Are Brownfield Sites a Good Investment?

A 2018 report by the National Housing Federation found there are 17,982 brownfield sites across England covering 30,497 hectares of land. The report suggested the land could be developed into around one million additional homes, indicating investment potential in brownfield sites.

As with any asset class, there will be good brownfield investments and bad ones. While some of the sites will be ready to redevelop and in high-potential locations, others may require years of remediation before they are considered fit for purpose.

In this article, we will take a look at some of the factors investors need to consider before investing in a brownfield site.

Is Remediation Needed?

Brownfield sites often comprise land formerly used for industrial purposes. As such, many of them need to be remediated before they can be developed. While the exact remediation process required will differ depending on the existence of and/or type of contamination, getting land back to being fit for development can be a long and costly process.   

As an example, the process to remediate the Olympic Park in London took three years — although a project of that size would historically have taken five to fifteen. The job was huge, with the company in charge of the process saying they excavated two million litres of soil, and dug 3,500 exploratory holes.

Not all remediation jobs will be on such a large scale. Nonetheless, investors can get a better idea of the value of their investment by digging into information about the type of remediation job that may be required.

What is the Location Like?

Location is a major consideration when investing in brownfield sites, or land of any kind.

The National Housing Federation discovered that there are 540 brownfield sites located on greenbelt land in England, including around London, Manchester, Liverpool, and Leeds. Beyond this, 85% of brownfield sites are located in urban areas.

While many of these sites could seem like potentially good investments, there are other things to consider.

For example, sites in areas with existing or improving infrastructure could provide good investment opportunities as the value of the site could rise. Another factor to look out for is other redevelopment or development projects happening nearby.

An example of a project that completely changed the area around it was when Manchester City Council decided to build a stadium for the Commonwealth Games in east Manchester. The stadium was then taken over by Manchester City Football Club.

At the time the stadium was built, it was in an economically depressed area surrounded by unused industrial buildings.

However, in the years since the stadium was built, significant development has taken place in the area. This includes tram links, housing, and sports facilities. Much of the new development was built on brownfield sites, including 75 acres that were eventually turned into the Manchester City Football Academy.

Get to Know the Site

It’s important to know the specifics of the brownfield site as features of the land could affect the development potential and value.

Public right of ways and any overhead powerlines need to be taken into consideration. Additionally, the land surrounding a site can affect its access to roads and other public facilities.  

It is also worth checking whether the site you are considering still has access to utilities such as water, gas, and electricity. This would make any redevelopment projects easier as developers wouldn’t have to worry about reconnecting the land to these grids.

Does the Site Already Have Planning Permission?

The National Housing Federation found that in 2018, 57 per cent of brownfield sites in England already had permission to be built on. Another four per cent have a planning decision pending.

Sites with existing planning permission show investors that there is development potential. Of course, even if a site doesn’t yet have permission it doesn’t mean developers won’t be able to apply for and receive permission in the future.

It’s also worth noting that even if a site you are considering is permissioned, there may still be restrictions on what exactly can be built. Any development plan will have to be finalised with local authorities before starting development.

Is the Price of the Site Right?

Once investors have considered the above points, they can get an idea about what would be required should they or anyone else want to redevelop the site.

Using this information, they will be able to estimate whether the price of the site makes it a good investment opportunity considering the time and money costs that would be required to make it useable – as well as any potential future price fluctuations.

Reparo Finance Can Provide the Funding Needed for Property Investments

Businesses looking for funding to invest in any type of land or property should consider Reparo Finance. As an alternative lender we have many benefits over traditional lenders, we:

• Consider all applications – even those from businesses that may struggle to receive financing from banks, such as recently established companies or those without a history of revenue.
• Have a team of experts well qualified to make rapid lending decisions. This means businesses can have the money they need to invest in their bank account in little over a week.
• Provide a personal service and will work with applicants to gain an understanding of what they need and how we can come up with a mutually beneficial solution.
• Provide loans of between £10,000 and £1 million.

If this sounds like something that could benefit your business, please get in touch with one of the team on sales@reparofinance.co.uk or 0161 451 5710.