26 Feb 2016
Our latest information paper - Placemaking and value – 1st Edition- indicates that creating ‘better’ places to live can substantially increase the value of dwellings.
- Placemaking has never been more important in creating thriving sustainable communities
- Commercial viability is crucial and ‘placemaking’ can substantially enhance value
- Good placemaking helps sustain premium values over a longer time period
Enhancing the value of dwellings
Good placemaking techniques, can substantially enhance value of dwellings, according to new research published by RICS entitled Placemaking and value.
The term placemaking is used to capture all of the factors which combine to create a good place in which to live or work, with evidence suggesting that top of the list for people in the UK is a concept of neighbourhood. Proximity to local facilities and shops also ranks highly.
The new research looks at the relationship between placemaking and commercial value, based on the notion that if creating better places translates into better profits; this could encourage more and better developments to come forward. A key finding of the research has been that creating better places where more people want to live enhances financial value and can secure substantial commercial premiums. The exemplar case studies that were examined showed uplift of between 5%, and in one exceptional case 56%.
Although good placemaking in areas of high value sees the most significant commercial uplift, with variation between different dwelling types, the commercial benefit of a better place to live was still evident in lower value areas of close to 20% uplift on other local new build competition. The increase in commercial value is long term rather than short term in nature.
There has been regular criticism of the quality and quantity of new housing and in the light of the enormous need for sustained housing delivery, placemaking has never been more important in creating thriving communities where people want to live, work and play.
Strong leadership is needed in development teams with a clear vision and ambition from the earliest point. Masterplanners, landowners and developers need to work together with the support of the local planning authority to deliver through the political and economic cycles.
RICS has always been interested in harnessing market forces in the public interest and the proposition is simple - if developers create places that are well planned, well designed and well built, people will pay more for them.
Uplift in commercial value
The report also found that placemaking achieved uplift in commercial value on relatively small homes – suggesting that people will pay a premium to be in a good place even if this means compromising on space. Another key finding was that retaining flexibility in the masterplan was important to allow the scheme to evolve.
When looking at the provision of community and other facilities these must be provided as early as possible in the development although there is a recognition of the need for a critical mass of housing to be occupied to support these services. The mitigation of flood risk has also got the potential to underpin value.
The research, carried out by CBRE analysed residential property value data from the Land Registry as well as using site observations, discussions with developers and agents, as well as community groups and planners.
It is based on five case studies within an hour’s commute of London demonstrating the benefits of good ‘placemaking’ not just for the high quality of the living environment created but also for the enhancement in the financial value of the dwellings.
CBRE and the RICS have worked closely together on this Information Paper and I am delighted that it’s now been launched. The CBRE research team examined a number of large, residential-led urban extension schemes in England that have created entirely new places with their own sense of identity. It found that strong place making can lead to substantial house price premiums within the schemes, anything between 20 – 50% over the imbedded new build norm in the locations.
I think that the Information Paper will be of real interest to landowners, house builders, developers and property companies.
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