UK - The UK government is to sell off decommissioned land earmarked for the development of a new town in southeast England.
According to a tender issued for a "land sale delivery partner" by Defence Estates, the real estate subsidiary of the Ministry of Defence, the development and disposal of the Kent site - pitched as a "large-scale new community" - will take up to 15 years. This planned sell-off is part of a strategy to rationalise defence sites, with land and buildings worth £1.69bn sold since 1999.
The partner will provide capital for pre-sale development of the 700-acre site, described by the body's agents as "a work in progress" targeting 5,000 residential units, 50 acres of commercial, with retail and community facilities.
This contract for planning and land sale will be worth £2m—10m (€2.8m—14.3m), with a contract worth £0—£80m for additional services, however, the Kent site does not yet have planning permission.
It is not clear why it is bringing in a partner at this stage, although the fact that some elements of masterplanning and "considerable technical background work" have already been completed suggests the decision to involve a partner was fairly recent.
Previous land sales have been direct, although an earlier parliamentary report pointed to a lack of incentives for Defence Estates that "militates against innovative and creative rationalisation decisions: Defence Estates has no financial incentive to restructure the estate in a cost-effective manner."
Recent Defence Estate partnerships have proved controversial as a report published in July by the parliamentary scrutiny committee on defence attacked a partnership for subcontracted military accommodation, describing Defence Estates officials as "helpless".
The committee added: "They did not seem to know where responsibility lay, nor what, if anything, they could do. At present, there is no sense that anyone has ownership of the problem."
Serviced land has recently emerged as a new real estate sub-asset class in the UK, encouraged by planning reforms and fund manager champions such as Cordea Savills. However, the planned development of a new town on greenbelt land owned by BP pension fund has met with considerable opposition from local campaigners. The scheme acquired the land as an agricultural real estate investment in 1979.
In the US, fund managers have recently adopted land acquisition as a specialist investment strategy, turning to large homebuilders interested in shifting land, earmarked for residential property, off their books. JP Morgan, for instance, plans to launch a commingled fund for investing in residential and mixed-use land with a total equity raising of $100m-$200m (€71.6m-€143.2m).