Land shines like a diamond
What price would you get for a second-hand diamond? Answers may include reference to the size or quality, or reference to the market or the original price. If you’re looking for a guide, though, a rough estimate would be about 33% less than you’d pay for a new diamond. The reason for this is twofold: 1. Jewellers place around 20% profit uplift on diamonds; and 2. Diamonds actually aren’t that rare. In-fact, to emphasise point 2: diamonds are as common as bearded men in Shoreditch. So how do they command such a high-price when they’re new? Simple, the supply is closely managed by the suppliers. It’s a market where the price is artificially inflated by managing supply and when diamonds are second-hand the supply is much, much higher.
As you think whistfully about a diamond you’ve lovingly purchased or had purchased for you and wonder whether with a few million years less compression it would be worth more as a lovely lump of coal that would provide heat and light, let us consider something else that is in finite supply: land. Notwithstanding the efforts of a limited number of volcanoes around the world, Dubai’s artificial islands and the Chinese government building out into the South China Sea, land is in finite supply. Especially in the UK. And it doesn’t move. It’s the reason land has its own special set of laws – it doesn’t move. The fact that everyone wants their own bit and that bit will never move makes it continually valuable.
As we are all aware, these are uncertain times; the unknown consequences of Brexit and the new President elect of the United States. But the benefits for Property Developers are potentially huge. Kinght Frank reported this week that Chinese investment into UK property remains high, boosted by the falling price of sterling. Donald Trump’s election as president of the USA has led a number of industry figures to suggest that there will be higher demand for UK assets. Atlas Residential has formed a Joint Venture with Wildheart Residential for a major push into the UK property market.
Land continues to be the bedrock of the UK economy (and literally the bedrock of the country) and with the UK’s well established laws, trusted commercial court system and rising prices – we’ll try to forget about the ropey planning system – the large-scale investment in development property over the next 12 months. Bright times ahead – shining like a diamond.”