Where are the most profitable new-build markets?

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.