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Development Proposal Report

Working Paper · June 2017

DOI: 10.13140/RG.2.2.25089.45922

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 Development Proposal Report
PLAN60102&40662 Land and Development -

Site Location

Chadderton
District

Oldham
Borough

Greater
Manchester

OL9 6DP

Course Student No. Institution Module Convener

Land and Development 9993963 University of Manchester Ms. Selma Carson

Date: 20th May, 2017

Table of Contents

Introduction .................................................................................................................................................. 2

Section 01 – Site Characteristics ................................................................................................................. 5

Section 02 – Review of Planning History .................................................................................................... 8
Section 03 – Review of Planning Policy .................................................................................................. 10
Section 04 – Economic and Demographic Analysis ............................................................................... 10
Section 05 – Development Options ........................................................................................................ 10
Section 06 – Justification for Preferred Options ................................................................................... 10
Section 07 – Residual Evaluation for Mixed Used ................................................................................ 10
Section 08 – Commentary of Evaluation for Mixed Used .................................................................... 10
Section 09 – Sensitive Analysis of Evaluation ....................................................................................... 10
Section 10 – Development Program and Financing ............................................................................. 10
Section 11 – Marketing ......................................................................................................................... 10
Section 12 – Conclusion and Recommendation ................................................................................... 10

Annex A: District location in relation to the Greater Manchester ....................................................... 10

Annex B: Proposed Development Site ....................................................................................................... 10
Annex C: Planning History .................................................................................................................... 10
Annex D: Potential Development Options ............................................................................................ 10
Annex E: Residual Appraisal of Preferred Development Options ........................................................ 10
Annex F: Sensitive Analysis of Evaluation ................................................................................................... 10
Annex G: Development Program for Proposed Scheme ............................................................................ 10

References ................................................................................................................................................. 12

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Introduction

The report is about to deliver an appraisal for a development proposal at site in Oldham borough at
Greeter Manchester. The report covers legislation, policy, planning, socio-economic and market aspects
necessary to come up with the best decision to develop the site, these aspects are highly important for
clients who intend to develop the specified site, as it gives them an inclusive overview about the
development environment in the site.

On one hand, Oldham borough can be considered as a residence area in northeast of Manchester.
However, Oldham is a main hub of labors and workers as well, as the population is about to jump from
224,999 to 241,1600 by 2020, and the average of population age within 30 min drive from Oldham town
center is younger than average of population age in UK as a whole. In fact, Oldham Council states that
“The borough’s working age population is over 157,000 with 34.2% profiled in the 25 - 44 year old age
group (both of percentages are higher than the national average” (Oldham Council, 2017). This
percentage demonstrates that Oldham represents a hub for younger workers.

On the other hand, Oldham is a home for 6000 business; taking the fact the three are 101,555 registered
brands within 30 min drive from Oldham town center. These business types are vary, as there are many
manufacturing, health, construction, creative, financial and professional services sectors taking place in
Oldham. The district represents a high socio-economic hub as there are many other national and
international brands locate within Oldham Borough.
In that case, the report examines the site characteristics and planning policy related the development
option. As well, the report delivers a full development appraisal and evaluation for the preferred option
in order to come up with best recommendations and conclusions.

2|Page
Section 01- Site Characteristics

The Land is located at the T junction of Chadderton Way and West End Street in Chadderton district
in west side of Oldham borough at eastside of greater Manchester (See Fig. 01).

Figure 1 District location in relation to the Greater Manchester (Source: Inpractice UK News, 2012)

1-1 Surrounded Area: -

The site is surrounded by many types of retails and community facility services, which turned the
Chadderton area into a small attractive centric space, as the land is surrounded by community
centre from south-east side, sweet food retail from north-west side, travel agency and cosmetic
centre from north side and 12 car parking spaces from south side (See Fig. 02).

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 Figure 2 Proposed Development Site (Source: Google Maps, 2017)

1-2 Access to nearby public services:-

Most of public services serving the neighbourhood residents are located within appropriate walking
distance, which increase the accessibility of all daily life requirements without using public
transportation. The bus stop, community centre, church, mosque, library and food store are all 1
min walking distance from the site, while it takes only 2 min drive to reach the petrol station. It also
takes about 5 min walk to reach St Hilda's C of E Primary School, while it takes about 7 min walk to
reach light rail station and Tesco superstore and 13 min walk to reach Royal Oldham Hospital.

1-3 Access to district and city centres:-

Both, the district centre and city centre are accessible by public transportation, as it takes only 10
min by public bus to reach Oldham centre, while it takes 32 min by light rail to reach Manchester

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city centre. Both centres are accessible within 1 direct line, as there is no need for a transit stop to
reach both centres.

1-4 Land tenure, type and price:-

The site is 6,970 SF “about 625 meter square, it’s a flat land with rectangular shape (See Fig. 03). The
site land is a freehold tenure, classified as 2 stars commercial land and offered for sale at £ 175,000,
which is about £25.11/SF (CoStar, 2017)

Figure 3 Proposed Development Site (Source: Google Maps, 2017)

2-5 Environmental Site Characteristics:-

The land locates at risk shellfish waters zone. As well, the land locates at Surface Water NVZ Area.
So, Geo-environmental and Geo-technical investigation is required and treatment action is
necessary in order to be qualified with NHBC 10-year warranty.

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Section 02- Review of Planning History

The site is granted a planning permission approval (See Fig. 04) which has been applied by Mr. Khan.
Thee planning permission was about to erect mixed-use development of three stories building, contains
four retails on ground floor and three duplex apartments on first and second floor, each apartment
includes 3 bed rooms, kitchen, bathroom and living room.

Figure 4 Planning History (Source: Oldham Council, 2017)

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The application was made on 20th December, 2006. And the approval issued on 14th Feb, 2007. There
were several conditions which should be followed by the client and his developer agent named Kirkham
Property. The most important conditions were as the following: -

- The development details and specifications shall be carried as per authorized drawing
- Samples of exterior materials to be submitted to Local Planning Authority for approval
- Soundproof scheme of retails and flats to be submitted to Local Planning Authority for approval
- Details scheme of treating open spaces to be submitted to Local Planning Authority for approval
- The use of retails at ground floor should be restricted to the time between 8:00 – 18:00, Monday-
Friday.

The planning permeation approval was granted for only three years after the day of application (Oldham
Council, 2017), which means that this approval is already expired, and another application should be
made prior to do any development on site. However, it would be better to take the previous conditions
into consideration before starting the new application.

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Section 03- Review of Planning Policy

The review of planning policy relays on the Oldham council vision for housing and retail development.
Therefor the main documents to be followed in order to determine the most significant policies toward
housing and retail development are Joint Core Strategy and Development Management Policies, Oldham
Housing Strategy 2015-18, Oldham Local Development and Framework and Oldham Proposal Map
adopted by Oldham Council

1-1 Retail and leisure policies:-

Increase physical activities for children and young people to reduce the high level of obesity among
them. As well, Oldham Council calls to increase the amount of new major retail, private investments,
leisure services and office floor spaces.

As per the proposal map of Oldham district which adopted by Oldham Council, the site is located at
retail zone (See Fig. 05)

Figure 5 Oldham Proposal Map adopted by Oldham Council (Source: Oldham Council, 2017)

3-2 Housing:-
The main housing policy delivered by the council is about providing accessibility to suitable and good
quality homes as the housing supply is not yet meets the demand for housing.

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The council as well, promotes the delivery of three bed rooms and above family housing, to meet the
demand of family housing in the borough.
As per Oldham Housing Strategy 2015-18, the council will use its land to promote the delivery of 1000
aspirational homes by implementing new model of investment including private rented, new build,
custom and self-build homes. It will do so by “working with developer to encourage the development of
higher value homes”(Oldham Council, 2017).

Affordable housing and high value market housing such as private rented and self-build homes are
required to meet the demand of Oldham community. Taking into consideration that the council will
promote a delivery of family housing (Three bedroom and above).

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Section 04- Economic and Demographic Analysis

The population in Oldham borough is about 224,900 and it’s expected to grow to reach 241,000 in 2022.
At the same time, the average age is below the average age in UK which demonstrates that Oldham
represents younger population. In fact, the key statistics of Oldham council shows that “Over a third
(37.7%) of the borough’s population are classified as ‘Wealthy Achievers’, ‘Urban Prosperity’ or
‘Comfortably Off’ by CACI’s Acorn consumer classification system” (Oldham Council, 2017). On the other
hand, Oldham’s working age population is higher that UK, as about 157, 000 are working age sector with
about 34.2% of them are 25-44 year old age group. These numbers shows that there will be a demand
increase in Oldham.

According to The Greater Manchester Forecasting Model developed by Oxford Economics, there will be
an increase of 6% in the job opportunities in Oldham, as there will be additional 5,300 jobs in the coming
two decades (Oldham Council, 2017). Most of these growths will take place in construction, admin, food,
accommodation, social work, ICTs and professional services (See Fig. 06).

Figure 6 Future Growth Sectors in Oldham 2013-2033 (Source: GMFM, 2013)

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As well, there will be an increase in the number of households, as the households number will jump
from 94,000 in 2017 to 96,000 by 2019 (Oldham Council, 2017). This demonstrates the high demand for
housing in the coming years (See Fig. 07).

Figure 7 Number of Projected Newly Forming Households in Oldham (000s) 2004-2021 (Source: Oldham Council, 2017)

As per Oldham Housing Needs and Demands Study, there will be a need for 525 new homes per year.
Although this figure made for the year of 2007-2008, but comparing this figure with the rapid growth of
households and population in Oldham, we can anticipate that there will be growing need for flats
apartments, spatially for the high weight of working groups within the total amount of population.

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Section 05- Development Options

Following is an assessment for three development options. The required policies, spaces, demand
approach, planning history and the type of each unit is set to deliver a general overview that helps is
choosing the best options (See Table. 01).

Assessment of Option Against Previous Planning History,

Development Options Detail of Proposed Option
Manchester Core Strategy and Market Demand

Option 1 Mixed-use:
3 Story building (GF + 1st F + 2nd F)

- 4 Retails @ GF Planning History:

(Each retail area = 137.5 m2) Sensitive to building material submission
Total retails area = 550 m2
Rent Price PA = £ 314 pm2 Oldham Core Strategy
Option 1 Mixed-use:
Total Rent price PA = £ 172,700 Addresses Policies P10, P16, P25, P25 and Proposal Map
- 4 Retails (A1)
- 13 (2 Bedroom Duplex Apartments) (C3)
- 13 (2 Bedroom Duplex Apartments) Market Demand
(2 Bed Rooms + Kitchen + Hall + Bath + WC) High Quantifiable
(Each apartment area = 80m2 = 40 m2 1st F + 40 m2 2nd F)
Average sale price for each apartment is £120,000

- Target Market:
(Wealthy Achievers community sector)
Option 2 Mixed-use:
3 Story building (GF + 1st F + 2nd F)

- 4 Retails @ GF
(Each retail area = 137.5 m2)
Total retails area = 550 m2 Planning History:
Rent Price PA = £ 314 pm2 No planning history
Total Rent price PA = £ 172,700
Oldham Core Strategy
Option 2 Mixed-use:
Addresses Policies P10, P13, P16, P25, P25 and Proposal
- 4 Retails (A1)
- 3 Offices @ 1s F Map
- 3 (B1) Offices
(Each office area = 165m2)
- 13 (2 Bedroom Duplex Apartments) (C3)
Average price for each office is £300,000 Market Demand
High Quantifiable
- 13 (2 Bedroom Duplex Apartments)
(2 Bed Rooms + Kitchen + Hall + Bath + WC)
(Each apartment area = 80m2 = 40 m2 1st F + 40 m2 2nd F)
Average sale price for each apartment is £120,000

- Target Market:
(Wealthy Achievers community sector)
Option 3 Mixed-use:
3 Story building (GF + 1st F + 2nd F)

Planning History:
- 4 Hot food Takeaway @ GF
No planning history
(Each retail area = 137.5 m2)
Total retails area = 550 m2
Oldham Core Strategy
Rent Price PA = £ 314 pm2
Option 3 Mixed-use: Addresses Policies P10, P13, P16, P25, P25 and Proposal
Total Rent price PA = £ 172,700
- 4 Hot food Takeaway (A5) Map
- 11 (3 Bedroom Duplex Apartments) (C3)
- 11 (3 Bedroom Duplex Apartments)
Market Demand
(3 Bed Rooms + Kitchen + Hall + 2 Baths + WC)
High Quantifiable
(Each apartment area = 94m2) (47 m2 1st F + 47 m2 2nd F)
Average sale price for each apartment is £210,000

- Target Market:
(Wealthy Achievers community sector)

Table 1 Potential Development Options

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Section 06- Justification for Preferred Options

Base on the assessment of three development options with regard to council policy context, space
types, sale price, demographic and economic analysis. It’s clear that Option One which comprise of four
retails and thirteen (2 Bedroom Duplex Apartments) is the most appropriate choice for development.
The justifications of choosing this option is due to the anticipation of population growth, the demand
analysis of housing in Oldham, economic growth and the context of proposal map delivered by the
council.

First, the council statistics shows that population growth in Oldham will jump from 224,900 to 241,000
in 2022. Over third of the population considered as ‘Wealthy Achievers’. This statistic demonstrates that
there is high purchase power among Oldham’s community that can have high interest to live in higher
standards situation. On the other hand, the site is located out of industrial and central zone of Oldham
borough, which gives no mean to go for the option number two with three offices as the offices usually
required a central area within borough. So, it’s better to allocate the first floor for residential purpose
than to allocate the first floor for office purpose. This proves that option one and three are more
appropriate for development than option two.

Second, according to The Greater Manchester Forecasting Model developed by Oxford Economics, the
economic growth in the field of food and accommodation sector is higher than the economic growth in
the retail sectors. However, as per the Proposal Map developed by Oldham council the site is located in
the retail zone where the preferred option for ground floor area is retails, taking into consideration that
there is nearby takeaways restaurants, while there is a lack in the number of retails in Chadderton
street. In this case, option one will be more appropriate for development than option three.

Third, according to Oldham Housing Needs and Demands Study, 2 bed apartment sales are more stable
than one and two bedroom apartments (See Fig. 08), while there is always a dramatic decrees in other
apartment types such as one and two bedroom apartments. So, it’s better to go for 2bed apartment
choice than other 3 bed apartment choice. This study approves that option one will more appropriate
for further development than option three.

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 Figure 8 Leasehold Sales in Oldham by Property Type between 2005-2009 (Source: Oldham Council, 2017)

In conclusion, and after the assessment of population growth, proposed map and economic growth,
along with a consideration of spatial requirement, it can be concluded that option one is the appropriate
choice for development.

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Section 07- Residual Evaluation for Mixed Used (4 Retails + 13 Apartments)

Below is the residual evaluation for option one 4 (Retails) + 13 (2 Bedroom Duplex Apartments) (See
Table. 02).
GROSS DEVELOPMENT VALUE

550 m2 @ £ 314 pm2 172,700 4 Retails = 4* 137.5 M2 = 550 M2

YP perp @ 7.50 % 13.3333

2,302,667

13 (2 Bedroom Duplex Apartments) 13*120,000 1,560,000

GROSS DEVELOPMENT VALUE 3,862,667

ALLOW FOR PURCHASERS COSTS @ 5.8%

NET DEVELOPMENT VALUE 3,650,914

COST OF SCHEME

BUILDING COSTS
1,875 m2 @ £ 752 pm2 1,410,000

ANCILLARY COSTS 150,000

TOTAL BUILDING COSTS 1,560,000

PROFESSIONAL FEES 156,000 10%

1,716,000

CONTINGENCIES 51,480 3%
1,767,480

FINANCE @ 8%
FINANCE FOR BUILDING PERIOD 106,049 Construction period 18 months
(Full costs for half construction period)
FINANCE FOR MARKETING PERIOD 70,699 Marketing period 6 months
1,944,228

DISPOSAL COSTS
LETTING (agent, legal, marketing) 17,270 10% rental income
INVESTMENT SALE (agent, legal,marketing) 73,018 2% NDV

COST OF DEVELOPMENT 2,034,516

COST OF LAND 175,000

ALLOW FOR ACQUISITION COSTS @ 5.8%
185,150
ALLOW FOR FINANCE ON LAND For 24 months
(assume at interest rate above) 215,959

TOTAL COST 2,250,475

DEVELOPER'S PROFIT 1,400,438 NDV less Total Cost

68.83 %

Table 2 Residual Appraisal of Preferred Development Options 4 (Retails) + 13 (2 Bedroom Duplex Apartments)

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Section 08- Commentary of Evaluation for Mixed Used

The evaluation of the option one (mixed used 3 story building) which comprises of 4 (Retails) and 13 (2
Bedroom Duplex Apartments) is based on many surveys that justifies all values and prices included in
the residual evaluation sheet.

Retail space and rent price:

The average rent price for retail is varying according to the location of street. In Oldham, the retail rent
prices in shopping centres is higher than the retail rent price in commercial streets. As well, the retail
rent prices located in commercial streets are higher than the retail out of town centres. The site is
located in Chadderton Way which considered as retail zone according to the Proposal Map developed by
Oldham Council, and according to CoStar Shopproperty website, the average price of retail rent price is
£ 314/m2 (See Table. 03). The total space of retails is 550 m2, which means each retail will have a space
of 137.5 m2. The remaining 75 m2 in the ground floor will be allocated for entrance, stair case and
security desk area.

Retail Rent Prices in Oldham Borough

Address/Postcode Location Class Rent price PA Area M2 £ Rent Price/M2
Oldham / OL1 1JA High Street Shop Area A1 47,500 149 318
Oldham / OL1 1JA High Street Shop Area A1 40,000 113 354
Oldham / OL1 3AB High Street Shop Area A1 32000 78 410
Oldham / OL1 3AB Out of Town Shop Area A1 18032 60 300
Oldham / OL4 2GA Out of Town Shop Area A1 17500 92 190
Average
314
£ Rent Price/M2

Table 3 Retail Rent Prices in Oldham Borough (Source: CoStar Shopproperty, 2017)

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The last yield value offered by CBRE was in Jan 2016. The CBRE reports shows that the yield value for
retails located in secondary high street shop is between 6.5-9.0. The yield value was 6.5% in good
secondary high street shops, while it was 9.0% in secondary high street shops. The site is located in
Chadderton Way which can be identified either secondary or good secondary retail zone. Therefore, it’s
better to go for the average of 7.5% (See Table. 04).

Table 4 Manchester Yield value for Retails in High Street Shops areas (Source: My Manchester Blackboard, 2017)

The purchase cost allowance is 5.8% which is the average of purchase cost allowance in real estate field
in UK.

Apartment space standard and sale price:

According to THE ARCHITECTS’ JOURNAL website, the space for 2 bedroom duplex apartment can be
about 80 m2, this is a gross space area, which comprise of 40 m2 for dining room, living room, kitchen, 2
stores and WC. In lower level. And 4o m2 for 2 bed rooms, 1 bathroom and store in upper level (See Fig.
08). However, the build-up area in each floor is about 625 m2. This means that each floor can
accommodate 13 apartments with a gross area of 520 m2, plus 105 m2 for lobby, corridor and
circulation area. The total build area is 625 for each floor, which means that the total build area for the 3
story building is 1,875 m2.

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Figure 9 The Space of 2 Bedroom Duplex Apartment

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According to Zoopla website , the sale price of 2 bedroom apartment in Oldham is between £ 106,000 –
150,000 (See Table. 05). These prices are for standard 2 bedroom flats. So the average sale price set for
each apartment set on £ 120,000. Take into consideration that the sale price for the proposed
apartments may sell in higher prise, as the duplex apartment sale price is usually higher than the flat
apartment.

2 Bedroom Appartment Sale Prices in Oldham Borough

Address/Postcode Location New Build/Used Duplex/Flat Sale Price £
Foundry Street / OL8 Foundry Street New Build Flat 109,950
Foundry Street / OL8 Foundry Street New Build Flat 106,950
Mellor Street / OL4 Mellor Street Used Duplex 135,000
King Street / OL8 King Street Used Flat 109,950
Oldham Road / OL4 Oldham Road Used Flat 149,995
Baldwins Close / OL2 Royton Used Flat 115,000
Average
120,000
£ Sale Price

Table 5 Sale Price of 2 Bedroom Apartments in Oldham Borough (Source: Zoopla, 2017)

Development costs:
As per JEWSON website, the building cost of 3 story standard building located in North West area with
an land area of 625 m2 is £752 pm2, by which the construction activities delivered by a main contractor.
The cost of land is already issued for this site. CoStar website declared that the land price is £ 175,000.
Taking into consideration the other amount of professional, ancillary, contingencies, disposal and
finance fees during construction and marketing periods is set according to the percentage value of real
estate services in UK.

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Section 09- Sensitive Analysis of Evaluation

There are many factors that can affect the profitability, as there are many uncertain areas which should
be tested to get a general overview of the profit margins. In fact, the land selling price is fixed, so there
will be other factors that can have further positive or negative impacts on the profitability. The three
main factors are the retails rent prices; apartments sell prices and building costs. However, the entire
previous figures are set upon the average rate delivered by a survey of similar type of development
developed in the same type of area. However, these figures are not 100% accurate as it can increase or
decrease according to uncertain situation. Thus, it better to see the effect of these figure upon
profitability.

First, 10% increase in retails rental prices will lead to an increase of 10.17% in profitability, as the profit
will jump from 68.83% to 79%. On the other hand, if there is a 10% reduction in retails rental prices, the
profit will decrease from 68.83% to 58.61%, this mean there will be a reduction of 10.22% in
profitability.

Second, 10% increase in apartments sell prices will lead to an increase of 7% in profitability, as the profit
will jump from 68.83% to 75.83%. On the other hand, if there is a 10% reduction in apartments sells
prices, the profit will decrease from 68.83% to 61.82%, this mean there will be a reduction of 7.01% in
profitability.

Third, 10% increase in building costs will lead to a decrease of 13.42% in profitability, as the profit will
decrease from 68.83% to 55.41%. On the other hand, if there is a 10% reduction in building costs, the
profit will jump from 68.83% to 84.80%, this mean there will be an increase of 15.97% in profitability.

In conclusion, the worse scenario will happened if there is a 10% decrease in retails rental prices and a
10% decrease in apartments sell prices, while there is a 10% increase in the building costs. In this case,
the profitability will reduce from 68.83% to 39.46%. In contrast, the best scenario will happened if there
is a 10% increase in retails rental prices and a 10% increase in apartments sell prices, while there is a
10% reduction in the building costs. In this case, the profitability will increase from 68.83% to 103.45%
(See Table. 06).

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 Sensitive Analysis of Evaluation

The effect of retails rental prices on profitability

£ Retails rent prices pm2 Profitability% Rate of profitability (decrease/increase)
Retails rental prices pm2 £314.00 68.83% /
10% Increase £345.40 79.00% 10.17% Increase
10% Decrease £282.60 58.61% 10.22% Decrease

The effect of apartments sell prices on profitability

£ Apartments sell prices Profitability% Rate of Decrease/Increase
Apartments sell prices £1,560,000.00 68.83% /
10% Increase £1,716,000.00 75.83% 7% Increase
10% Decrease £1,404,000.00 61.82% 7.01% Decrease

The effect of building costs sell prices on profitability

£ Building costs pm2 Profitability% Rate of Decrease/Increase
Building costs pm2 £752.00 68.83% /
10% Increase £827.20 55.41% 13.42% Decrease
10% Decrease £676.80 84.80% 15.97% Increase

Worse scenario of profitability

£ Retails rent prices pm2 £ Apartments sell prices £ Building costs pm2
Profitability%
10% Decrease 10% Decrease 10% Increase
£282.60 £1,404,000.00 £827.20 39.46%

Best scenario of profitability

£ Retails rent prices pm2 £ Apartments sell prices £ Building costs pm2
Profitability%
10% Increase 10% Increase 10% Decrease
£345.40 £1,716,000.00 £676.80 103.45%

Figure 6 Sensitive Analysis of Evaluation

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Section 10- Development Program and Financing

The development program will take up to 33 months to be accomplished. The program will be divided
into 3 main program main activities. The first activity is preparation and submission of planning
application which will take up to 9 months to be finalized. The second activity is the construction activity
which will take up to 18 months. The last activity is marketing which will 8 months for retails and
apartments to be sold and let (See Table. 07).

The financing scheme is within rate of 8%, the money will be borrowed from The Development Finance
Bank, as their services can provide a loan for up to 60% of GDV for £250k-£50m property development
projects (The Development Finance Bank, 2017).

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Table 7 Development Program for Proposed Scheme

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Section 11- Marketing

The marketing period propped for the chosen option of property development contains two main
phases. In fact, the marking period in residual appraisal combined these two phases into one phase.
However, the whole two phases take 6 months to finalize.

Phase I Residential: 6 Months

A survey conducted by asking many developers of property projects in the area of Oldham about the
market time for the sold 2 bed room apartments, and it the result shows that it took from 4-5.5 months
for apartments to be sold. Thus, 6 months is set as marketing period for the apartments.

Phase II Commercial space: 6 Months

Phase II goes in parallel with phase I, as the survey result shows that retails in Oldham took about 5.5
months to be leased. Thus, 6 months is set as marketing period for retail. Taking into consideration that
the two phases will start at the same time.

The reason why the marketing period start at the end of constructions period is the fact that
advertisement companies prefer to lunch the advertisement campaign until the constriction is finalized,
so as to take photos for the actual on site spaces.

Marketing strategy:
The marketing campaign is small in scale comparing with other property development marketing
campaign, as the suggested cost for letting and sale investment is £90,288 includes all agent, marketing
and legal costs. Estate agent will be hired to lunch advertisement campaigns in property magazines,
newspapers and websites. As well, a brand concept and website will be created for identifying all the
development phases. On the other hand, an on-site board will be placed to attract the pedestrian and
drivers to the property development project address and links.

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Section 12- Conclusion and Recommendation

The site gives a great opportunity to invest in property development project that will deliver a four
sizable retails and thirteen (2 Bedroom Duplex Apartments), providing the much needed type of
developments to the location and Oldham borough as a whole.

The residual appraisal has shown that the development is highly viable as it can provide the client with a
profit of £ 1,400,488, this is equal a %68.83 of cost of development. Taking into consideration that the
cost of development is £ 2,034,516 and the total land cost after acquisition is £185,150. As well, the
proposed property development project can generate a total net development value (NDV) of £
3,650,914.

However, the achievement of these values is based on many surveys and investigation. But, there are
still many sensitive issues in the market that can affect theses values and prices. So, it’s recommended
to sit with all stakeholders such as development finance banks, contractors, developers, estate agents,
legal advisors, and council officials to come up with agreed actual values and prices.

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Annex

Annex A) District location in relation to the Greater Manchester:

Annex A-1 District location in relation to the Greater Manchester (Source: Inpractice UK News, 2012)

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Annex B) District location in relation to the Greater Manchester:

Annex B-1 Proposed Development Site (Source: Google Maps, 2017)

Annex B-2 Proposed Development Site (Source: Google Maps, 2017)

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Annex C) Planning History:

Annex C Planning History (Source: Oldham Council, 2017)

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Annex D) Potential Development Options:

Assessment of Option Against Previous Planning History,

Development Options Detail of Proposed Option
Manchester Core Strategy and Market Demand

Option 1 Mixed-use:
3 Story building (GF + 1st F + 2nd F)

- 4 Retails @ GF Planning History:

(Each retail area = 137.5 m2) Sensitive to building material submission
Total retails area = 550 m2
Rent Price PA = £ 314 pm2 Oldham Core Strategy
Option 1 Mixed-use:
Total Rent price PA = £ 172,700 Addresses Policies P10, P16, P25, P25 and Proposal Map
- 4 Retails (A1)
- 13 (2 Bedroom Duplex Apartments) (C3)
- 13 (2 Bedroom Duplex Apartments) Market Demand
(2 Bed Rooms + Kitchen + Hall + Bath + WC) High Quantifiable
(Each apartment area = 80m2 = 40 m2 1st F + 40 m2 2nd F)
Average sale price for each apartment is £120,000

- Target Market:
(Wealthy Achievers community sector)
Option 2 Mixed-use:
3 Story building (GF + 1st F + 2nd F)

- 4 Retails @ GF
(Each retail area = 137.5 m2)
Total retails area = 550 m2 Planning History:
Rent Price PA = £ 314 pm2 No planning history
Total Rent price PA = £ 172,700
Oldham Core Strategy
Option 2 Mixed-use:
Addresses Policies P10, P13, P16, P25, P25 and Proposal
- 4 Retails (A1)
- 3 Offices @ 1s F Map
- 3 (B1) Offices
(Each office area = 165m2)
- 13 (2 Bedroom Duplex Apartments) (C3)
Average price for each office is £300,000 Market Demand
High Quantifiable
- 13 (2 Bedroom Duplex Apartments)
(2 Bed Rooms + Kitchen + Hall + Bath + WC)
(Each apartment area = 80m2 = 40 m2 1st F + 40 m2 2nd F)
Average sale price for each apartment is £120,000

- Target Market:
(Wealthy Achievers community sector)
Option 3 Mixed-use:
3 Story building (GF + 1st F + 2nd F)
Planning History:
- 4 Hot food Takeaway @ GF
No planning history
(Each retail area = 137.5 m2)
Total retails area = 550 m2
Oldham Core Strategy
Rent Price PA = £ 314 pm2
Option 3 Mixed-use: Addresses Policies P10, P13, P16, P25, P25 and Proposal
Total Rent price PA = £ 172,700
- 4 Hot food Takeaway (A5) Map
- 11 (3 Bedroom Duplex Apartments) (C3)
- 11 (3 Bedroom Duplex Apartments)
Market Demand
(3 Bed Rooms + Kitchen + Hall + 2 Baths + WC)
High Quantifiable
(Each apartment area = 94m2) (47 m2 1st F + 47 m2 2nd F)
Average sale price for each apartment is £210,000

- Target Market:
(Wealthy Achievers community sector)

Annex D Potential Development Options

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Annex E) Residual Appraisal of Preferred Development Options:
GROSS DEVELOPMENT VALUE

550 m2 @ £ 314 pm2 172,700 4 Retails = 4* 137.5 M2 = 550 M2

YP perp @ 7.50 % 13.3333

2,302,667

13 (2 Bedroom Duplex Apartments) 13*120,000 1,560,000

GROSS DEVELOPMENT VALUE 3,862,667

ALLOW FOR PURCHASERS COSTS @ 5.8%

NET DEVELOPMENT VALUE 3,650,914

COST OF SCHEME

BUILDING COSTS
1,875 m2 @ £ 752 pm2 1,410,000

ANCILLARY COSTS 150,000

TOTAL BUILDING COSTS 1,560,000

PROFESSIONAL FEES 156,000 10%

1,716,000

CONTINGENCIES 51,480 3%
1,767,480

FINANCE @ 8%
FINANCE FOR BUILDING PERIOD 106,049 Construction period 18 months
(Full costs for half construction period)
FINANCE FOR MARKETING PERIOD 70,699 Marketing period 6 months
1,944,228

DISPOSAL COSTS
LETTING (agent, legal, marketing) 17,270 10% rental income
INVESTMENT SALE (agent, legal,marketing) 73,018 2% NDV

COST OF DEVELOPMENT 2,034,516

COST OF LAND 175,000

ALLOW FOR ACQUISITION COSTS @ 5.8%
185,150
ALLOW FOR FINANCE ON LAND For 24 months
(assume at interest rate above) 215,959

TOTAL COST 2,250,475

DEVELOPER'S PROFIT 1,400,438 NDV less Total Cost

68.83 %

Annex E Residual Appraisal of Preferred Development Options 4 (Retails) + 13 (2 Bedroom Duplex Apartments)

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Annex F) Sensitive Analysis of Evaluation

Annex F) Sensitive Analysis of Evaluation

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Annex G) Development Program for Proposed Scheme

Annex G) Sensitive Analysis of Evaluation

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