Leeds new-build suffers bleak midwinter

The short-term future of the Leeds new-build sector remains bleak as development sites with planning permission remain stalled and the future of those at pre-application stage hang in the balance.

More than 30 development schemes totalling 9,920 units in the city centre remain stalled and unlikely to complete, with funding for large-scale apartment blocks highly unlikely to return within three to five years, according to a new report out today.

The report, which was initiated by Knight Frank and developer Morgans City Living, and completed in collaboration with Savills, King Sturge, Allsop and the University of Leeds, reveals that only two schemes under construction - Indigo Blu and Saxton - and only five schemes, totally 600-700 flats, seem likely to have a chance of delivering within the next five years. It adds that newly-proposed schemes need to feature varied home types, including some family houses, in order to meet demand.

Rachael Unsworth from the University of Leeds, says: “The research reveals that the market has contradictory features. There are high levels of occupancy in city centre apartments, yet development is at a standstill.”

Nevertheless, the research shows that the rental market has remained strong during the recession. The properties managed by six major firms of agents total 3153 apartments and these are more than 92% occupied.

Meanwhile, though sale values dipped from Q4 2007, they stabilised during 2009, with the dip less severe in good quality and/or well-located schemes, such as One Brewery Wharf (pictured), 1 Dock Street, The Gateway and Langton’s Wharf, where some values rose.

Anne Haggas, a partner at Knight Frank, says: “We are seeing growing numbers of owner-occupiers, and when investors are buying they choose to buy with a tenant already in place. Property will still be income-generating, but for longevity rather than through flipping.”

Andrew Hunt, a partner at Allsop, adds: “Without a doubt, the threat of over-supply in Leeds city centre has averted. Capital values are at a realistic level. This has resulted in apartments within landmark and prime located developments having strong appeal to owner occupiers whilst units within fringe schemes are once again selling to high net worth individual investors as well as parents of students.”

But Matthew Jones, a director at Savills, says: “It’s clear that stabilising sales and a strong rental market reflect Leeds’ popularity as a destination city. However, renewed consumer confidence and developer investment are key to its future success.”

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