The value of housing design and layout

CONCLUSIONS
more appropriate to talk about ‘density, density, density’. The issues involved are
complex but the rules of the game now seem to be to maximise unit values while
increasing the number of units on the site to meet planners’ requirements. It may be
said that this has always been the developers’ game plan but new design
techniques, and indeed changing planning rules, have upped the stakes. Whereas
previously a developer might have aimed for densities of between 25 and 30 per
hectare (10 and 12 per acre), new planning and design technologies have changed
the target to something more like 30–40 per hectare (12–16 per acre). In urban
situations, these densities would be very much higher again. Values will only be
maintained at these densities if design techniques become very much more
sophisticated to maintain the attractiveness to occupiers.
Another question that this research raises is whether design can ever make a really
big value difference in a supply-constrained market. The sites under study were all
in high demand regions of south-eastern England. This region is particularly
characterised by very low levels of new build in relation to increasing demand for
housing. The number of new developments makes a very small impact on overall
supply in those housing markets. In a supply-constrained scenario, it may be that
design has less of an impact than where purchasers’ choices are freer. The question
perhaps is, where the supply of new homes meets demand, whether conventional
designs would sell at a discount or whether enhanced design would sell at a
premium.
The final, and perhaps most important, question is whether this research is really
measuring value to the developer. The margin that the developer makes out of any
scheme is still highly dependent on the price the developer paid for the land. Even
huge residuals would mean nothing if the developer has to pay exceptionally high
prices to secure the land. In cases where competition for land is high (as it is in
much of the South-East), it is likely that any developer with a competitive advantage
(whether it be through design or for any other reason) will have to pass much of that
value on to the landowner. This is because they would need to use enhanced value
as their bidding advantage in order to secure the site against competition in the first
place. Only where developers are part of the longer term land acquisition, ownership
and land development process are they more likely to benefit from any enhanced
value of their design efforts. This is likely to favour more adventurous developers
who can add value at the start of the development process through design and
detailed master-planning and who are prepared to separate their building activity
from this specialised, but potentially lucrative, task.
Ultimately, therefore, it is very likely that if, for any reason, there were to be a
revolution in development values it would only prove advantageous to a developer
while the developer’s competition were unwilling or unable to make use of the
advantage themselves. FPDSavills has already predicted that land values will be
driven up during the next 5–10 years, primarily through development gains of
increased density. If certain other design principles were also discovered to increase
development value, no doubt these would find their way into land values as well.
Not all of the exemplar schemes selected are as dense as PPG3 recommends.
T H E V A L U E O F H O U S I N G D E S I G N A N D L A Y O U T
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