14 May 2016 – by Alexander Peace
The UK’s largest housebuilder can no longer find development opportunities in central London that meet its required rate of return.
Barratt Developments will now focus on schemes in Zones 3-6, because Zones 1 and 2 cannot satisfy its minimum hurdle rates.
Chief executive David Thomas said that Barratt had not been successful on a bid in central London since September 2014, when it bought the Kidderpore Avenue site in Hampstead, NW3.
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“In London we are competing against commercial developers and people investing money into the London markets with different objectives to a housebuilder,” he said.
“That is the reality of the market, and in that situation you can do one of two things: drop your hurdle rates, or go elsewhere.
“Our focus over the past 12 months has been about Zones 3-6 and we have secured a number of opportunities in outer boroughs.”
Thomas blamed the situation on high land values, less demand from overseas buyers and reduced rates of sale caused by an increase in stamp duty.
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