IPF News

IPF Commissions Research to Establish Land Values Indices

28 Jul 2017

Land has become a significant store of wealth for individuals and corporate entities but there is a dearth of information in the public domain on UK commercial real estate land values. Actual transaction prices are a function of a variety of site- and location-specific factors, including hope value. The IPF Research Programme (2015-2018) has commissioned the University of Reading, led by Dr Steven Devaney, to investigate and propose a framework for the regular estimation of land values for different areas based on a consistent approach.

The research will measure land values for different hypothetical scheme types in all UK regions and for selected major cities and will examine the time-series characteristics of these measures, comparing trends in values, as well as analyse the key drivers of changes in development viability over time. In addition, the researchers hope to provide recommendations on the scope for the regular production of land value indices, their likely applications and limitations.
Simon Marx, Regional Director – Research & Strategy, at LaSalle Investment Management, is chairing the Project Steering Group (PSG) that will oversee the research. He commented: “The benefits of having access to aggregate land value data are many and far-reaching. They can help developers and investors to model the drivers of viability and formulate strategies towards development of real estate in different locations. Insight into the cyclicality and volatility of land values over time is also critical to more accurately price long leases.”

Meanwhile, Dr Steven Devaney commented: “In addition to the benefits for investors, a better understanding of land values is important to facilitate fair or policy-compliant distribution of uplifts in value between the community, developers and landowners. Also, land value indexes could assist with setting area-wide planning and regeneration policies.”

Other members of the PSG comprise Richard Yorke, CoStar Group, and Sue Forster, the IPF’s Chief Executive. The report, with the working title Land value indices for commercial real estate: measuring performance and benchmarking viability, is due to be published in approximately six months’ time.