Development Viability Study in Newham

Development Viability Study in Newham
Photo by Piret Ilver / Unsplash

This is a summary of viability workings of a typical town centre development in Newham.

The following planning application was picked due to being recent very typical in terms of building heights for strategic sites in the local plan.

Demolition of existing buildings and redevelopment of the application site, 2-16 High Street and 2 Upper Road, to provide a part 2, 6, 7 & 8 storey mixed use development, encompassing 69 residential units and 449sqm of commercial space
August 2022, Approved in March 2024. See application on Newham website.

The Development shows a 20% profit will be made based on a mostly 6-8 storey development. Viability has been reviewed by both Savills (on behalf of applicant) and BNP Paribas (on behalf on council).

See Full Viability Workings in Google Sheet

The workings show that a 5 storey building having the same build costs, would result in a 7% profit margin which isn't enough for any developer to justify the risk of the development.

Are land owner profits reasonable?

In short, yes. The existing use valuation we came up with was higher than the valuation in the viability report.