City looks to buy cheap land from crunch-hit developers

Published on Thursday 8 January 2009 08:50

EDINBURGH city leaders are preparing to launch a major land grab by buying up land on the cheap from credit-crunch hit developers.

Officials are scouting Edinburgh for potential bargains, with the main focus on the city's waterfront, where land values have fallen by up to three-quarters over the last two years. Land there which cost 2 million an acre 18 months ago, is now said to be fetching closer to 500,000.

It is hoped that bringing the land under council control will help stimulate stalled development, as well as providing land for more affordable housing.

The city council is in a stronger position because it can borrow money from the Government at preferential rates, whereas private landowners have been badly hit by the slowdown in banks' lending.

This means the local authority is looking to pick up good deals from developers who are struggling with cashflow in the current economic climate.

Officials are working on the details of the scheme to pay for any new housing built on the council-acquired land but it is thought the homes would be a mix of private, rented and shared-equity homes.

This would be in addition to separate plans to build 1100 new council homes unveiled by city leaders last year.

Council chiefs today said they would not buy land for the sake of it, but added the current economic climate did present opportunities for them. As well as the waterfront, sites in West Edinburgh are understood to be among half a dozen targets.

Dave Anderson, the council's city development director, said:

"We are looking at strategic land acquisitions but you have still got to have a reason to buy the land and also a revenue stream to pay back the money you have borrowed.

"If you take the waterfront, the land values have just not held.

"There are some developers who are in a position where they either sell assets to get cash flowing again or wait until the bank manager calls and have to hand over the keys.

"But we want to work with them and affordable housing is our main focus at the moment."

City leaders last year unveiled an economic resilience package designed to steer the city through the global economic downturn.

Among the ideas floated in that package was for the city council to buy empty flats, offer mortgages and provide loans to first-time buyers.

Roy Durie, senior partner with Ryden property consultants, said:

"The problem with land values is that they have dropped by something like 70 per cent in places.

"The issue for the council is that there are still a lot of vultures out there who are also ready to pounce for the bargains."