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Residual land values - measuring performance & investigating viability

There is limited information on commercial real estate land values in the UK. This reflects the thinly traded nature of land markets and heterogeneous nature of each site that is traded. Actual transaction prices reflect a variety of site and location specific factors.

Residual land value

Given this context, theoretical land values for different locations, estimated using a consistent set of assumptions, provide a useful benchmark for developer and investor decision making processes. The project produced quarterly estimates of residual land values for the apartment, retail, office and industrial sectors. The findings revealed a North/South divide in land values for all land uses analysed and development would not be viable without intervention for some uses in some areas. The research establishes a framework for continued recording of UK land value trends into the future, which could increase the transparency of land markets. The approach could also assist policy-making in relation to land value capture.

This research was funded by Investment Property Forum.

Authors Neil Crosby, Peter Wyatt