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The sales of land in 2009 achieved by Hallam Land included greenfield sites at Bedford (top) and Ampthill (bottom).
We continue to invest in our site portfolio and across our holdings achieved new allocations in Local Plans for almost 4,000 dwellings and secured planning consents for 2,775 dwellings.
Hallam Land Management, our land business, faced a very difficult market throughout the latter part of 2008 and during 2009. Its success is closely aligned to that of UK house builders, most of which have been restructuring their businesses to reflect recent market demand levels for housing, which are significantly below the levels prevailing up to the end of 2007. They seem to have been reasonably successful in this and there does not appear to be a significant overhang of unsold, completed property. However, their land banks are largely in equilibrium with current level of sales. Therefore, whilst we see a more stable market for greenfield land with planning consent, we do not anticipate a strong recovery in land pricing until housing production moves towards 150,000 units per annum.
Buying evidence seems to suggest that land for traditional residential development, as opposed to city centre apartments, is more highly sought after. Hallam Land has always concentrated on this market for greenfield land and is ideally placed to help meet the demand. Indeed, the five sites we marketed in 2009 received considerable interest and sales were concluded in all cases, although pricing was well below peak levels and payment was on a deferred basis. These sales included our first wind farm site at High Haswell, County Durham. Despite depressed sale values, we have included onward sales overage clauses so that should the quantity or pricing of houses on the finished site exceed the base expectation, we partially benefit from that uplift in value. There were indications that land prices stabilised during the summer of 2009 and as house builders re-entered the market towards the end of the year, prices began to recover.
As we consistently forecast, our trading performance was significantly reduced on the record year in 2008, with revenue of £10.2m (2008: £74.7m) and a trading loss of £3.1m (2008: profit £35.5m). At 31 December 2009 we held interests in 7,933 acres (2008: 7,635 acres) with 1,679 acres owned (2008: 1,679 acres), 4,117 acres optioned (2008: 3,982 acres) and 2,137 acres under agency agreements (2008: 1,974 acres). The inventory value of these assets was £51.3m (2008: £53.9m) and we have 119 sites (2008: 130) in progress with a geographical bias towards the south and west of England and Scotland.
We continue to invest in our site portfolio and across our holdings achieved new allocations in Local Plans for almost 4,000 dwellings and secured planning consents for 2,775 dwellings, most still subject to Section 106 agreements or judicial reviews. We consciously took a number of sites through to planning application stage which on the whole proved to be rewarding. However, three sites taken to appeal following an initial planning refusal were not successful. The net write downs taken in the year through trading profit associated with these sites were £4.6m. Overall, we are pleased with this early submission approach and we hope to see enhanced returns in the longer term from this decision.
After a relatively quiet year in 2009, we expect trading levels to begin to pick up from 2010 onwards as a result of prospective or achieved planning consents. However, we remain cautious that the market could be influenced by any changes to the Government's housing and planning policy adopted after the forthcoming General Election. We believe the need for new housing is indisputable but increasing housing provision will require strong planning policies and the availability of affordable mortgage funding to be achieved.
Of our 119 schemes, we have selected some of the sites that we hope to bring to the market over the next three years for further comment:
EXETER – we have a 30% holding alongside three large house builders in this major urban extension to Exeter at Cranbrook. This site already benefits from a minded-to-grant planning permission and will eventually include up to 7,500 houses, employment and office sites and a retail development to support the housing and employment uses. We are in discussion with landowners, Government agencies, local authorities and our three partner builders in order to bring this complex scheme forward and there are many issues to be resolved. Some 20% of our stock carrying value for land is tied up in this project and we remain confident that we will be bringing it forward in order to commence land sales within the next three years.
BRIDGWATER – we have received a minded-to-grant planning consent subject to a Section 106 Agreement, along with an adjacent landholding, for 2,000 dwellings and 750,000 sq ft of industrial development. We are in advanced detailed negotiations with Wm. Morrison Supermarkets for a regional distribution hub on the site and, whilst there are complex matters to be dealt with, we expect the first residential land sales to occur in the next three years.
BIDDENHAM – here we have a significant land value tied up with a minded-to-grant planning consent for over 1,000 residential units. This is a very complex site and we have to conclude negotiations with the local authority, Network Rail and adjacent landowners. It is likely that the infrastructure expenditure will qualify for grant funding and provided all the parties can be brought together, it is possible for land sales to commence in the next three years and continue for some years after that.
WORCESTER – we propose to market this optioned site, with planning permission for some 250 units, during the early part of 2010. The balance of the site, along with adjacent land holdings, is zoned for up to 3,500 dwellings and it is hoped that a joint application on the combined holdings will be submitted in 2010.
BUCKINGHAM – we were successful in obtaining a planning permission for 700 units and 2.5 hectares of employment land on this optioned site. The judicial review period has now passed with no challenge and, whilst there are issues to be dealt with before the site is marketed, interest in it is good and it is hoped that part of the site will be marketed in 2010.
KETTERING – we hold a small proportion of the land on a site which has a minded-to-grant planning permission for up to 5,500 dwellings, subject to concluding and signing a Section 106 Agreement. However, our land is likely to be some of the first to be developed and it is possible that staged sales may be achieved over the next two years.
In addition to these larger sites, we have others which should be marketable over the next two years. These include the sale of a ground rent portfolio at Oxclose in Sheffield, a social housing site for 55 units in Chesterfield, a small site for 14 units in Stafford, the first phase of a site in St Albans, 75 units at Tillicoultry and 33 units at Bishopbriggs, both in Scotland. We will receive additional payments for sites at Dewsbury, Chudleigh and Mansfield where land sales concluded in 2009 were staged and it is anticipated that we will receive initial overage payments on sites already sold at Stotfold and Melksham as housing development commences.
In addition to the above, which are currently the most likely sites to be marketed first, the following sites have either had a planning application submitted or we intend to submit an application in the next two years:
MANSFIELD – this jointly owned site with an overage to the original owner is intended for mixed residential and employment uses. The application should be submitted in 2010.
CHATTERIS – a planning application for 1,000 units is expected to be submitted in 2010.
IRTHLINGBOROUGH – the site has an allocation for 600 units and we anticipate submitting a planning application in 2010.
CHELLASTON – a planning application for a development of accommodation for the elderly is expected to be submitted in 2010. We have already received acceptable, outline sale terms for the site if this application is successful.
BOLSOVER – an application for 250 units has been submitted. If we are successful in the application, it is possible that this owned site will be marketed in late 2010 or 2011.
MARKET HARBOROUGH – we hope to submit an application for 1,100 units on a 50% owned site in 2010. If successful, we would expect the first land sales to take place in 2012 at the earliest.
MARSTON MORETAINE – we own a 64 acre site with a development overage of 50% to the original landowner. We have initial allocations for 125 residential units and 17 acres of industrial development, with a further 320 residential units in reserve. We hope to submit a planning application to reflect the current allocation in 2010 and, if successful, land sales are expected to commence in 2012.
Bob Brown, the founder Managing Director of Hallam Land, retired at the end of 2009 after 20 years at the helm. He made a massive contribution to Hallam Land's development and success and we all wish him well in his retirement. He has been succeeded by Keran Power who has worked for Hallam Land for 20 years, 18 of which have been as a Director.
