An 811-home scheme on the site of a former Shredded Wheat factory in Hertfordshire is among thousands of consented homes that have been placed at risk in the past five months.
The 11-acre North Site of the Wheat Quarter in Welwyn Garden City is the latest major scheme to be put up for sale by receivers.
Octopus Real Estate, which had loaned £21m to previous owner Plutus Estates to transform the site in 2019, appointed receivers at CBRE to sell the site. The brownfield site had been acquired by Plutus Estates and MTVH – then known as Metropolitan Housing Trust – in 2016, with MTVH taking over the South Site in 2019.
The site has planning permission for a mixed-use development including 811 homes, 114 of which are slated for later living. It also has consent for 151,000 sq ft of community, leisure, retail and workspace uses.
The move comes after Octopus separately appointed receivers at RSM UK to sell a flagship 263-acre development site in Biggleswade, Bedfordshire, in September last year. The site previously had permission for 1,500 homes before consent lapsed in March last year.
The Biggleswade site, set to be developed by UK Regeneration, was backed by a £28.3m refinancing loan from Octopus and Pure Commercial Finance in January 2020, but development stalled.
The sites are two of many residential schemes across the UK that are thought to be in the doldrums.
Jonathan Vandermolen, chief executive at Vandermolen Real Estate, estimates that sites with permission for around 3,000 homes in total have been put up for sale in receivership.
Vandermolen said: “There is a triple whammy leading to this trend – rising build costs, borrowing costs, and, without Help to Buy, there are no buyers.”
Industry figures have observed marked increases in enquiries on cash flow and working capital difficulties from property development lenders.
Duncan Swift, restructuring and insolvency partner at accounting firm Azets, said this was largely down to the impact of inflation, a lack of “skilled trades necessary to do particular parts of the build” and rising project costs and delays.
Where the latter was concerned, Swift cited the “attitude of the customer as to the acceptance of cost overruns, and the acceptance of delays to contract completion and the penalties that might be attractive on both counts”.
However, industry observers said sites in receivership have attracted market interest on the back of an ongoing imbalance in supply and demand for homes. Vandermolen said that, on that basis, the market will not suffer the same as it did during the 2008 financial crisis, citing a “shedload” of capital waiting in the wings.
Jasper Masters, head of development land agency, CBRE UK said: “This is the first residential-led scheme of its scale to launch this year, and it has been a really interesting gauge as to market appetite.
“The fundamentals are there – we’re dealing with a renowned site, strong local employment base, very close proximity to Welwyn Garden City’s train station, and good connections into London, with only a 28-minute journey to Kings Cross.
“As a result, The Wheat Quarter has garnered significant interest from a wide range of parties – from private, build-to-rent, and senior living developers and investors looking to value engineer the existing planning to deliver a best-in-class, major mixed-use quarter in the home counties.”
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