Assessment Brief/Task
The Manchester Crane Survey, 2021 produced annually by Deloitte provides a useful market insight into construction and property development activity in Salford and Manchester. The report monitors new starts on site, planning applications and permissions and refurbishment schemes to enable a thorough analysis of the quantity and type of new floorspace which has (and is in the pipeline) to be delivered over the next few years. Whilst construction activity is resilient, this can vary quite significantly between the different sectors. The outlook, whilst remaining positive states that there may be an element of “levelling” off in the future.
A new client has recently contacted your property development consultancy for advice on a potential development opportunity in East Manchester that has been brought to their attention. Whilst they have an established, successful manufacturing business, they have no experience in property development, or any active involvement in the real estate market. They believe that property development is a “high risk/ high reward” activity and would like to seek professional advice before they decide if this venture is the right opportunity for them.
The client has been sent property particulars from a local agent for the sale of land of a redundant public house situated on Ashton Old Road, Manchester (M12 6LP), close to Manchester City Centre and the Etihad Stadium. The current owners submitted plans and an application for planning permission for a scheme of apartments, with ground floor commercial use and have received full consent. This development opportunity is to be sold freehold, with vacant possession and the agent has confirmed that there are no onerous covenants or restrictions on title.
The client are very keen football fans and would like to pursue a development opportunity in this part of the city, as they consider East Manchester to be an “up and coming” area. However, they are a little concerned that the real estate market in Manchester/ Salford may now have reached its saturation point. To make progress, your consultancy has now been instructed to research the NW real estate market, advise on the residual value of the land, and to appraise this opportunity.
The advice will be presented in a report, which will be shared with the client’s investors and must cover all the following:
1. Research the NW real estate market, with a specific focus on East Manchester to provide a full market commentary, which should also highlight any factors, which could have either a positive or negative impact on the GDV or Development Costs for the site. (ILO’s 1, 7; 750 words)
2. Prepare a fully costed valuation to calculate your opinion of the residual land value based on the information that has been provided by the local agent . The valuation should be presented on a separate excel spreadsheet, but your report must include a clear explanation for the client of the method of valuation and your main assumptions for the GDV and Development Costs. (ILO’s 2,5,7; 750 words)
