The latest research from the real estate debt advisory specialists, Sirius Property Finance, has revealed how modular builds could benefit property developers to the tune of £126,000 per development when it comes to the interest paid on the amount borrowed to fund said development.
On average, the estimated annual interest on development finance sits at approximately five per cent per annum – around 0.42% per month.
Based on the example loan amount of £5m over one year, property developers opting for the traditional route to build would see £252,000 paid in interest over just 12 months.
However, opting for the modular build route could see construction complete 30% to 50% quicker than a traditionally built development.
So just by reducing this construction time by 30% developers could see an interest saving of £75,600 in a single year – £9,000 per month.
However, by cutting this timeframe by 50%, this saving climbs to £126,000 per year or £21,000 per month.
Managing Director of Sirius Property Finance, Nicholas Christofi, commented: “Modular builds provide a real opportunity for property developers to maximise their profit margins due to the significantly shorter build timeframes they provide.
The quicker a project is completed, the sooner it can reach the market and generate the income required to repay any loans taken.
With demand for housing higher than it’s ever been, developers are also under extreme pressure to deliver and this speed often results in homes reaching the market that aren’t quite up to standard.
Modular building is the solution to these current problems, not only allowing homes to reach the market at a far quicker pace but also providing a far greater, more consistent level of quality control in the process.”