Where are the most profitable new-build markets?
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December 10, 2021
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The latest research from Warwick Estates reveals where Britain’s most profitable new-build markets are and, therefore, where developers are best focussing their attention.
Warwick Estates looked at the average cost of constructing a new-build home per square foot across seven major British cities, including the cost of materials, labour, first and second fix costs, a contractor’s margin of 2.5% and preliminary costs of 15%.
Warwick Estates then looked at the total cost of constructing a new home based on the average size in each city comparing it to the market value of a new-build in the current market.
The research shows that on average across these major cities, it costs £139,238 to build a new home, while the average market value is currently £320,515. This is a positive difference of 130%, for developers.
The most profitable market for new-build homes analysed by Warwick Estates is Edinburgh. It costs an estimated £126,400 to construct a new-build home in the Scottish capital while the average sale price is £375,870 – a 197% profit margin for developers.
London ranks second, with an estimated construction cost of £181,700, while the average new-build home sells for £533,642. A 194% profit margin for developers.
The third most profitable new-build market was Bristol (137%), followed by Leeds (133%), Birmingham (107%), Newcastle (101%) and Manchester (85%).
Glasgow ranked bottom of the table, although, with an average construction cost of £139,238 and an average new-build value of £320,525, the city is still home to a 68% profit margin.
| Table shows most British cities that have the largest difference between average new-build construction costs and average new-build house price, listed from largest % difference to smalles | ||||||
| Location | Construction cost (sq ft) | Property Size
(sq ft) |
Construction cost | New-build house price | Profit margin (£) | Profit margin (%) |
| Edinburgh | £160 | 790 | £126,400 | £375,870 | £249,470 | 197% |
| London | £230 | 790 | £181,700 | £533,642 | £351,942 | 194% |
| Bristol | £180 | 790 | £142,200 | £337,062 | £194,862 | 137% |
| Leeds | £160 | 790 | £126,400 | £294,384 | £167,984 | 133% |
| Birmingham | £170 | 790 | £134,300 | £278,074 | £143,774 | 107% |
| Newcastle | £170 | 790 | £134,300 | £270,117 | £135,817 | 101% |
| Manchester | £170 | 790 | £134,300 | £248,997 | £114,697 | 85% |
| Glasgow | £170 | 790 | £134,300 | £225,973 | £91,673 | 68% |
| Average | £176 | 790 | £139,238 | £320,515 | £181,277 | 130% |
