For most companies, particularly those related to housing, the announcement of an ambitious growth plan in the press usually requires a generous pinch of salt.
But when that company is the development arm of a major utilities company that has been steadily honing its operations and expertise throughout the recession, there’s a good deal more reason to take them seriously.
That is what is happening in Yorkshire. Keyland Developments – the unregulated sister company of Yorkshire Water – is planning an assault on the Northern strategic development market, hoping (for starters) to unlock a pipeline of 6,000 homes and 6m sq ft of commercial space in “the very near future” in addition to the work it is already doing with Yorkshire Water’s portfolio.
Keyland is betting that the time is right, with development activity increasing, local authorities putting strategic plans to bed and big firms struggling to dispose of major landbanks.
The development company – one half of the team behind the 3m sq ft Temple Green project in Leeds’ Aire Valley Enterprise Zone – reckons it can double its pipeline in a few short years, targeting large-scale public and privately held sites outside major northern cities, clearing them up and securing the appropriate planning permission, then selling them on to hungry but risk-averse housebuilders and developers.
Talks have already begun with several major landowners and local authorities over partnering on sites, and Keyland hopes to have its first independent land deal completed by the end of the financial year next March. It already controls more than 800 acres, together with 900 acres of joint venture projects.
Though Keyland only wants to develop out the land in special circumstances, this foray into the wider private development world is hugely significant for the northern recovery.
Yorkshire Water feeds redundant sites from its 70,000 acre landbank through Keyland to carry out speculative property work disallowed for the regulated brand.
Keyland will continue this work, but now sees greater opportunities in the wider northern and Midlands marketplace to enable sites before selling them on and recouping costs and a minority stake of the sale price.
The move shows the thirst for major players to return to the open market, the innovative ways in which they are trying to do so, and something of a revival in the fortunes of the strategic land market.
Managing director Peter Garrett (pictured) explains: “There’s potential for growth. We know our way around corporate bodies and regulated and unregulated business, and the planning system.”
It’s a field where water companies have some form, with Anglian Water purchasing Morrison while Garrett was an employee of the construction firm. But Keyland sees the opportunity now as towards the front end of the development lifecycle, rather than on the construction site itself.
“We wouldn’t have done this a few years ago. If we’d just downed tools, as some other people did [at the onset of recession], and waited for things to get better, we wouldn’t be in the favoured position that we are now.”
Keyland believes it has the advantage in the marketplace because of its 20-strong team, which already controls a substantial commercial and residential pipeline. Every one of those schemes means an existing relationship with a council, with planning consultants and with agents, which is just as well since Keyland doesn’t want to keep any one firm on a retainer.
The new venture’s target of repeating that success in the short term looks ambitious, but Keyland’s model predicts that it could grow “exponentially” – especially if it manages to keep up its successful streak of planning approvals (29 and counting).
The team also sees opportunity from those public and private companies whose core business sits outside of property, but whose operations generate large-scale land banks. “We’ll look at any piece of land,” says Garrett, “but really, ideally, we are looking for people like Yorkshire Water who are busy doing something else, but as a natural consequence of their work are a major landowner.”
The new venture is open to retail, industrial and office development in “the right circumstances”. However, Garrett expects to weight its activity towards housing, where values are reliable and planning stands an increasingly strong chance of going through.
Of course, the housing market is not known for rolling out the carpet to new entrants. Though Garrett insists Keyland’s new operation is “not a threat” to developers that will enter into bidding wars, the firm will inevitably be jostling with housebuilders and propcos who see the same opportunities coming to market.
One is hard pressed to find a house builder willing to comment on the venture, with many mumbling that the land market may be more competitive than Keyland expects.
However, Barratt Homes Yorkshire East managing director Paul Newman said Keyland’s launch could “only be seen as a positive” for an industry attempting to deliver 200,000 homes per year. “By opening up their portfolio of brownfield sites, if developed, this land will make a significant contribution to the housing needs of the region.”
Garrett thinks Keyland will have the advantage in turning strategic long-term into “oven-ready” sites, where many housebuilders made cuts during the recession and where policymakers have struggled to find viability.
Keyland’s entry into the northern land market is sure to shake up proceedings. What is less certain is how effective their new product will be, and whether taking off their training wheels encourages other potential players to look for their own innovative ways to enter the market.
Local and central government will be hoping the answer to both of those questions is a positive one.
