growthcompanyinvestor24 Nov 2015 20:33
From latest copy of GCI
Inland Homes’ value creation skills
Land investor Inland Homes creates value by taking brownfield sites and cleaning
them up for housing, and is now turning its hand to building some projects itself.
The business
It feels like it might be a bit late in the cycle to be
recommending a housebuilder. After all, it’s no secret that the
housing market has been strong, and the sector has had a
terrific four years or so as a result. Yet the outlook remains
positive. Employment is healthy, with real wages growing
again, which helps demand and affordability. But it’s the
supply side that really underpins the market. The number of
available building plots is constrained by our planning system
and we build far fewer new homes each year than the market
could absorb.
These supply constraints provide land investor Inland
Homes with its opportunity to create value. Inland specialises
in acquiring brownfield sites in the South of England that do
not have planning permission. Often, these sites have several
problems to overcome before they can be turned into
building plots. Of course, once permission to build is
successfully granted, the land soars in value. The key is to
buy the land well, understand what’s needed to get it through
planning and have an accurate idea of the exit value.
Inland was originally set up to trade its plots on to
housebuilders after it had created the planning value, and
440 were sold last year. Recently, though, it has started to
look a little more conventional by building some projects itself
and developing a stream of rental income. However, its core
expertise remains the acquisition of brownfield sites which
can be tricky to deal with. The sites are often contaminated
with toxic substances like diesel or asbestos and need
remediation before they are safe to inhabit. Even so, Inland
has a 100 per cent record in getting permission for its sites
The Ministry of Defence has been a good source of
opportunities. A major project now nearing completion is
Drayton Garden Village, a 32-acre former RAF site within the
M25. This involved a complex demolition and remediation
phase, followed by the building of nearly 800 homes, retail
and office space.
Wilton Park in Beaconsfield is a more recent acquisition from
the MoD. This major South East site has already seen an early
valuation uplift from 76 existing rental units that Inland is
retaining. There are 300 potential building plots, and the
planning application is due to go in soon. The gross project
value is around £250 million.
For houses it completes itself, Inland’s average selling price
is £260,000 and the aim is to stay below £300,000. This
places it in the first-time buyer bracket, where demand is
healthy. Being outside London but in most cases close to the
M25 means that its units are more affordable while still being
in popular locations.
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