A football stadium isn’t the first venue that springs to mind when searching for space to alleviate a housing shortage, but developments are popping up around the country that do just that. And they’re presenting investors with a mix of real estate opportunities.
Since the Taylor Report recommended that stadiums become seating-only venues, football clubs have been searching for new and bigger grounds to house their fan base, with clubs such as Arsenal, Middlesbrough, Sunderland and Southampton all moving to bigger stadiums.
Their former grounds have all been converted into residential housing developments, helping to alleviate the UK’s housing shortage and contribute towards the Government’s target of building 300,000 extra homes a year.
Some London-based clubs, meanwhile, have included new-build housing in the development plans for their new stadiums. Tottenham Hotspur’s 62,000-seater stadium in White Hart Lane will have 585 on-site flats when it is completed later this year, while Brentford’s proposed new stadium near Kew Bridge will include 648 homes.
Both types of development aim to help to bring much-needed housing to the UK’s cities, and they both present investment opportunities.
“Stadium-led housing developments offer investors access to large scale, mixed use regeneration schemes in urban areas that are usually densely populated,” says Nick Whitten, Director – UK Residential Research at JLL. “They are typically favoured by investors that don’t need immediate returns and who prefer companies with a low cost of capital.”
Different structures create opportunities
The investment required for stadium-led housing developments varies according to the structure of a scheme. The first developments, especially those in the north of the country, tended to be taken over by large publicly-listed housebuilders who would build and then sell off the properties.
Some modern developments involve a large developer who parcels off opportunities to other developers, or builds the housing in stages itself.
At Tottenham’s new stadium the developer is building and selling homes in phases and it will take around 24 months to deliver the whole scheme. To secure finance, it will look at pre-selling some homes off-plan, but “there are also likely to be opportunities for small, local buy-to-let investors,” says Whitten. “Other developers have considered tapping into the UK’s burgeoning build-to-rent sector by selling blocks of properties to large institutional investors to own and manage.”
A big draw for investors is the chance to access a regeneration project in an urban location, as the vast majority of football stadiums are located in towns and cities; opportunities like this are few and far between.
Over the long term, investing in a regeneration project can be very rewarding. Analysis by JLL of 10 regeneration areas in London found that over a five-year period they outperformed the wider market in terms of house price growth by an average of 40 percent.
The mixed nature of the schemes can also be very attractive says Whitten. “If an investor is heavily weighted to one sector, a regeneration project offers the chance to immediately diversify. Most of the football stadium housing schemes include a mix of commercial, residential and leisure uses, offering investors exposure to different markets through one overall development.”
Tottenham’s new stadium, for example, is being heralded as a project that will kick-start the regeneration of a tough area. It is expected to result in the opening of new restaurants and pubs, and it could also drive the need for better transport infrastructure.
Most football clubs already have the new facilities they require, but there are still some teams who are planning to build modern fit-for-purpose stadiums, such as Chelsea and Everton.
According to Whitten, this means investors will have to do the leg-work, negotiating “trickier opportunities to talk about how football clubs can maximise their land.”
“Engineering solutions are getting better all the time, which means clubs can make much better use of their site. They just need an experienced investor to impress upon them the benefits of change – and with demand for housing a top priority for the UK’s urban areas, it’s an ideal time to have this conversation,” he says.
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