EASTERN PRIME RESIDENTIAL RESEARCH - CANARY WHARF AND ITS ENVIRONS 2015 - Knight Frank
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RESIDENTIAL RESEARCH EASTERN PRIME CANARY WHARF AND ITS ENVIRONS 2015 ECONOMIC HOUSING SUPPLY THE CHANGING FACE FUNDAMENTALS AND DEMAND OF CANARY WHARF
A PRIME
RESIDENTIAL DISTRICT
The growth of Canary Wharf to become one of Europe’s
largest financial services employment clusters in the last
20 years has overshadowed its emergence as a leading
prime London residential market. The next wave of
development is likely to rebalance this view, supported
by new infrastructure and amenities, which will reinforce
the area’s position as a prime residential address.
Canary Wharf is best known as one of amenities. The Canary Wharf Estate is
89%
Europe’s leading financial and business home to one of the busiest and most
employment clusters which, alongside the vibrant shopping malls in the city. In total,
City of London, form one of the world’s there are more than 300 shops, cafés,
most important financial districts. supermarkets, bars and restaurants on the
It is home to the headquarters of major Estate, open seven days a week, making
Population increase in banks, media companies and professional it an attractive residential environment as
Canary Wharf and its services firms including Citigroup, JP well as a business centre.
immediate surrounds Morgan, Credit Suisse, Thomson Reuters As one of the limited number of areas in
between 2001 and 2011 and KPMG. London’s zone 1 and 2 where there is the
It also sits within one of the fastest potential for large-scale redevelopment,
growing areas of London. The population the Canary Wharf estate is now poised to
of Canary Wharf and the area to its south further expand as residential district.
in the Isle of Dogs rose by 89% between
The development planned for this area,
2001 and 2011.
including a school, will augment its appeal
This growing population has been to a wider demographic, attracting families
accompanied by an expansion of as well as young professionals, and serve
MARKET ANALYSIS
Property prices in Canary Wharf more established prime residential
have risen by 27% since early 2013, neighbourhoods in West London.
outstripping the 10% growth seen across
prime central London over the same time, FIGURE 1
according to Knight Frank’s index. Price outperformance in Canary
Wharf Indexed to 100 = June 2012
Such strong growth is partly underpinned
by the improving UK economy,
something which is also reflected in the 135 CANARY WHARF
commercial property market in Canary 130 PRIME CENTRAL LONDON
Wharf, with vacancy rates falling and 125
upward pressure on office rents. 120
115
The other effect at play on prices is the
return of the ‘ripple effect’, with house 110
price growth spreading outwards from 105
central London, as it did in previous UK 100
housing cycles. 95
90
Despite this outperformance in June 12 June 13 June 14 June 15
price growth, average values are
still significantly lower than those in Source: Knight Frank Residential Research
2 Please refer to the disclaimer at the end of this report
to further change perception away from
‘pied a terre’ to ‘home’. The opening of
FIGURE 3
Workforce growth
CONNECTIVITY
Crossrail will enhance its connectivity. Number of employees in Canary Wharf
The extension of the appeal of the Canary
Wharf estate through mixed land uses,
cultural activity and amenity will cement its
position as a prime location, and the ripple
effect will provide an uplift to the wider
Nearly thirty years ago, Canary Wharf
market in the Isle of Dogs.
was one of the most redundant areas
of London. Today, as one of the
Economic primary business hubs in the world,
it is one of the most well-connected
outperformance districts in the capital.
Employment in Canary Wharf almost
quadrupled in the 10 years to 2012,
with the number of workers rising from
27,000 to over 100,000 during this time,
according to figures from the ONS.
The majority of jobs in the area are in
finance and insurance but there has been 27,400 100,500
The Jubilee Line provides quick
notable business growth in emerging
access to London Bridge, Bond
tech industries.
Street and north west London while
Already some 7,000 employees the Docklands Light Railway (DLR)
work in the technology, media and connects the area to the heart of the
telecommunications (TMT) sector in City of London. London City Airport,
Canary Wharf, helping London to clinch 2001 2012 which hosts flights to Europe’s
the title of the ‘Fintech’ capital of Europe. Source: Knight Frank Residential Research / ONS major economic centres, is less
Fintech start-ups based in Canary Wharf than 20 minutes away. The Jubilee
benefit from being in close proximity to In terms of economic growth, Tower line will also become one of the first
Hamlets has outperformed the UK for lines to have a 24-hour service on
their natural client base in the banking,
Friday and Saturday evenings from
financial and professional services sectors. the past few years. Annual Gross Value
the autumn of 2015.
Added, a measure of economic activity,
Some 40,000 additional jobs are forecast
rose by 2% in 2013 and 3.8% in 2014,
to be created in Tower Hamlets, the
compared with 1.9% and 3% respectively
borough in which Canary Wharf and
across the UK.
the Isle of Dogs are located, by 2025,
according to Experian. Growth is expected to average 3.9% per
year over the next five years outperforming
both the UK and London over this time. From late 2018, Canary Wharf, as
FIGURE 2
As well as strong economic growth and well as the nearby Royal Docks and
Economic growth
Queen Elizabeth Olympic Park, will be
Total annual output (GVA) job creation, there will also be notable
served by three Crossrail stations. The
population growth. An extra 57,325
TOWER HAMLETS high-speed rail service will cut journey
households are due to be created during
10% LONDON times to many destinations, with
UK FORECAST the coming decade in the wider borough passengers able to reach Liverpool
of Tower Hamlets, a 20% increase. This is Street in 6 minutes, and Heathrow in
8% a faster rate of growth than in London as less than 40 minutes. It will be the first
whole, which is forecast to see a 13% line to directly connect London’s West
rise in the number of households over the End, the City and Canary Wharf.
6%
next decade.
The station at Canary Wharf is already
open and hosts a number of shops,
4% Emergence of a new restaurants and a cinema. The rooftop
is a public garden.
cultural centre
2% Canary Wharf and its surrounds are
also emerging as a hub for culture and
0% entertainment as London’s ‘cultural
2011 2012 2013 2014 2015 2016 2017 2018
centre of gravity’ is enhanced by activity
Source: Knight Frank Residential Research / Experian in the East.
Please refer to the disclaimer at the end of this report 3
EASTERN PRIME 2015 RESIDENTIAL RESEARCH
There is a popular arts and events across East London is changing. There
FIGURE 5
programme already hosted on the Canary are plans for a £3.5 billion regeneration
A growing borough
Wharf Estate, with live music shows, project at Silvertown Quays, which will Forecast increase in private household population
outdoor dance performances, sporting provide housing, retail and commercial Indexed to 100 = 2014
events, open-air theatre and exhibitions. business space. At Royal Albert Dock, a
125
As part of the wider shift east, the English £1.7 billion commercial hub for Chinese TOWER HAMLETS
LONDON
National Ballet (ENB) has announced and other Asian businesses is being 120
plans to relocate from its existing home in created by ABP.
Kensington to London City Island, close 115
Businesses will also benefit from
to Canary Wharf. The new facilities will
Crossrail, with a wider pool of potential 110
include space allowing members of the
employees to draw from, as shown in the
public to see the ballet company’s work.
commuter map (figure 2). 105
The ENB is not alone. In the neighbouring
borough of Newham, there are plans 100
for a new education and cultural district
Broadening appeal
at the Queen Elizabeth Olympic Park. As part of the continued development 95
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
The Victoria and Albert Museum, one at Canary Wharf, access to schools is
of the most recognizable landmarks in set to improve. As well as the opening
Source: Knight Frank Residential Research / GLA
Kensington in West London, is set to of a primary school for 420 pupils, a
display more of its collection in a new first for the immediate area which will
space opening in the Park. enhance its appeal to growing families,
The park may also become home to the the opening of Crossrail will make top-
first base for the Smithsonian outside tier schools across London even more
the US. Added to this, there are plans for accessible from Canary Wharf.
University College London to open
a campus in the area. Aspirational retail
The layout of the new public realm in the
A new business centre Canary Wharf Estate will create a vibrant
There is also regeneration planned further and attractive high street with cafés,
to the East, emphasizing how a wider area restaurants and daily markets.
FIGURE 4
How Crossrail will expand the 30 minute ‘commuter zone’ from Canary Wharf
Enfield
Canary Wharf station
Crossrail route
Current commuting zone, 30 minutes travel time
New commuting zone, 30 minutes travel time with Crossrail
Romford
West Ealing Liverpool Street
Paddington
Canary Wharf
!
Greenwich
Dartford
Clapham
Source: Knight Frank Residential Research
Please refer to the disclaimer at the end of this report 4
EASTERN PRIME 2015 RESIDENTIAL RESEARCH
Adding to the high street and luxury outlets Canary Wharf Group has already begun
FIGURE 6
already accessible at the Canary Wharf work on Canary Wharf Residential, a
A diverse community
shopping malls, a range of independent mixed-use scheme of over 3,000 new Age of buyers and tenants in Canary Wharf (2014)
retailers as well as more luxury brands homes, including over 600 affordable
are set to arrive in the coming years, units, a school and a medical centre.
Tenants Buyers Tenants Buyers
reinforcing the area’s position as a The scheme will expand the estate from
destination shopping location. 100 acres to 122 acres.
These will add to the attraction of an Berkeley Homes has permission to
area which also boasts a host of leisure build a residential tower on Marsh
activities, recently boosted by an Wall, which, once complete, will be
additional Everyman cinema complex at the UK’s tallest residential building –
the newly finished Crossrail station. surpassing the 181m St George Wharf
Tower in Vauxhall.
Key developments Meanwhile Eco World-Ballymore is
constructing twin residential towers at
There are 14 schemes of around 400
Wardian, just across the dock from
units or more already under construction
the Canary Wharf Estate.
or with full planning on the Canary Wharf
Estate and nearby on the Isle of Dogs, as The scope of expansion highlights the
shown on the map below. Some of these transformation taking place in the area,
GLOBAL BRIEFING
For the latest news, views and analysis
on the world of prime property, visit
KnightFrankblog.com/global-briefing
Outlook demographic, and cement its position
as a key prime London location. RESIDENTIAL RESEARCH
Knight Frank’s current forecasts show
This position is emphasised by the shifting Gráinne Gilmore
a steady and sustainable rate of growth Head of UK Residential Research
of London’s economic and cultural
across the London market. Residential +44 20 7861 5102
‘centres of gravity’ further eastwards as
prices are expected to climb by a grainne.gilmore@knightfrank.com
well as the eastwards expansion of the
cumulative 26% between 2015 and 2019. Oliver Knight
boundaries of prime London, reflecting the
Within this wider trend across London, increased popularity of East London living. Residential Research
+44 20 7861 5134
the maturing of Canary Wharf as a prime
oliver.knight@knightfrank.com
residential market is expected to continue,
FIGURE 8
underpinned by the delivery of new London leading RESIDENTIAL DEVELOPMENT
amenities and infrastructure upgrades Households in London and the UK’s Charlie Hart
such as Crossrail. expectations for future house prices Residential Development, City and East
+44 20 7718 5222
The planned residential developments, Prices
rising 90 charlie.hart@knightfrank.com
the amenities and ‘place-making’ UK
which will accompany them, should 80 LONDON Raul Cimesa
Residential Development, City and East
also serve to mark a sea-change in the 70
+44 20 7718 5227
area’s community. 60 raul.cimesa@knightfrank.com
No
Canary Wharf is currently primarily home change 50 Mark Wilkinson
to younger residents, with those under 40
London Residential Development
40 making up a much larger proportion +44 20 7861 5414
30 mark.wilkinson@knightfrank.com
of buyers and renters than in other prime
London neighbourhoods, according to 20 NB: A score of 50 equates to no change,
Nick Parr
above or below representing growth or
Knight Frank data. 10 decline respectively Residential Development, City and East
0 +44 20 7718 5224
The creation of new homes pivoting Prices nick.parr@knightfrank.com
falling Feb Feb Feb Feb Feb Feb Feb
around a new school, Crossrail and new 09 10 11 12 13 14 15
James Barton
office space for creative and technology Residential Development, City and East
Source: Knight Frank Residential Research /
firms will enhance its appeal to a wider Markit Economics +44 20 7718 5266
james.barton@knightfrank.com
Knight Frank Residential Research provides strategic advice, consultancy services and forecasting
to a wide range of clients worldwide including developers, investors, funding organisations,
corporate institutions and the public sector. All our clients recognise the need for expert independent
advice customised to their specific needs.
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FROM READING TO SHENFIELD 2015
OPPORTUNITY AREAS 2015
Disclaimer
© Knight Frank LLP 2015 – This report is
published for general information only and
CITY CENTRAL not to be relied upon in any way. Although
high standards have been used in the
EXAMINING LONDON’S NEW PRIME RESIDENTIAL
DISTRICTS FROM FARRINGDON TO WHITECHAPEL 2015
preparation of the information, analysis, views
HOW HAVE PRICES
PERFORMED? MEASURING SUPPLY OUTLOOK
HOUSING DELIVERY IMPROVING TRANSPORT ESTABLISHED PRIME GROWTH AS A FUTURE
MARKET FORECASTS RESIDENTIAL MARKET COMMERCIAL DISTRICT TRENDS
ACROSS LONDON INFRASTRUCTURE
The Wealth Report London Development Crossrail - 2015 London: City Central and projections presented in this report, no
2015 Hotspots 2015 - 2015 responsibility or liability whatsoever can be
accepted by Knight Frank LLP for any loss or
damage resultant from any use of, reliance on
RESIDENTIAL RESEARCH
RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH UK RESIDENTIAL
RESIDENTIAL RESEARCH
MARKET FORECAST
EASTERN LONDON
TENANT SURVEY:
LONDON FOCUS
HOUSING FORECAST OVERVIEW
The Conservative Party’s recent surprise election victory has led to a
spate of frothy house-price forecasts. The reality is likely to be more
or reference to the contents of this document.
OPPORTUNITY RESIDENTIAL
sober, argues Liam Bailey
Headlines May 2015
As a general report, this material does not
We last reviewed our UK house-price Speech, and with the benefit of a month’s
London has seen the biggest growth renters are the most likely to factor the In terms of location vs affordability, a
forecast in February. At that point, despite a post-election market activity.
REVIEW
in the private rented sector out of distance of a rented property from transport significantly higher proportion of Londoners,
Our immediate post-election slowing economy, we left our outlook for The risk from higher interest rates, and
any region in the UK over the last links into their decisions, with 58% of 18-24 especially younger tenants, are prepared
REGENERATION AND DEVELOPMENT forecast review has left our existing modest future growth unchanged. Since then therefore potential future affordability
decade. The expansion of rented year olds across Great Britain saying it was to live in smaller types of accommodation
five-year forecast largely unchanged, forward-looking economic indicators, such pressures, global economic risks and the
accommodation as a form of tenure a key factor in choosing a privately rented to ensure they are in a good location at an
IN EAST LONDON 2014 has been driven not only by the property. Overall, nearly two-thirds (63%) affordable price. As shown in figure 2, more our risk monitor however has as our own House Price Sentiment Index, uncertainty surrounding the outcome of the
necessarily represent the view of Knight Frank
undergone a substantial overhaul have begun to tick upwards.
THE GENERAL ELECTION AND
dynamics of affordability in the London of London tenants surveyed want to be than half (54%) of 18 to 24 year olds said promised UK referendum on EU membership
housing market, but also a preference within a 9-minute walk of a transport they would be happy to live in a studio A majority win for the Conservative Party at by 2017, collectively mean we don’t foresee
THE PRIME LONDON MARKET for more flexible living arrangements. link such as the bus stop, tube or train flat (with communal entertaining space) the General Election on 7 May, means fears an immediate upswing in UK price growth
Cumulative growth in UK prices will
station,Close
compared toClose
51% to
of tenants if doing so made the rent more affordable of weak government for the next five years above our existing forecast.
SPRING 2015
Affordability
We have drilledClose
down tointo the
Close to
results Close to to Close total a little over 18% in the five years
work/ transport shopssurveyed
friends and Britain.
across amenities to good in a central area. Some 39% of 25-34 year have, in the short-term at least, disappeared. Although our view on prime London prices
of our country-wide tenant survey,
university links the family (cafes, gym etc) schools to the end of 2019
olds and 42% of 35-44 year olds in London In light of this, and allied to improvements has turned positive, we are monitoring the
largest survey of this type ever conducted, would also be prepared to choose a studio
FIGURE 2 in economic and consumer sentiment, we volume of new housing supply, especially
to focus on the private rental trends in
LLP in relation to particular properties or
in a central location for an affordable rent. While political risk for the prime have revisited our forecast for UK house- new-build, which has the potential to weigh
London, to help inform and shape thinking Space vs Location
% of respondents who would consider living in a When asked if they would live in a “micro- London market has fallen, affordability price growth. on price growth.
on how the sector may develop. flat”, a small studio flat around 300 sq ft in
studio flat making central locations more affordable constraints and rising stock volumes However, with the exception of moving the
size, in a building with communal entertaining In terms of key risks, while we have
The first key finding is that Londoners, will limit price growth in the near term prediction for our Prime Central London
space which was in a “perfect” location, 45% downgraded the impact of political risk,
while just as concerned with the
GB LONDON (BY AGE)
Index from 0% to +1% in 2015 (there appears we remain mindful that the previous
affordability of rental accommodation as 18-24 of 18-24 year olds in London indicated that
they would consider such an option, while UK rents and prime central London sufficient momentum in central London to Conservative-led administration was arguably
those in the rest of Great Britain, place
32% of 25-34 year olds and 37% of 35-44 rents will rise 2.2% and 3.5% deliver modest positive growth this year), we the most activist in recent history regarding
much greater emphasis on proximity 25-34
projects. Reproduction of this report in whole
year olds also agreed. This is much higher respectively in 2015 have held firm on our view for other markets high-value property taxation. But interest rate
to transport links, as shown in figure
than the overall GB average of 27%. for the moment. We will be reviewing our and global economic uncertainty in our view
1 below. Nearly four-fifths (79%) of
35-44 figures again in June, following the Queen’s remain the key risks for house prices.
respondents based in London said When it comes to the maximum Londoners Interest rate rises and the risk of a
that being close to transport links was are prepared to pay in rent, the figure is renewed global economic slowdown
important to them when choosing 45+ slightly higher than the country-wide average. remain the biggest risks to the UK Knight Frank Residential Market Forecast May 2015
privately rented property. This fits with the The mean average of our survey responses housing market
increased dependence on public transport Average for those in the Capital shows that the 2014 2015 2016 2017 2018 2019 2015-2019
or in part is not allowed without prior written
in the Capital, and is also supported by maximum respondents were prepared to
60 Mainstream residential sales markets
ALL the uplift in capital values seen around pay was 42% of their gross monthly
25-34 (UK) 0% 10% 20% 30% 40% 50% 60% UK 7.2% 3.5% 2.5% 3.0% 4.0% 4.0% 18.2%
transport links in the sales market, for personal income, compared to 40%
50 LONDON ALL
example, Crossrail stations. Younger Source: Knight Frank Tenant Survey 2014 across Britain. London 17.8% 3.5% 4.0% 5.0% 5.5% 5.5% 25.8%
FIG2 South East 10.6% 5.0% 3.0% 3.5% 5.0% 5.0% 23.4%
40
South West 8.0% 4.0% 2.5% 3.0% 4.5% 4.0% 19.3%
FIGURE 1 Which of these are important to you when choosing a rental property? FIGURE 3 East Anglia 9.8% 4.5% 3.0% 3.5% 4.5% 5.0% 22.2%
30
% of respondents who identified each factor % of respondents prepared to pay East Midlands 6.0% 3.5% 2.0% 2.5% 4.0% 4.0% 17.0%
approval of Knight Frank LLP to the form
20
more than 40% of gross income West Midlands 6.8% 3.5% 2.0% 2.5% 4.0% 4.0% 17.0%
on rent: North East 4.4% 3.0% 2.0% 2.0% 3.0% 3.5% 14.2%
GB North West 3.8% 3.0% 1.5% 2.0% 3.5% 3.5% 14.2%
10
LONDON Yorkshire & Humber 1.5% 3.0% 2.0% 2.0% 3.5% 3.5% 14.8%
18-24 LIAM BAILEY Wales 1.4% 3.0% 2.0% 2.5% 4.0% 4.0% 16.5%
GB LONDON (BY AGE)
0
18 25 40% 50% 60%+ Don’t 18-24 Global Head of Research
-24 -34 know 25-34 Scotland 4.2% 3.5% 2.5% 3.0% 4.0% 4.0% 18.2%
LONDON
LONDON
25-34
and content within which it appears. Knight
35-44
“Don’t assume the election Prime residential sales markets
45-54 33% result means political risks Prime Central London 6.7% 1.0% 4.5% 5.0% 5.0% 6.0% 23.3%
55-64 85% 85% 53% 79% 55% 58% 51% 55% 33% 35-44
39% 34% 29% 12% have disappeared for the Prime Outer London 10.5% 3.0% 5.5% 5.0% 5.0% 5.0% 25.8%
7% GB prime London market.” Residential rental markets
65-74
45+ 25% Follow Liam at @LiamBaileyResi UK Mainstream 2.0% 2.2% 2.3% 2.3% 2.4% 2.4% 12.1%
75+
Prime Central London 4.0% 3.5% 3.3% 3.3% 3.0% 3.0% 17.1%
Affordability Close to Close to Close to Close to Close to Close For the latest news, views and analysis
PRICE PERFORMANCE THE RESURGENT transport work/place shops Average
amenities friends and to good Prime Outer London 0.5% 4.0% 3.3% 3.0% 2.8% 2.8% 16.8%
UK
POST-ELECTION ANALYSIS
Frank LLP is a limited liability partnership
on the world of prime property, visit
CANARY WHARF ROYAL DOCKS E20 MAP OF LONDON RENTAL MARKET
links of study family
(cafes, gym etc) schools
Global Briefing or @kfglobalbrief Source: Knight Frank Residential Research
0% 10% Source:
20% 30% Knight40% 50% Survey
Frank Tenant 60% 2014 0% 10% 20% 30% 40% 50% 60% Source: Knight Frank Tenant Survey 2014
FIG5
London: Eastern London Residential The Tenant Survey - UK Housing Market registered in England with registered number
UK
Opportunity Report - Review - Spring 2015 London Focus Forecast - May 2015
OC305934. Our registered office is 55 Baker
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