LAND VALUES AND THE IMPLICATIONS FOR PLANNING POLICY
CHAPTER THREE: TRENDS IN DEVELOPMENT LAND VALUES
3.1 The broad premise for this study is that land for development has been increasing in value in recent years. Time series in residential and industrial land values have been based on data drawn from the biannual Property Market Report compiled by the Valuation Office. This is the most accessible dataset for land value information. Other sources (Register of Sasines and Land Value Information Unit, University of Paisley which maintains databases of Sasines data) have raw datasets on land sales which are not categorised by land use and thus would require considerable research and analysis to convert them to a useable dataset.
3.2 The Report's valuations are based on a mixture of fact and opinion and a time series based on this information reflect general trends rather than definitive movements. From Autumn 1995, typical land values are included for individual Scottish cities. Information on Dundee is available from Autumn 1996.
3.3 For industrial land, the authors of the report tend to focus on a stereotype or typical area, for example Hillington, or East Kilbride, and track values in that locality over time. Some of these areas lie outside the relevant city boundary, so that a 'Glasgow' industrial land price may in fact be a wider West of Scotland land price. No data is available for sub areas within cities.
Residential Land Values
3.4 The unit of land on which typical residential land valuations were based in the Report was changed in spring 1998. Instead of including only a typical value for ' Sites of Two Hectares', typical values are now provided for:
- Small Sites (sites for five houses or less);
- Sites for Flats and Maisonettes (not defined); and
- Bulk Land (sites in excess of two hectares).
3.5 It has been assumed that this latter value equates most closely to the value for 'Sites of Two Hectares' included previously and these two data sets have been used to construct a time series from 1995. Changes in land classification may explain the timing of shifts in land values in some cities 53.
Scottish Cities: Land Values
3.6 The overall figures for bulk land suggest the following trends (Figure 3.1):
- Edinburgh, Glasgow and Aberdeen have all experienced a rise in residential land values in recent years.
- Land values increased in Glasgow and Aberdeen from the late 1990s onwards. In Edinburgh values have been rising from at least 1995.
- Edinburgh has seen by far the most dramatic increase in land values. Glasgow has witnessed a steady climb in values whilst the trend in Aberdeen has been flatter and steadier.
- Over the same period, land values in Dundee, which has by far the lowest values at 240,000 per hectare, have not increased at all, and in real terms, have therefore fallen.
3.7 A time series of the land values for the two other site categories of land from 1998 onwards suggests the following (Figure 3.2, 3.3):
- The most startling rise in values has been that of sites for flats and maisonettes, where values in Edinburgh reached 7.5 million per ha in the autumn of 2001. While prices for land for flats also increased substantially in Glasgow over the same period, the Edinburgh increase is of a completely different order from that of the rest of Scotland.
- There has been less movement in the value of small sites than in the value of bulk land, but again a significant increase in values has again occurred in Edinburgh.
- Trends in the value of small sites follow those of bulk land more closely. While there has been little or no rise in values in Dundee and Aberdeen, Edinburgh and Glasgow have witnessed an increase in value - in the case of Edinburgh, a rapid increase.
3.8 The exceptional rises in land values are, in our view, a consequence of Edinburgh's economic success, which has stimulated the housing market in a context where development land is perceived to be in short supply.
Scotland: Land Values
3.9 The figures for Scotland suggest relatively little variation between the trends for different site types but (Figure 3.4):
- Land for flats and maisonettes has been consistently the most expensive category of residential land in Scotland, as would be expected. (current values average just under 2m per ha) Less expensive have been small sites (currently just under 1m per ha, and bulk sites which were slightly less expensive still at around 790,000 per ha.
- All values have increased over time. The value of sites for flats and maisonettes has risen markedly relative to bulk land sites and small sites. The value of bulk land has risen slightly relative to the typical value of small sites.
3.10 In general, values for individual Scottish cities over the last three years reflect consistent patterns (Figures 3.5-3.8). These are:
- values for land for the development of flats and maisonettes are highest. The development appraisals on which housebuilders base their prices clearly lead them to believe that they can pay much more for sites on which flats can be built.
- in Aberdeen and Dundee, small site values are lower and values of bulk land are lower still.
- In Edinburgh and Glasgow, however, the opposite obtains - typical values of small sites and bulk land are at a similar level, suggesting a strong demand for bulk land.
- in recent years land values have changed little in Aberdeen and Dundee.
- in Glasgow, site values for land to be used for the development of flats and maisonettes have risen substantially (108%) and the value of bulk land has also seen a more modest increase (41%). The increase in value of sites in Edinburgh for flats and maisonettes is of a completely different order of magnitude however (+188%) - Edinburgh land values are now three times higher than they were in 1995. Edinburgh is also the only city to have experienced a substantial increase in the value of small sites (+100%) and in bulk land (62%) over this three year period.
3.11 The data from the Valuation Office Property Market Report suggest that the differentials between land prices in Edinburgh and elsewhere in Scotland have widened substantially since the 1980s, when the Pieda report on land prices was written. Table 3.1 shows mean housing land prices in the four Scottish cities and the districts around them in the 1980-1984 period, based on actual observations in the Register of Sasines. Although Edinburgh land prices were the highest in Scotland at that time, the margin between Edinburgh land prices and those elsewhere is now substantially greater than it was in 1986.
Table 3.1: Mean Housing Land Prices 1980-84 (1984 prices) (No. of Transactions in Brackets)
Bearsden & Milngavie
Kincardine & Deeside
Source: Pieda, Land Supply and House Prices in Scotland, 1986
Industrial Land Values
3.12 Generally, industrial 54 land values are substantially lower than residential values - average industrial values are 200,000 per ha and there is much less variation throughout Scotland, although Aberdeen prices appear consistently higher at around 400,000 per ha. The figures suggest the following trends (Figure 3.9):
- Whilst residential land values in Scottish cities have either remained stable or increased, trends in industrial land values have been much less consistent - in some years they have fallen.
- Aberdeen has the highest land values - followed by Edinburgh, Glasgow and Dundee. Again, Dundee's land values are well below the Scottish average, at under 150,000 per hectare.
- Aberdeen, Glasgow and Dundee all experienced a drop in industrial land values during 1997. Values in Dundee remained at a low level whilst those in Glasgow have gradually increased. Aberdeen saw a more rapid rise from 1998 onwards.
- Industrial land values in Edinburgh have remained stable after a slight increase in 1997 - they do not in any way match the trends in residential land prices.
Scottish and UK Land Values
3.13 Residential land value has risen much more than industrial land in most cities (Figures 3.10-3.13). Trends in land values vary enormously throughout Scotland so that in Edinburgh, for example, there is now a huge divergence between residential and industrial values.
3.14 How do Scottish land value trends compare with those elsewhere in the UK? Data from the most recent Property Market Report was used for comparison (Figures 3.14-3.17).
3.15 The figures suggest the following :
- Residential land values are relatively high in Edinburgh but not in other Scottish cities. Values in Edinburgh are high even relative to the East and South East. Those in Glasgow and Aberdeen are equivalent to those in the North of England and the Midlands. Dundee has land values which are relatively low compared to all regions of the UK.
- Industrial land values in Scotland are relatively low. Values in Aberdeen - the highest in Scotland - are similar to those in mid range English cities such as Peterborough and Harrogate. Glasgow and Dundee have very low values equivalent to those in towns including St. Austell, Newcastle and Sunderland.
- The value of land for flats and maisonettes is particularly high in all Scottish cities. In Glasgow and Aberdeen, for example, the value of small sites and bulk land is similar to those experienced in the North of England but land for flats and maisonettes is equivalent in price to similar plots in the East and South East.