Profitability Of Brownfield Land For Development
There is a shortage in the availability of housing in the UK, this is occasioned by the fall in supply and the continuous rise in the demand for houses.
There are two types of lands that can be used for housing development; Greenfield and Brownfield lands. Greenfield refers to natural untouched lands, e.g. forests, parks etc. These lands have not been previously used for any form of development. Brownfield, on the other hand, refers to a previously developed land. These lands have previously been used for industrial or commercial purpose but have since been abandoned for some reasons.
The costs associated with the removal of old structures on Brownfield lands have discouraged potential developers. In many cases, Brownfield lands are contaminated with chemicals and materials that are hazardous to human health. Therefore, before such lands can be used such contaminants must be removed. The removal is usually very complex and expensive. In some cases, the cost of cleaning up such lands is greater than the value of anything that can be built on it. These factors have allowed many Brownfield lands to remain undeveloped.
This has caused many developers to opt for Greenfield lands instead, as it saves the cost of assessment and remediation. But a recent fall in the availability of green spaces have put developers in a doldrum and have contributed to a fall in housing.
However, the UK government, aware of the growing housing shortage have instituted reforms to allow Brownfield lands to be more attractive and profitable for developers. It has now become more profitable to build on Brownfield lands. The UK government have made it much easier for planning approval to be granted for housing units on Brownfield lands, while appeals are harder to be rejected. The government also, through a couple of federal and state programs have agreed to assist developers in the cleaning and reclaiming of Brownfield lands. These programs offer technical assistance, tax incentives, loans, regulatory guidance etc. These programs have allowed Brownfield land to become more profitable for developers.
Aside from the intervention by government, technological advances have allowed new and more advanced remediation technologies to emerge. These latest technologies are more affordable than the traditional approach and even offer extra benefits, such as protecting and preserving the environment. Some of these latest advancements include; Bioremediation, phytoremediation and in-situ chemical oxidation.
In Bioremediation, natural organisms such as indigenous bacteria, fungi, plants, and enzymes are used to break down or destroy toxins and contaminants. In phytoremediation, plants are used to absorb contaminants e.g. heavy metals, through a process of bioaccumulation. Such metals can later be mined and reused. This is called phytomining. In phytoremediation is important that the contaminants do not make their way into the food chain. In-situ oxidation allows oxygen or chemical oxidants to be injected into the contaminated water or soil to break down contaminants.
Brownfield lands are typically located in prime spots in the UK, close to transport and workforce, increasing their appeal. There is a growing appetite among institutional investors when these lands become available. Investing in Brownfield lands is a goldmine.
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