this will still only boost the profit percentage by one or two per-cent. This is also the figure from selling 100% of the site to possible clients. This will unlikely be the case, 7. Market Strategy and Funding For any product to shift in ownership the product or service has to seen by a mass market. A market strategy is the method used to reach the mass market through multiple marketing methods. 25
  26. 26. When analysing which marketing strategy best suits the product it is important to assess how it will be sold. A production orientated strategy will sell the product through demonstrating its quality while a product orientated strategy will sell the product by showing its features. The market strategy may also target a select group of the population; different target markets will warrant different strategies to improve the effectiveness. The most ideal marketing strategy for this development would by product orientated. The supermarket space will be aimed at national chains such as Tesco or Morrison’s. With a “blue chip tenant” on the site it will likely increase the “site brand” increasing the sale rate of the other properties. The residential flats will be aimed at new families or professionals who work within the city. Generally the average marketing time is 8-18 months and can sometimes increase to two years. To best use this long period it would be advisable to start marketing early on in the development, with offering the residential flats and supermarket space early it would be possible to offer bespoke specification of their chosen lot. While the site has fencing to provide a duty of care to the general public advertising can be place around the fence in certain strategic positions, the southern corner of the site facing the Leeds Street junction would be most adequate. Advertising boards can also be placed throughout Liverpool on a local scale and a regional scale, national advertising is however unnecessary. With technology constantly evolving, the use of the internet is growing expediently. This is now an essential resource for marketing, a branded website showing particulars can be produced incorporating with a 3d model produced on AutoCAD. Listing for the site can also be displayed on the Co Star Focus website, a professional estate agent which would appeal directly to the targeted market. Social media can also be a useful for selling a product, Facebook groups and LinkedIn profiles can be created with ease. Spread virally to the mass market it would be much easier than any other methods such as standard advertising. Paper based advertising can also be a useful strategy, strategies which would include glossy brochures (Fig.23) or articles in newspapers and property magazines would reach a wide range of the market. Finally multiple estate agents can be used to reach the local market of Liverpool through window space. 26
  27. 27. Fig.23 – Example Brochure, Google (2013) In the short and long term developments will help boost the local economy through added jobs or increased trading. As a city council, Liverpool will want any and all developments to continue, to guarantee this multiple sources of funding is available. Sources which will include:    Insurance and Pension funds – Large institutions will have significant investing power and currently are a major investor within the property industry. Banks – The most widely used option with small families to large corporations taking out mortgages every day. An interest rate would normally be applied to the amount borrowed which can be paid back in instalments. Internal – Finance from private developers who are willing to risk their own money. Government – If applicable to the development grants loans and other public sector support may be available from funding bodies. 27
  28. 28. In this situation funding will come from banks, internal finance and government bodies (Fig.24). 10% will be from government funds amounting to £627,580, developers finance at 30% set at £1882741 and 60% finance from banks estimated at £3,765,481. Figure 24 – Mezzanine Finance, Excel (2013) Finance can also vary in its timescale, short (3 years), medium (3-10y years) and long term (10+). Each timescale with its own advantages, however as some property will be sold and some leased, there will be a mixture of short and medium length financing terms. Bank loans should be paid back by sales as they carry a significant interest rate; government funding can be paid back either after any sales in the future or from rental income. The government funding will come from multiple regeneration programs, Liverpool vision which stated they have £54 million available for development schemes LIVERPOOL VISION (2013). Regional Growth Fund also quoted as having £350 million to spend between 2011 and 2015 LIVERPOOL CITY REGION (2013). The European Regional Development Fund is also able to offer £2.8 billion ERDF (2013), however this fund is aimed at more disadvantaged areas and so this development would be unlikely to gain finance from this source. 28
  29. 29. References BBC LIVERPOOL, 2012. Liverpool Waters Plan Approved. [Online] Available at: http://www.bbc.co.uk/news/uk-england-merseyside-17270508 [Accessed 26th Feburary 2013]. BBC, 2012. Rents to Rise Faster than House Prices in 2013. [Online] Available at: http://www.bbc.co.uk/news/business-20726001 [Accessed 1st March 2013]. BBC, 2013. How Recessions Compare. [Online] Available at: http://www.bbc.co.uk/news/10613201 [Accessed 26th January 2013]. BBC, 2013. Uk GDP: Economy shrank at end of 2012. [Online] Available at: http://www.bbc.co.uk/news/business-21193525 [Accessed 26th Feburary 2013]. CITY RESIDENTIAL , 2012. Liverpool Residential Update. [Online] Available at: http://www.cityresidential.co.uk/images/cms_uploads/editor//Liverpool%20Resi%20Update%20Q4 %202012.pdf [Accessed 1st March 2013]. COMMUNITIES.GOV, 2011. Planning and Building. [Online] Available at: http://www.communities.gov.uk/documents/planningandbuilding/pdf/1984490.pdf [Accessed 4th March 2013]. GOOGLE MAPS, 2013. Lanyork Rd, Liverpool: Google. GOOGLE MAPS, 2013. Retail in Liverpool, Liverpool: Google. LIVERPOOL CITY COUNCIL, 2002. Unitary Development Plan. [Online] Available at: http://liverpool.gov.uk/Images/UDP.pdf [Accessed 4th March 2013]. LIVERPOOL GOV, 2005. Sustainable Development. [Online] Available at: http://liverpool.gov.uk/Images/SustainableDevelopmentPlan.pdf [Accessed 8th March 2013]. LIVERPOOL VISION, 2007. Liverpool Commerical Office Market 2007. [Online] Available at: http://www.liverpoolvision.co.uk/Docs/NewsDocs/Market%20Review%202007.pdf [Accessed 1st March 2013]. LIVERPOOL VISION, 2011. Liverpool Commercial Office Market Review 2011. [Online] Available at: http://www.liverpoolvision.co.uk/Docs/DownloadDocs/298Liverpool%20Commercial%20Office%20 Market%20Review%202011.pdf [Accessed 1st March 2013]. 29
  30. 30. LIVERPOOL VISION, 2012. Strategic Investment Framework. [Online] Available at: http://www.liverpoolvision.co.uk/City_Centre/Strategic_Investment_Framework.aspx [Accessed 26th Feburary 2013]. LIVERPOOL VISION, 2013. European Union Grant. [Online] Available at: http://www.liverpoolvision.co.uk/news/54m_european_union_grant_released_for_merseyside_reg eneration_projects.aspx [Accessed March 8th 2013]. LIVERPOOL WATERS, 2011. Statement of Key Development Principles. [Online] Available at: http://www.liverpoolwaters.co.uk/pdf/PlanApps/201111/Statement_of_Key_Development_Principl es.pdf [Accessed 26th Feburary 2013]. LIVERPOOLLEP, 2013. Liverpool City Region. [Online] Available at: http://liverpoollep.org/opportunities/regional_growth_fund.aspx [Accessed 8th March 2013]. MARLEY ETERNIT, 2013. Rock Grove 1, London: Marley. MERSEY PARTNERSHIP, 2012. Economic Review. [Online] Available at: http://tmp.immediacy.live.mandogroup.com/docs/Economic_Report_2012.pdf [Accessed 26th Feburary 2013]. NATIONAL ARCHIVE, 2011. Tesco Design, London: National Archive. PORTAS, M., 2013. Liverpool Vision. [Online] Available at: http://www.liverpoolvision.co.uk/news/city_shops_are_ahead_of_the_curve.aspx [Accessed 26th Feburary 2013]. REDCAR AND CLEVELAND, 2008. Network rail Response. [Online] Available at: http://www.redcarcleveland.gov.uk/Maps/R_2008_0928_FF/Network%20Rail%20Response.pdf [Accessed 4th March 2013]. TELEGRAPH, 2012. Average First Time Buyer is Now 35. [Online] Available at: http://www.telegraph.co.uk/news/uknews/9533491/Average-first-time-buyer-is-now35-research-finds.html [Accessed 1st March 2013]. THE COMMERCIAL DISTRICT, 2010. Liverpool Office Market Defies Economic Downturn. [Online] Available at: http://thecommercialdistrict.com/news/shownews.asp?recordid=711 [Accessed 1st March 2013]. ZOOPLA, 2012. Sold Prices. [Online] Available at: http://www.zoopla.co.uk/house-prices/ [Accessed March 1st 2013]. 30
  31. 31. Appendix 1. 31
  32. 32. 32
  33. 33. 2. 33
  34. 34. 3. 34
  35. 35. 35
  36. 36. 4. 36
  37. 37. 5. 37
  38. 38. 38
  39. 39. 39
  40. 40. 40
  41. 41. 41
  42. 42. 42
  43. 43. 43
  44. 44. 44
  45. 45. 6. Yield £34,931 £375,000 x100 Evidence in Appendix 5a = 9.3149333 Unit 1 Subject Size m2 Lease years Start End Clause £/m2 Rent paid Unexpired 955 10 2008 2018 B/c 7th £43 £41,065 5 Comparable Size m2 Rent Lease 165 £11,828 5 years Evidence in Appendix 5b Rent per m2 = Rent paid (£) Space (m2) Rent per m2 = £11,828 165 Rent per m2 = £71.68 Adjustments on rent paid Subject 955m2 10 years Break clause Comparable 165m2 5 years N/a Total= Adjusted rent per m2= Adjusted FRV= 1% -1% 4% 4% £74.55 £71,197.39 45
  46. 46. Subject Valuation Freehold Term Rent Recived Less Management 3% Net Income £41,065 £1,231.95 £39,833 Yp @ 8.5% for 5 years 3.9406 Comparable at 9.3%, this is a term valuation so reduced .8% Term Value= £156,966.12 Reversion Rent Recived Less Management 3% Net Income £71,197 £2,135.92 £69,061 Yp rev to perp in 5 years @ 9% 7.22146 Site is closer to city centre than comparable, a reduction of 3% Reversion Value = £498,724.64 Freehold Value= £655,690.76 Leashold FRV Less rent Profit £71,197.39 £41,065 £30,132.39 Yp @ 9.5%,3% and 20% for 5 year 3.5291 9.5 to represent a lease when compared to freehold Leasehold Value= £106,340.22 Unit 1 Valuation= £762,030.98 46
  47. 47. Unit 1A/B Subject Size m2 Lease years Start End £/m2 Rent paid Unexpired 170 1 2013 2014 £53 £9,000 0 Comparable Size m2 Rent Lease 165 £11,828 5 years Evidence in Appendix 5b Rent per m2 = Rent paid (£) Space (m2) Rent per m2 = £11,828 165 Rent per m2 = £71.68 Adjustments on rent paid Subject 170 m2 10 years Comparable 165m2 5 years Total= Adjusted rent per m2= Adjusted FRV= 1% -1% 0% £71.68 £12,186.42 47
  48. 48. Subject Valuation Freehold Term Rent Recived Less Management 3% Net Income £9,000 £270.00 £8,730 Yp @ 8.5% for 1 year 0.9217 Comparable at 9.3%, this is a term valuation so reduced .8% Term Value= £8,046.44 Reversion Rent Recived Less Management 3% Net Income £12,186 £365.59 £11,821 Yp rev to perp in 1 year @ 9% 10.19368 Site is closer to city centre than comparable, a reduction of 3% Reversion Value = £120,497.77 Freehold Value= £128,544.21 Leashold FRV Less rent Profit £12,186.42 £9,000 £3,186.42 Yp @ 9.5%,3% for 1 year 0.9132 9.5 to represent a lease when compared to freehold Leasehold Value= Unit 1A/B Valuation= £2,909.84 £131,454.06 48
  49. 49. Unit A1 Subject Size m2 Lease years Start End Clause £/m2 Rent paid Unexpired 90 10 2002 2012 B/c 7th £77 £6,300 0 Comparable Size m2 Rent Lease 165 £11,828 5 years Evidence in Appendix 5b Rent per m2 = Rent paid (£) Space (m2) Rent per m2 = £11,828 165 Rent per m2 = £71.68 Adjustments on rent paid Subject 90m2 10 years Ir Comparable 165m2 5 years FRI Total= Adjusted rent per m2= Adjusted FRV= 1% -1% 8% 8% £77.42 £6,967.77 49
  50. 50. Subject Valuation Freehold Term Rent Recived External Repairs 5% Insurance 3% Less Management 3% Net Income £6,300 £315.00 £189.00 £189.00 £5,607 Yp @ 8.5% for 1 year 0.9217 Comparable at 9.3%, this is a term valuation so reduced .8% Term Value= £5,167.97 Reversion Rent Recived Less Management 3% External Repairs 5% Insurance 3% Net Income £6,968 £209.03 £348.39 £209.03 £6,201 Yp rev to perp in 1 year @ 9% 10.19368 Site is closer to city centre than comparable, a reduction of 3% Reversion Value = £63,214.20 Freehold Value= £68,382.17 Leashold FRV Less rent Profit £6,967.77 £6,300 £667.77 Yp @ 9.5%,3% for 1 year 0.9132 9.5 to represent a lease when compared to freehold Leasehold Value= Unit A1 Valuation= £609.81 £68,991.98 50
  51. 51. Unit A2 & A4 Subject Size m2 Lease years Start End Clause 72 10 2013 2023 B/c 7th Comparable Size m2 Rent Lease 165 £11,828 5 years Evidence in Appendix 5b Rent per m2 = Rent paid (£) Space (m2) Rent per m2 = £11,828 165 Rent per m2 = £71.68 Adjustments on rent paid Subject 72 10 years Break clause Comparable 165m2 5 years N/a Total= Adjusted rent per m2= Adjusted FRV= 1% -1% 4% 4% £74.55 £5,367.76 Subject Valuation Freehold Term Rent Recived Less Management 3% Net Income £5,368 £161.03 £5,207 YP in perp @ 9% 11.11 Comparable at 9.3%, this is a term valuation so reduced .8% Term Value= £57,846.75 51
  52. 52. Unit A3 Subject Size m2 Lease years Start End £/m2 Rent paid Unexpired 72 3 2011 2014 £75 £5,400 2 Comparable Size m2 Rent Lease 165 £11,828 5 years Evidence in Appendix 5b Rent per m2 = Rent paid (£) Space (m2) Rent per m2 = £11,828 165 Rent per m2 = £71.68 Adjustments on rent paid Subject 72m2 Ir Comparable 165m2 FRI Total= Adjusted rent per m2= Adjusted FRV= 1% 8% 9% £78.14 £5,625.83 52
  53. 53. Subject Valuation Freehold Term Rent Recived Less Management 3% External Repairs 5% Insurance 3% Net Income £5,400 £162.00 £270.00 £162.00 £4,806 Yp @ 8.5% for 2 years 1.7711 Comparable at 9.3%, this is a term valuation so reduced .8% Term Value= £8,511.91 Reversion Rent Recived Less Management 3% External Repairs 5% Insurance 3% Net Income £5,626 £168.77 £281.29 £168.77 £5,007 Yp rev to perp in 2 years @ 9% 9.352 Site is closer to city centre than comparable, a reduction of 3% Reversion Value = £46,825.33 Freehold Value= £55,337.24 Leashold FRV Less rent Profit £5,625.83 £5,400 £225.83 Yp @ 9.5%,3% and 20% for 2 years 1.7018 9.5 to represent a lease when compared to freehold Leasehold Value= Unit A3 Valuation= £384.31 £55,721.55 53
  54. 54. Unit 5 Subject Size m2 Lease years Start End £/m2 Rent paid Unexpired 72 10 2005 2015 £94 £6,750 3 Comparable Size m2 Rent Lease 165 £11,828 5 years Evidence in Appendix 5b Rent per m2 = Rent paid (£) Space (m2) Rent per m2 = £11,828 165 Rent per m2 = £71.68 Adjustments on rent paid Subject 72m2 10 years Ir Comparable 165m2 5 years FRI Total= Adjusted rent per m2= Adjusted FRV= 1% -1% 8% 8% £77.42 £5,574.21 54
  55. 55. Subject Valuation Freehold Term Rent Recived Less Management 3% External Repairs 5% Insurance 3% Net Income £6,750 £202.50 £337.50 £202.50 £6,008 Yp @ 8.5% for 3 years 2.554 Comparable at 9.3%, this is a term valuation so reduced .8% Term Value= £15,343.16 Reversion Rent Recived Less Management 3% External Repairs 5% Insurance 3% Net Income £5,574 £167.23 £278.71 £167.23 £4,961 Yp rev to perp in 3 years @ 9% 8.57982 Site is closer to city centre than comparable, a reduction of 3% Reversion Value = £42,564.92 Freehold Value= £57,908.07 Leashold FRV Less rent Profit £5,574.21 £6,750 -£1,175.79 Yp @ 9.5%,3% and 20% for 5 year 3.5291 9.5 to represent a lease when compared to freehold Leasehold Value= -£4,149.47 Unit A5 Valuation= £53,758.61 55
  56. 56. 7a. http://www.showcase.co.uk/#&&/wEXAQURV29ya2Zsb3dIaXN0b3J5SUQFJGY5YmQ1MmM3LWM2Y jMtNDUxMy04ZTlmLTAxMzdlNzgwZjI2NcLKFv7/lCpw3DyC1JC/ZI/b9IYd 7b. http://www.showcase.co.uk/#&&/wEXAQURV29ya2Zsb3dIaXN0b3J5SUQFJGNjY2I5MTQ3LWNmYTAt NDI4OC1iYjQ1LTAyMmUwMDc3YzVjNaI+XoGzHuu6OXtXURt2xlfRGvW0 7c. http://www.rightmove.co.uk/property-to-rent/property-40837100.html 7d. http://www.rightmove.co.uk/property-to-rent/property-26068605.html 7e. http://www.rightmove.co.uk/property-to-rent/property-26128077.html 56
  57. 57. 8a. 57
  58. 58. 58
  59. 59. 59
  60. 60. 8b. 60
  61. 61. 61
  62. 62. 62
  63. 63. 63
  64. 64. 8c. 64
  65. 65. 65
  66. 66. 66
  67. 67. 67
  68. 68. 9. Development Appraisal Lanyork Road Fieldtown Developments Prepared by Liverpool Developments Date 6th March Valuation 2 Bedroom Flats p.a 3 Bedroom Flats p.a Supermarket space Conversion to GIA m2 @10% 28 @ £735pcm 12 @ £800pcm 918m2 @ £35/m2 £246,960.00 £115,200.00 1020 £32,130.00 Total rent p.a. Less 3% Management £394,290.00 £11,828.70 Net Income £382,461.30 Yp in perp @ 6% 16.6667 Gross Realisation £6,374,367.75 Less legal/agent fees @ 2.5% Less Surveyor fees @ 1% £9,561.53 £3,824.61 Net Realisation £6,360,981.60 Construction Costs Flats @ 3930m2 £716/m2 (Appendix 6A, 6B) Supermarket @ 1020m2 £560/m2 (Appendix 6C) Total Build Cost £2,813,880.00 £571,200.00 £3,385,080.00 Additonal Construction Costs Prelims @ 10% Site Investigation/Site prep Site Survey Demolition 1503m2 @ £30/m2 Planning Fees Contingencies @ 5% Total Additonal Construction Costs £338,508.00 £45,000.00 £500.00 £45,090.00 £2,695 £169,254 £601,047 68
  69. 69. Professional Fees Architect @ 4% Quantity Survery @ 3% Structural Engineer @ 2% Building Surveryor @ 2% Consultant/PM @ 2% £135,403.20 £101,552.40 £67,701.60 £67,701.60 £67,701.60 Total Professional Fees £440,060.40 Finance for half build period (1+0.14)^0.5-1 =0.067 Finance for professional fees (1+0.14)^1 =0.14 Finance for 2 months void (1+0.14)^0.166=0.0221 £267,070.51 £61,608.46 £97,818.74 Finance Total Finance Cost £426,497.71 Letting and Advertising Letting @ 10% FRV £39,429.00 Advertisng @ 10% net realisation £636,098.16 Total Letting and Advertising Cost Net Realisation Total Cost Residual Sum Total Cost for Land Profit Profit % £675,527.16 £6,360,981.60 £5,088,151.87 £1,272,829.74 £1,187,650 £85,179.74 1.4% 69

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