Disclaimer: I am not a successful property developer – one of the few things I would seem to have in common with Mr Swann.
There are 2 or 3 regular posters on here who seem that £3.5m for the land to build the potential development of 160 Apartments at the ground is a bargain so I thought that with the aid of Google and the back of a fag packet I would check this out.
First I searched for 2 bed apartments in Scunthorpe using RightMove and Zoopla. It seems that the going rate for a 2 bed flat in a decent area in Scunthorpe is anything from £80k to £100k. The plans for the development give no clue to the size and make up of the flats so I am assuming 2 bed units. Ignoring the fact that flats overlooking a car park and hemmed in by a railway line, an unattractive tin shed of a non league football ground and an empty Debenhams I decided to use the upper figure to estimate the sales value of £100k per unit. Total sales price £16m. Lets say £2m for marketing and legal costs for the sales. Gives us £14m
Next I searched for average size of a 2 bed flats/apartments in the UK. There are a multitude of sites giving views on this with a wide range of suggestions but the average (not scientifically proven) seems to be about 70 sq metres. I figure if you want to achieve top end prices the flats need to be at least average size.
Next I searched build costs for blocks of flats. Again lots of sites to choose from with variation in costings. I chose Checkatrade as their data was the most recent I could find (March 2022) and I know building costs have risen sharply over the last year or two. They quote a build cost of between £1800 and £3000 per sq metre with an average cost of £2400 per sq metre.
They do have a top tip for would be developers – Top tip: Remember to factor into your budget the cost for finishing, architect and contractor fees – not to mention landscaping and many of the soft costs like interior design, decoration and furnishings.
For the sake of simplicity (running out of space on my fag packet) lets ignore that stuff and just go with the lowest quoted build cost:
160 apartments x 70 sq metres = 11,200 sq metres of building @ £1800 per metre
Basic build cost £20,160,000
So basically building the flats on the cheap and selling them at peak Scunthorpe prices will only lose you £6m
It was a riduculous plan in the first place and if the potential new owners were falling for it then they would not be the people I would want running my football club. Stay well away Simon and Ian. £3.5m is an awful lot to pay for a car park that is used once a week at £4 a shot and a training pitch that is used for 2 hours a day.
It also probably explains why no-one (apart from the council) has ever built blocks of flats of a significant size in Scunthorpe. The model only works in places where you can sell apartments for £200k plus.
