Property development finance in Cardiff

The Cardiff property market

It’s no secret that the housing market in Wales is booming. Annual house price growth accelerated to 13.4% in Q2 of 2021; higher than any major city in England, with Northern Ireland just marginally taking the top spot for the highest growth in the UK.

 The popularity of Wales as a desirable location for second homes was bolstered further by the pandemic.  This, combined with the well-publicised housing shortage across the country, means there’s opportunity for savvy property developers with the right access to property development finance, to make their mark in Wales’ capital city and its sought-after surrounding areas.

Addressing the housing shortage

In 2014 Cardiff city council’s now controversial Local Development Plan (LDP), stated the city needed 41,000 new homes by 2026.  Thousands of homes were given planning permission on countryside surrounding the city, with the ambition to increase its size by around a third.

The expected shortage was partly due to predictions that the population of Cardiff was due to rapidly increase.  Following a review by the Welsh Government, this forecast has now significantly reduced, largely due to the pandemic and Brexit, and the city is now expected to grow by less than a quarter of the previous forecast.  The LDP is therefore also under review, and it’s likely that the number of new homes required will be far lower than the 41,000 stated originally.

The outcome of the new LDP is something property developers should watch closely.  It’s a pivotal time for the city and will shape how the landscape looks until 2036, providing strong insight into where the best property development opportunities could lay in Cardiff going forward.

Overview of the property development market

Newcastle hosts a number of corporate headquarters and has strengths in learning, digital technology, retail, tourism and cultural centres.  Investment property is typically terraced housing, with imposing Georgian structures in central areas. New build developments, student lets feeding Newcastle and Northumbria universities and large family houses in the outer areas all contribute to growing property development opportunities.

The North of Tyne devolution deal, agreed in 2018, will appoint a mayor for Newcastle, North Tyneside and Northumberland, and bring an extra £600 million of investment to the region over the next 30 years. This new Combined Authority has power over land acquisition and disposal, and will establish Mayoral Development Corporations to serve North of Tyne’s housing and regeneration focus.

The North East has the lowest average house price at £143,000, and the average property price in the Newcastle upon Tyne postcode area is £194k (increasing by 7% over the last 12 months). Newcastle-upon-Tyne house prices in maps and graphs.

Low property prices are unsurprisingly tempting people to relocate to this location.  Commercial office space in the North East is around 30% cheaper than other UK cities and nearly 68% lower than London. Residential properties are some 37% below the national average.

With one of the best graduate retention rates in the country (36% of all graduates settle and work in the city), Newcastle is recognised as a fast-growing region for new start-ups, prompting increasing demand for property from young professionals, increasing rental prices and yields.

Ascend Properties says Newcastle witnessed its largest year-on-year rental increase across the Build to Rent sector, achieving current average rentals at £858, 17% up on the previous year.

Only recently, international technology firm Xplor announced it was setting up a new customer service base, creating over 200 jobs, boosting demand for property.

Key property developments in Cardiff

Development is currently mainly concentrated to the north of the city, although the diggers are also moving into the east, with both areas dominated by new-build residential neighbourhoods and estates.  The average selling price for residential property in Cardiff currently sits at £267K.

 Here are some of the key sites in the development pipeline, which vary in their progression from planning stage to nearing completion.

 Northwest Cardiff

 Plasdŵr

A new £2bn ‘garden city’ located between the suburbs of Radyr and St Fagans in the northwest and west of the capital. Predicted to take up to 20 years to complete, the sizeable new suburb will comprise 7,000 homes and five new schools over 900 acres.  There are currently four developers building the foundations of Plasdŵr, creating three of its five neighbourhoods, and there is of course opportunity for many more as the project progresses.

Maes-y-Deri

A 211-property site from Barrat Homes, due for completion in June 2022.  The houses comprise two, three and four bed coach houses, terraced and semi-detached properties.

Northeast Cardiff

Churchlands

A semi-rural location between the suburbs of Pontprennau and Lisvane, earmarked for 4,500 new homes.  Two developers are currently linked with the site; Redrow, which has 560 homes across two developments, with completion expected by 2027, and Taylor Wimpey which has submitted a planning application for a new community space with up to 2,500 new properties.

East Cardiff

St Edeyrn’s Village

A large section of land sandwiched between Pontprennau and Old St Mellons has been redeveloped by Persimmon and Charles Church, and is now nearing completion.  The developers have added 1,300 new homes to the village of St Edeyrn’s, and proposals include an interchange to join Rhymney Line rail services.

Persimmon Homes are building up to 1,020 new homes at the site, over six phases.  Construction had already started on five, with all six due for completion by 2026.

Llandaff

The BBC moved its Wales HQ to Cardiff city centre in 2020, leaving a large opening for development on its old site at Llantrisant Road in Llandaff.  Taylor Wimpey has been granted planning permission to build, comprising 364 houses and flats, from one-bedroom apartments to detached five-bedroom homes.

Opportunity for developers in Cardiff

The lure of the South Wales coastline has never been stronger for homeowners or developers, says Laurence Hooper, Managing Director of Laurence Francis Property Development:

 “Property in Cardiff and across the Vale of Glamorgan is booming and there’s no sign of this changing for the foreseeable future. Having all the convenience of the city and a flourishing economy within a few minutes of the coast and national parks mean buyers are continuing to flock to the area for the best of both worlds. As a result, opportunities are rife for developers with local knowledge to tap into a flourishing market, driven by increasingly wealthy home seekers.”

 We agree it’s a great time to be a property developer in one of the UK’s most exciting and popular cities, if you have access to the right development finance, which is one of the top barriers to success for SME developers.

 Property development finance is a short-term loan used to fund construction or refurbishment projects.  It nearly always makes sense to borrow, because using someone else’s cash almost always proves cheaper that using your own. 

 Access to more funds also means you can take on bigger schemes that might otherwise be out of reach, as well as running several projects at the same time, increasing your portfolio and profit more quickly.

How to finance a development in Cardiff

The development finance market can be difficult to navigate. It’s overwhelming, and challenging to see beyond the big banks, so it’s also easy to miss an opportunity if you don’t know where to look. 

Brickflow is the UK’s first comparison site for development finance. We bring the market online, searching in real-time, providing instant online access to development loans. We only work with  lenders we know and trust, and we even help you to create the perfect lender presentation.  With a few clicks, you can invite lenders to make their best offer, meaning you’re empowered to select the finance that’s right for your project.

It’s the developers who can secure quality finance quickly, who will ultimately win in the race for the most competitive development opportunities in Cardiff, and beyond.

To talk to us about development finance for a project in Cardiff, or elsewhere in the UK, give us a call on 020 3488 1674, or email info@brickflow.com.

“While we’re all about the tech, we’re also about the human too. We’re happy to answer questions, explain the development loan process, or share tips & guidance along the way, if you need.”

Ian Humphreys Co-Founder & Head of Lending

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