LONDON HOTSPOTS RESIDENTIAL RESEARCH - RESIDENTIAL DEVELOPMENT OPPORTUNITY AREAS 2015 - Knight Frank
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
RESIDENTIAL RESEARCH LONDON HOTSPOTS RESIDENTIAL DEVELOPMENT OPPORTUNITY AREAS 2015 HOUSING DELIVERY IMPROVING TRANSPORT MARKET FORECASTS ACROSS LONDON INFRASTRUCTURE
INTRODUCTION FIGURE 1
London’s future residential development ‘hotspots’
In 2011, Knight Frank published
its inaugural Development
Hotspots report. Our analysis
highlighted areas where
2015 hotspots
market fundamentals, from
regeneration to transport links,
suggested new-build property
prices had the propensity to
outperform the market.
9
Of the 13 areas we highlighted, most
have performed in line with, or even
beyond, our forecasts for achievable 2
new-build prices, as examined in detail
later in the report.
1
Following a comprehensive review, we
have returned to our hotspots forecast
to reflect our expectations of how 4 7
different locations are projected to
perform relative to the overall market in
the years to come. We expect some of
the original locations will now perform
in line with the market. We have also
added some new locations where we 6
expect to see outperformance.
3
It is worth noting that the prices we are
examining are quite distinct from our
wider market forecasts, which include all 5
types of housing. Instead we are looking
at very localised areas, comparing
current day values for a typical new-
build apartment or house to the prices
that may be reached by the end of 2018.
Source: Knight Frank Residential Research
After some years of strong performance,
price growth is showing signs of
easing. This fits with the cyclical nature alongside the views of our residential and labour costs have also spiralled. Yet
of the market, as well as specific development consultancy teams, are at the same time, the Mayor of London
factors currently at play. However the not traditional ‘prime’ areas and this is making more firm commitments to
disequilibrium between supply and will be reflected in capital values, but step up housing supply in the Capital,
demand shows little sign of being they are included as the factors potentially cutting red tape and freeing up
addressed, and this, coupled with mentioned suggest they will outperform more government and brownfield land.
London’s standing as a leading global the wider market.
We are not underestimating the risks
city will continue to underpin the market.
By the end of 2018, Crossrail will be to the property market posed by the
It is noticeable that we have widened open, dramatically cutting travel times upcoming election and wider economic
our scope for development hotspots across the capital, and making some of and geopolitical landscape. We publish
beyond prime central London, which our new hotspots even more attractive. our latest thinking on these in our
was the focus of the 2011 report. This We have examined the effect of Crossrail quarterly forecast and risk monitor, and
not only reflects the “ripple-out” effect on property movements in detail in our recognise that any dramatic changes
of prices from central London, which recent Crossrail Report. in the current market conditions could
we expect to continue in the short-term, impact pricing. However our analysis
but also highlights some of the large- The outlook for developers is not the shows that at the current time, the areas
scale placemaking which is already same as it was in 2011. Since then, identified in this report are poised to
underway or which is planned. Some of development land values in prime central deliver growth that outperforms the
our hotspots, identified by our analysis London have risen by 48%, and material wider market.
Published on a non-reliance basis; please see the important note on back cover.
213 HOTSPOTS 2015 RESIDENTIAL RESEARCH
11 12 13
8
10
14
ts 16
15 11 12
17
9 8
10
4 7 14
HOTSPOTS
Methodology:
Listed in order from West London to East London.
Hotspots not ranked in order of forecast growth.
In our analysis we have had regard 6
developers to enter the market and 1 Acton
for demographic and economic undertake significant schemes over 2 Old Oak Common
3 – but the critical elements
forecasts the next five years. 3 Earls Court
in our assessment have been the 4 Bayswater
factors which are likely to lead to
Working with our London Residential 5 Nine Elms
5
Development team we have 6 Victoria
the dynamics of a particular market
area changing over time. So we determined a final short-list of 7 Mayfair
‘hotspots’ across London where 8 King’s Cross
have looked closely at new and
we believe there is (a) scope for 9 Euston
proposed transport infrastructure,
development activity, (b) where the 10 City Fringe
the spread of gentrification, current
underlying market is undergoing 11 Dalston & Hackney
and potential pricing, and critically
12 Olympic Park & Stratford
we have concentrated on areas improvements due to infrastructure
13 Tottenham Hale
where there is a real opportunity, investment or sociodemographic shifts
14 Canary Wharf Estate
either through refurbishment or and (c) where there is real potential for
15 Greenwich
redevelopment, for residential price growth over the next few years. 16 Royal Docks
17 Woolwich
3Hotspots drivers
Development Prime London expansion
HOTSPOTS 2015
Regeneration Price differential
Transport Place-making
* 2011 hotspots
1. Acton 3. Earls Court* 5. Nine Elms*
Current value: £650 psf Current value: £1,500 - £1,600 psf Current value: £1,100 - £1,400 psf
2018 forecast: £950 psf 2018 forecast: £2,000+ psf 2018 forecast: £1,800 psf
Running from Chelsea Bridge to Lambeth
Acton is set to be one of the key Planning permission for the Earls Court Bridge via East Battersea, Vauxhall
beneficiary areas of Crossrail. As well project was granted in 2013. Under the and Albert Embankment, the scale of
as a dramatic reduction in travel times proposals, the large-scale regeneration of regeneration taking place Nine Elms is vast.
which will open this area up to those the area will create 7,500 homes spread We originally identified the area as a Hotspot
working in the City and further east, a across four villages and green spaces. back in 2011. While price growth has been
new station and improvements to the Improvements to the public realm, robust between then and now, we believe
public realm will enhance the area. including a new high street, are likely to there is potential for further outperformance
further increase the desirability of the area. as new schemes come to market and
There are over 1,000 private units
improvements to the public realm are
with planning permission or already Buyers will also benefit from being
delivered. Our analysis of development
under construction in Acton, but the within walking distance of three existing
pipelines shows that over the next ten years
potential supply of homes which underground stations and one overground
over 15,000 homes will be built, alongside
have yet to be granted planning is station. New-build prices have risen by new schools and parks. A £1 billion transport
much larger – suggesting a critical 20% since 2011. We now expect that improvement package includes two new
mass of delivery which could uplift prices will reach £2,000+ psf in 2018. Northern Line stations, at Nine Elms and
the whole area. The long-term nature of the regeneration Battersea, creating direct links to the West
taking place in this area – some End, City and North London.
developments will not be completed until
ISSUES: Pricing could be determined
2032 – means that growth is likely to
by the phasing of delivery of
continue in the medium-term. completed units in this large-scale
regeneration area
2. Old Oak Common
Current value: £600 - £650 psf 6. Victoria*
2018 forecast: £950 - £1,000 psf Current value: £1,750 psf
2018 forecast: £2,500 - £3,250 psf
4. Bayswater*
Current value: £1,750 - £2,500 psf
Plans to create a “superhub” for The relative ‘discount’ on offer for new-
2018 forecast: £2,750 psf
both Crossrail and HS2 have the build housing in this area compared
potential to transform this 2,300 to neighbouring Belgravia will become
acre industrial area in west London increasingly attractive. Victoria has already
This area on the northern side of Hyde
into one of the Capital’s biggest seen regeneration and improvement over
Park has lagged behind neighbouring
regeneration projects since the the last decade, with new retail and office
areas of Notting Hill, Maida Vale and
Olympics. The regeneration includes space opening in Cardinal Place. There
the Hyde Park Estate in terms of capital
plans to build two new overground are plans for further enhancements to the
values over the past decade. However
rail stations which, taken as a whole, realm and amenity offer alongside providing
buyer demand in and around Bayswater is
will be roughly the size of Waterloo new homes, shops, offices and improved
already rising. transport facilities. The Victoria Station
and expected to handle 250,000
passengers daily. Development plans Plans to redevelop a large section of redevelopment will give the area a well-
are being drawn up for retail property Queensway and upgrade the retail and needed facelift, and might result in more
and hotels, as well as up to 24,000 amenities on offer will only enhance the interest from buyers keen to take
new homes. appeal of this area which will also be well advantage of its proximity both to the
served by Crossrail when it opens in 2018. West End and West London.
ISSUES: Depends on approval
of HS2 & Crossrail ‘spur’
4HOTSPOTS 2015 RESIDENTIAL RESEARCH
MAKING NEW CONNECTIONS
Changes in transport infrastructure 1.26 billion passenger journeys made. identifies the proposed new stations
stimulate and open up parts of a city, This figure represents 200 million more and terminals.
attract investment, create additional journeys than in 2009-10. With the Approval has already been granted to
demand for housing and can bring population of London forecast to pass 10
extend the Northern Line to Battersea,
new energy to markets in and around million by the 2030s, up from around 8.5
with new stations being built at Nine
transport hubs. million now, demand for public transport
Elms and Battersea.
Transport links are a key factor in will rise exponentially.
Proposals have been submitted for a
the property market. We commonly As a result, the arrival of Crossrail, a high-
new high speed rail link from London
witness price outperformance speed line which will increase London’s
to the midlands, known as the High
and see new residential hotspots rail capacity by 10% is highly anticipated.
emerge as access to an area Crossrail will interconnect with 41 other Speed 2 (HS2) project. Under the
improves or travel times around rail interchanges, including London proposals, terminals will be created in
the city are reduced. Underground and Overground services, Old Oak Common and Euston, two of
National Rail, Heathrow Express and the our new Hotspots.
Knight Frank’s recent survey of those
renting property in London – the DLR, giving people faster, easier journeys The preferred route for ‘Crossrail 2’ –
largest of its kind to date – showed across the city. the high speed train which will, if it is
that nearly 80% of Londoners said Our analysis shows that since the project approved, run from South West London
proximity to transport links was a key was granted Royal Assent in July 2008, to the North East of the city, has also
factor when deciding where to live. property prices in the areas surrounding been announced. If approved, it is
But existing transport infrastructure the stations have outperformed the estimated that Crossrail 2 would be
in London is already straining to keep wider market. completed by 2030. There is likely to
up with rising passenger numbers. We expect that other large transport be burgeoning interest in development
The underground ran more services infrastructure projects, if approved, will opportunities close to the stations
and carried more customers than have the potential to result in similar along Crossrail 2, just as there has
ever before in 2013-14, with a record price outperformance. The map below been along the first Crossrail route.
FIGURE 2
Future transport infrastructure
!
! Tottenham Hale Redbridge
Crossrail
!
Crossrail 2 (proposed)
HS2 (proposed)
Waltham Forest
Northern Line Extension !
!
Hackney !
Isli
Brent !
ng
Camden !
to
! Dalston Junction ! Barking
n
! Stratford
Old Oak
Euston ! Tower
Common ! Hamlets Newham
! !
! !
! Paddington ! ! Canary
Acton Mainline Wharf !
!
Victoria !
!
Southwark Woolwich
! Nine Elms
Battersea
Greenwich
!
Source: Knight Frank Residential Research
57. Mayfair 8. Euston
Current value: £5,500 psf Current value: £1,000 psf
2018 forecast: £7,000 psf 2018 forecast: £1,500 psf
38%
Mayfair has consolidated its reputation As part of the Euston Area Plan, a
as a destination for luxury over the last collaborative effort between Camden
decade, boasting the very best London Council, the Greater London Authority
has to offer in terms of retail, hotels and Transport for London, the area will be
and amenities. rejuvenated with new homes, businesses,
Projected growth in Significant changes in the public
schools and local amenities, centred on
number of households in the redevelopment of the existing rail
realm, especially around Mount Street,
station. Euston is also likely to benefit
inner London 2012-2037 have enhanced the appeal of the area from an overspill from King’s Cross as
(DCLG) among buyers. Another upgrade is buyer demand filters out. We expect the
on the way with the construction of development trends at King’s Cross will be
new ticket halls for Crossrail, which
10
replicated in Euston. Prices average around
will open in 2018. The residential £1,000 per square foot and we forecast this
developments under construction will rise to £1,500 per square foot by 2018.
or in the planning pipeline in Mayfair ISSUES: Pricing could be
are now starting to compete in determined by timing of delivery
million
terms of luxury, underlining the of schemes
“super-prime” status of this postcode.
These ambitious schemes provide the
opportunity for further uplifts in prices.
London’s forecast ISSUES: The future “super-
9. King’s Cross*
Current value: £1,400 - £1,500 psf
prime” market may be
population, 2030 2018 forecast: £2,000 psf
influenced by Government
policy, especially in respect of
property taxation. Prices in King’s Cross have already
achieved the upper-end of our earlier
forecast in 2011, but the high-quality nature
of the developments which are planned
10. City Fringe* Farringdon
In our 2011 Hotspots Current value: £1,100 - £1,300 psf
Report we identified the 2018 forecast: £1,600 psf
City & City Fringe as a
hotspot. In this report we An estimated three million passengers are
examine some areas on expected to use Farringdon’s Crossrail
a more localised basis, station every month when it opens in 2018
identifying pricing trends making it one of the biggest transport
for each locality: interchanges in the capital. The area has
already seen a noticeable increase in buyer
activity in recent years due to its proximity
to the City and also as a result of widespread
regeneration and redevelopment. A range
of public realm improvements are planned
in the vicinity of the station and our analysis
shows that there are over 1,200 residential
units under construction or with full
planning permission in the area. Farringdon
was included in our original 2011 hotspots
report – and new-build prices in this area
have already reached our 2016 forecast,
with more growth anticipated.
6HOTSPOTS 2015 RESIDENTIAL RESEARCH
means we see the potential for further We expect this ongoing regeneration will
growth. There are 265 units already under have a positive impact on pricing in the
construction and a further 1,700 units with coming years. The popularity of these
planning approved which will be delivered areas with families has underpinned prices,
in coming years. Technology giant Google’s and we see this demand continuing.
plans to open a new head office in King’s ISSUES: Would benefit from more
Cross in 2016 will further underpin the transport infrastructure ahead of
status of this area. As one of the main Crossrail 2 FIGURE 3
transport hubs for London, with direct links Projected growth in households in
to many of the UK’s key cities as well as London, 2015
Paris, and six underground lines, it boasts 12. Olympic Park & Stratford
enviable connectivity within the Capital.
Current value: £700 - £800 psf
2018 forecast: £1,000 - £1,200 psf
Perhaps the main legacy of the 2012
11. Dalston & Hackney
Current value: £700 psf
London Olympics was the regeneration
of the Olympic Park. Thousands of new
homes are currently under construction,
recently completed or in the planning
23,428Inner London
2018 forecast: £1,000 psf
pipeline, transforming a previously
barren part of the city into five new
Situated two and a half miles north of the neighbourhoods. The area is already
32,154
City of London, Dalston benefitted from well served by transport with London
the arrival of the East London Overground Underground connections, mainline
line in 2010. The overground rail link rail services and the DLR at Stratford.
connects the area with Canary Wharf, The arrival of Crossrail in 2018 will add
via Canada Water, and the West End via to these, further expanding the pool of Outer London
Highbury & Islington. The line’s arrival potential buyers.
came with a new Dalston Junction station
and development in the area. Currently
there are just over 1,000 homes being
Source: DCLG
built and more in the planning pipeline.
Shoreditch Whitechapel FIGURE 4
Current value: £1,200 - £1,300 psf Current value: £900 - £1,000 psf Rising land costs
2018 forecast: £1,500 - £1,700 psf 2018 forecast: £1,250 - £1,500 psf Prime central London residential
development land values
(indexed, 100 = September 2011)
We have isolated Shoreditch from the The area is set to become a major
Eastern Fringe as we believe that this transport hub, connecting Crossrail to 150
localised area has the opportunity the London Overground orbital route
for further growth. Shoreditch has around London. Crossrail will also mean 140
undergone a marked transformation that Whitechapel has a direct link to
Heathrow. In terms of development, the 130
over the last two decades and the
area now attracts young professionals Whitechapel Vision Masterplan will guide
120
from all over the world. This is likely new development in the area over the
to continue with growing commercial next 15 years. Focusing on six key
110
interest in the area expected to result areas the plan will deliver over 3,500
in a significant expansion of the new homes by 2025, generate 5,000
100
professional workforce. The forecast jobs, and create seven new public
for household growth in Hackney squares and open spaces. Our analysis 90
shows there are 550 units currently
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Ma-13
Jun-13
Sep-13
Dec-13
Maar-14
Jun-14
Sep-14
Dec-14
between 2011 and 2021 is 13% –
or an extra 13,000 households. under construction or with planning
permission which will be delivered in
the coming years. Source: Knight Frank Residential Research
713. Tottenham Hale over 13,000 new homes currently under
Current value: £450 psf construction or with planning approved.
2018 forecast: £750 psf Transport options in the area include the
Jubilee Line with links to Canary Wharf and
the West End, the Emirates Airline cable car
With over 30 hectares of development and link, the DLR and Thames Clipper services
LONDON investment opportunities, Tottenham Hale on the river.
DEVELOPMENT has notable potential. The area forms part
of the Upper Lea Valley regeneration plans
ISSUES: Amenities, including shops
and community facilities, need to be
Boroughs set to deliver the – a joint initiative between the GLA, TfL and delivered at start of development
most housing four London boroughs to deliver thousands
Ranked by residential units in planning of new homes and jobs. Already transport
or under construction
infrastructure is being improved with a
£110 million investment in a new tube, rail 16. Royal Docks
and bus station, as well as road network Current value: £600 - £700 psf
1. NEWHAM 2018 forecast: £900 - £1,000 psf
improvements and public realm works due
2. TOWER HAMLETS to complete in 2017. Tottenham Hale is also
on the preferred route for Crossrail 2, which
Plans are in place, backed by the Mayor
3. GREENWICH could serve to increase buyer demand close
of London and the Mayor of Newham, to
to the station if final permission is granted.
turn the Royal Docks into the Capital’s next
4. BARNET ISSUES: Crossrail 2 not “business district”. The regeneration aims
yet confirmed
5. WANDSWORTH to create a centre for global trade, with
thousands of jobs and new homes.
Already over 6,000 new homes are being
Source: Knight Frank Residential Research built or have had planning permission
14. Canary Wharf Estate granted. Population projections by the GLA
Current value: £1,200 psf suggest that in the Royal Docks area there
2018 forecast: £1,750 psf will be a 103% increase in population by
2028. Work is progressing on Crossrail
which, when complete, will stop at Custom
Canary Wharf is already an established House station in the Royal Docks making
business and residential district. Despite the area more accessible and reducing
the area’s relative maturity in terms of journey times to and from Heathrow,
regeneration, there is scope for further Canary Wharf and the City of London.
price growth in the new-build sector, led by ISSUES: Pricing could be determined
improvements to transport infrastructure by timing of delivery of schemes
as well as new residential development. and amenities
Transport will be boosted by the arrival of
Crossrail which will be the first direct public
transport link between the West End, the 17. Woolwich
City and Canary Wharf – London’s three Current value: £650 psf
key areas of business and wealth creation. 2018 forecast: £950 psf
New development will help satisfy demand
as it spreads eastward from prime
central London. When the Woolwich Crossrail station opens
in 2018, about a dozen trains an hour will link
the area to Canary Wharf and the West End,
as well as Heathrow. This promise of this
increased connectivity is already boosting
demand from buyers. Woolwich Arsenal
is set to be key to the more established
15. Greenwich business and residential hub as it emerges in
Current value: £600 psf
East London – benefitting from the availability
2018 forecast: £950 psf
of land in order to deliver much needed
homes for London. There are currently nearly
In time, Greenwich Peninsula is set to 5,000 units under construction or with full
become a new district for London with planning permission in Woolwich.
thousands of homes, offices, schools,
shops and community facilities. Some of
this re-generation is already underway, with
8HOTSPOTS 2015 RESIDENTIAL RESEARCH
BUILDING UP AND EAST
is attracting volume. Part of this is the The price differential between Central
sheer scale of available land in the eastern London and East London represents
boroughs. Moving further East also offers a relative level of affordability. With a
the opportunity to maximise on the full- focus on volume and the creation of
Jo Cosham stretch of the Thames and its riverside new lifestyle-based communities, this
Residential locations. The Knight Dragon site on type of development appeals to the
Research Greenwich Peninsula alone has 1.6 miles wider mainstream market.
of waterfront.
Across London, the number of
With the development of Wood The desire to capitalise on volume, as
private unit starts in 2014 was 15%
Wharf on the Canary Wharf Estate, well as waterside living, is also illustrated
higher than the previous record year
Greenwich Peninsula and the Royal through the increase in taller buildings
in 2013, with 24,693 new homes
Docks, the story in the East is one in the pipeline. Currently, in all London
boroughs, there are 192 buildings of 20 under construction. Compare this
of single sites with greater unit to 7,247 unit starts in the post-
numbers, says Jo Cosham. or more storeys, either in application,
with planning permission, or under Lehman low of 2009, and 17,241 in
Isolating the borough of Greenwich, construction. In East London, there are a the 2007 peak. The number of units
for example, in 2012 there were 24 total of 55 tall towers in the pipeline, with under construction in 2014 was
schemes with 100 or more units; in another 11 awaiting approval, representing 43% higher than in 2007. Out of all
2013, there were 38 schemes. At the 34% of the London total. These towers the construction activity in 2014,
end of 2014, there were 70. At present, range in height from 20 storeys to 75 the East London boroughs saw the
Greenwich Peninsula has planning storeys. In general, tall towers tend to be largest number of new starts at 9,849,
approved for over 13,000 units (nearly built at the end of schemes, so delivery of representing just under 40% of the
9,000 of which are private). The East these will be phased. total across London as a whole.
FIGURE 5
Where will housing in London be delivered in the future?
London borough’s housing supply: % of total delivery (as at Q1 2015) of units with full planning permission or under construction
ENFIELD
BARNET
10% - 11% HARROW
HARINGEY WALTHAM
HILLINGDON FOREST REDBRIDGE
HAVERING
ISLI
BRENT HACKNEY
NGT
CAMDEN BARKING &
DAGENHAM
ON
TOWER NEWHAM
EALING CW CL HAMLETS
5% - 6%
KC
SOU
HF GREENWICH
THW
HOUNSLOW
LAMB
ARK
BEXLEY
RICHMOND-UPON- WANDSWORTH
ETH
LEWISHAM
THAMES
KINGSTON MERTON
0% - 1% -UPON-
THAMES
BROMLEY
SUTTON CROYDON
HF Hammersmith & Fulham
KC Kensington & Chelsea
CW City of Westminster
CL City of London
Source: Knight Frank Residential Research / Molior London
9HOTSPOTS 2011
FIGURE 6
2011 hotspots
2011 hotspots
2011 and 2015 hotspots 24
21
20 23
22
18
19
HOTSPOTS (2011)
18 Southbank
19 Hammersmith
20 Paddington
21 Marylebone / Fitzrovia
22 White City Westfield
23 Midtown
24 City Road Corridor
Some of the hotspots included in our 2011 Here, we revisit the 2011 Hotspots not an increase in the number of buyers and
report, have shown strong growth over yet mentioned in this report, to examine investors who are no longer as loyal as
the last four years and are still expected the main drivers of growth in these they once were to the traditional core
to outperform the wider market between development markets. prime areas of London. Situated between
now and 2018. These include Earls Court, the major hubs of the West End and the
New-build property prices in Southbank/
Nine Elms, City Fringe, King’s Cross, City, many view Midtown, which includes
Blackfriars (18) have risen by 40%
Bayswater and Victoria. These areas have the heart of London’s theatre land as well
since 2011 and are on track to reach
already been examined in this report. as the London School of Economics and
our forecast of 44% growth earlier than
anticipated, taking average new-build Kings College, as offering good value, in
Most of the remaining hotspots have terms of price per square foot, compared
prices to around £1,800 psf. We expect
already achieved the price lifts we to neighbouring areas.
any future price growth will be in line
forecast in 2011, in some cases over a
with our wider forecast for prime central
shorter time-frame than we anticipated. As a result of this rising demand, price
London (figure 8).
growth over the last few years has
We expect that these areas will continue
The re-generation of Blackfriars station been robust and the very best new
to move in line with our forecasts from
has played its part in the growth in developments are able to achieve prices
2011 (see figure 7), and thereafter perform
pricing, as has rising demand from above the original forecasts for £2,250
in line with the general market trend, a
buyers for property close to the river. psf we made in 2011.
reflection of how some of these markets
have matured and stabilised over the last Located on the opposite bank of the Marylebone/Fitzrovia (21) has been one
four years. river, Midtown (23) has benefitted from of the stand-out performers, in terms of
10HOTSPOTS 2015 RESIDENTIAL RESEARCH
price growth, from our previous report. media village and an office complex for
Since 2011, prices for new-build blue-chip businesses.
residential schemes have risen by 83%,
with the very best developments achieving
New-build prices are on track to reach
our original 2011 forecast before rising
“Whilst the trend
upwards of £2,750 psf and surpassing our
original forecast. We believe future price
in line with central London forecasts for London as a
growth will move in line with our wider
until 2018. The shopping centre has
been a big draw for the area and further
whole remains
London forecasts.
expansion nearby is likely to appeal positive, the more
The area will be within walking distance to buyers.
astute will analyse
of both Bond Street and Tottenham Court
Road Crossrail stations, when the service
New-build residential property prices in opportunities on a
Hammersmith (19) have grown by 43%
opens in 2018, and this will help sustain since we released our original Hotspots micro geographical
buyer demand. report four years ago. We expect them to level and assess
hit an average of £1,250 psf by 2016. A
Previously we twinned Paddington (20)
planned £150m regeneration of the town schemes against
with Bayswater as a hotspot, but the
markets have since diverged in such a
centre including new retail, restaurant and local characteristics.
café space, a new town square, cinema
way that we have separated them. The
and new homes, will enhance the appeal Margin will be driven
fundamentals of the Bayswater market
have already been examined in this report.
of the area. The relative discount, in terms by detail, not generic
of price per square foot, compared to
The opening of Crossrail at Paddington
more central prime locations is also likely
overviews and for
from 2018 is already giving the area
surrounding the station a boost with travel
to underpin demand. those who continue to
times across London set to be drastically Over in the east of the city, price growth challenge and explore
reduced. Prices of new-build property in City Road Corridor (24) has already
exceeded our original forecast, with
opportunity, we
have stepped up from averaging £1,300
psf in 2011 to £1,600 today, and this could £1,300 psf now achievable for the believe the London
reach £1,700 by the end of next year, best prime new-build schemes. The
emergence of Tech City as a burgeoning
market has some
before moving up another 10% in line with
our wider forecasts by the end of 2018. cluster of hi-tech and digital companies exciting years ahead.”
based around Old Street roundabout Ian Marris, Joint Head of
White City/Westfield (22) was has been a game-changer in terms of Residential Development
designated an “opportunity area” by driving regeneration on City Road.
the Mayor of London in 2011. There are The area’s proximity to the City,
plans in place for a retail and residential Shoreditch and Farringdon (all less than
mixed-use development with more than a 10 minute walk) has been a further
5,000 new homes, a university campus, driver of buyer demand.
FIGURE 7
2011 Hotspots
How new-build prices have performed
City Road
Corridor
Hammersmith
Marylebone/
Fitzrovia
Midtown
Paddington*
South Bank/ 2011 - PRICE RANGE
Blackfriars
2015 - CURRENT PRICE RANGE
White City/ 2016 - FORECAST PRICE RANGE
Westfield
£0 £700 £900 £1,100 £1,300 £1,500 £1,700 £1,900 £2,100 £2,300 £2,500 £2,700 £2,900 £3,100
Source: Knight Frank Residential Research
*prices revised due to separation of areas
11GLOBAL BRIEFING
For the latest news, views and analysis
on the world of prime property, visit
KnightFrankblog.com/global-briefing
FIGURE 8
Knight Frank Residential Market Forecast Q1 2015 RESIDENTIAL RESEARCH
Gráinne Gilmore
Residential sales markets Head of UK Residential Research
+44 20 7861 5102
2014 2015 2016 2017 2018 2019 2015-2019
grainne.gilmore@knightfrank.com
London 17.8% 3.5% 4.0% 5.0% 5.5% 5.5% 25.8%
Oliver Knight
Prime Central London 6.7% 0.0% 4.5% 5.0% 5.0% 6.0% 22.1% Residential Research
Prime Outer London 10.5% 3.0% 5.5% 5.0% 5.0% 5.0% 25.8% +44 207861 5134
oliver.knight@knightfrank.com
Source: Knight Frank Residential Research
RESIDENTIAL DEVELOPMENT
Justin Gaze
Joint Head of Residential Development
+44 20 7861 5407
justin.gaze@knightfrank.com
Ian Marris
Joint Head of Residential Development
+44 20 7861 5404
ian.marris@knightfrank.com
Rupert Dawes
Head of New Home Sales
+44 20 7861 5445
rupert.dawes@knightfrank.com
James Mannix
Head of Residential Capital Markets
+44 20 7861 5412
james.mannix@knightfrank.com
Charlie Hart
Head of City and East
+44 20 7718 5222
charlie.hart@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.
You cannot rely on the whole or any part/s of
this document (“Information”) in any way. You
RECENT MARKET-LEADING RESEARCH PUBLICATIONS must make your own independent enquiries,
inspections and searches and take your own
RESIDENTIAL RESEARCH
independent professional advice.
PRIME CENTRAL
RESIDENTIAL RESEARCH
RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH
RESIDENTIAL DEVELOPMENT
LAND INDEX LONDON SALES INDEX
GREENFIELD LAND PRICES RISE PRICE GROWTH EDGES LOWER
IN PRIME CENTRAL LONDON AS
The Information is not definitive and is not
CROSSRAIL UK TENANT
2.3% IN 2014
ELECTION NEARS
intended to give advice about properties,
The growth in land values moderated across England and Wales in the
final quarter of 2014, reflecting the movement in the wider housing market. Activity in prime central London remains subdued though there are some
ANALYSING PROPERTY MARKET PERFORMANCE However residential development land values in prime central London exceptions to the rule, says Tom Bill
SURVEY 2014
continued their strong growth, ending the year up 24%. Gráinne Gilmore
FROM READING TO SHENFIELD 2015 examines the latest market trends.
Annual house price growth in prime central and St John’s Wood.
MARCH 2015 London declined marginally to 3.3% in March as
Key facts Q4 2014 Greenfield residential development land turn, has started to weigh on pricing as
markets, policies, taxes, currencies or any other
Islington has benefitted from the fact property
values remained broadly static in the final while there is still sturdy competition for the UK general election drew nearer.
Annual price growth slows to 3.3% as taxes such as stamp duty have affected
PRIVATE RENTED SECTOR RESEARCH Average greenfield residential
development land prices up 2.3% in
quarter of 2014, rising by just 0.1%.
This took the annual rate of growth to
good sites, it is less fierce.
Another factor weighing on greenfield land
May’s election gets closer It was the lowest rate in more than five years
and despite a 0.1% rise in March, prices have
lower-value properties to a lesser degree than
2.3%, well under the 7.2% rate of growth higher-value areas and annual growth of 7% is
2014, after a 5.3% rise in 2013 prices is the increasing cost of labour and remained broadly flat over the last six months
seen in house prices. However it is likely Monthly growth of 0.1% as prices the second-highest in prime central London after
materials. The industry is still gearing up as uncertainty surrounding the outcome of the
land price growth will remain subdued after the recession, and recruitment of remain broadly flat over last six months Hyde Park.
Prices rose by 0.1% in Q4, the most election on 7 May intensifies.
over the coming year as rising costs new tradesmen is proving problematic in
modest growth since Q4 2012 Sales in Knightsbridge have been strong
Activity is stronger in lower price brackets and
matters. The Information may not be accurate
press on margins. many areas. It is no coincidence that the Activity stronger in lower price brackets due to a series of high-quality new-build and
cost of building in the UK has risen up the where there is a more pressing need to act,
Activity in the land market has certainly but there is pent-up demand in other
Land values in prime central London international rankings. It is now the 8th though some parts of the market are treading newly-refurbished properties that are ready
picked up over the last 12-18 months parts of the market
climbed by 6.4% in Q4 2014, taking most expensive country in which to build, water ahead of the vote. for immediate occupation. Buyers in prime
– this is reflected in 17% rise in private
the annual rise to 24% from 43 countries surveyed, according central London are increasingly focussed on
units under construction across the UK in One of the most unpredictable elections in
to Arcadis, the design consultancy firm – Stronger activity in Knightsbridge due the quality of the property’s finish and facilities
December 2014 compared to December decades has caused some buyers and sellers to
although the relative strength of sterling to to high-quality new properties rather than its postcode, though in the case of
Land prices in prime central London 2013. There has been an increase in activity postpone decisions until there is clarity around
the Euro this year has also played a part in
in most regions, as shown in figure 2. The the outcome. Knightsbridge both have combined to produce a
and all of the subject matter may change without
up 48% since September 2011 this calculation.
demand for new housing is also robust Annual growth of 7% Islington as area strong sales market at the start of 2015.
across most parts of the country, with the affected less by recent tax changes As electioneering got underway in March, the
take-up of the Government’s Help to Buy polls still indicate a hung parliament is the most Meanwhile, St John’s Wood is benefitting as
FIGURE 2
Equity Loan scheme rising to 38,052 in the Change in number of residential likely outcome. more buyers seek better value and more space
20 months to November 2014, with some units on site (under construction) However, strong activity in some markets than markets further south in central London.
83% of these being first-time buyers. December 2014 v December 2013
suggests there is a degree of pent-up demand While the overall picture is subdued, what is
The supply of land has also risen, with the that could be released after May. happening in these three markets highlights
notice. So far as applicable laws allow, neither we
activities of land promoters helping boost
The top three markets by sales volumes at the some key trends that could contribute towards
the pipeline of oven-ready sites. This, in
start of 2015 have been Knightsbridge, Islington driving the market after the general election.
FIGURE 1 FIGURE 1 FIGURE 2
Development land values Price growth is stronger in Slowing growth
Quarterly changes, Sep 2012 - Dec 2014
lower price bands (Rebased to 100)
Annual Growth
nor any of our members, consultants, ‘partners’
8% £1m to £2m
PCL 108 £2m to £5m
ENGLAND AND WALES £5m to £10m
3.3%
4.0%
7%
7.5%
7.5%
7.8%
8.1%
7.9%
7.7%
7.4%
6.5%
6.1%
5.1%
4.6%
107 over £10m
GRÁINNE GILMORE Prime central London average
TOM BILL
Head of UK Residential Research 6% 106
5% Head of London Residential Research 105
“Price growth for residential 104
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
4%
development sites is likely “Strong activity in some 103
to be more subdued over 3%
markets suggests there is a 102 Monthly Growth
or employees will have any responsibility or
the coming year as rising 2%
degree of pent-up demand 101 0.8%
construction costs press 1% that could be released after 0.6%
100
on margins.” 0% May”
0.4%
0.2%
99
Follow Gráinne at @ggilmorekf Follow Tom at @TomBill_KF 0.0%
-1% 98 -0.2%
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
For the latest news, views and analysis
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
For the latest news, views and analysis
on the world of prime property, visit on the world of prime property, visit
HOW HAVE PRICES WHERE ARE THE IDEAL Global Briefing or @kfglobalbrief Source: Knight Frank Residential Research Source: Knight Frank Residential Research
MEASURING SUPPLY OUTLOOK Global Briefing or @kfglobalbrief Source: Knight Frank Residential Research Source: Knight Frank Residential Research, Glenigan
liability in connection with or arising out of the
PERFORMED? WHAT TENANTS WANT AFFORDABILITY VS LOCATION
RENTAL PROPERTIES?
Crossrail 2015 UK Tenant Survey Residential Development Prime London Sales accuracy or completeness or otherwise of
2014 Land Index - Q4 2014 Index Mar 2015
the Information or the reasonableness of any
assumption we have made or any information
included in the document or for any loss or
RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH
UK RESIDENTIAL
FORECAST & damage resulting from any use of or reference
RISK MONITOR
PRE-ELECTION EDITION to the Information. As a general review, prepared
FEBRUARY 2015
using information from various sources which
may not have been verified, this document does
LONDON not necessarily represent the view of Knight
RESIDENTIAL BRIDGING Frank LLP in any respect.
LEADING
POLITICIANS SHARE
THEIR KEY HOUSING
REVIEW
LONG-TERM REWARDS,
THE GAP
PLEDGES WITH LONDON RESIDENTIAL
SHORT-TERM UNCERTAINTY DEVELOPMENT 2014
© Knight Frank LLP 2015
KNIGHT FRANK
WINTER 2015
All rights reserved. Copying, modification or reproduction of the
HOUSING POLICY MANSION TAX AND AREAS OF LONDON’S GROWING MEASURING THE HOUSING DELIVERY
UK AND REGIONAL COMPREHENSIVE DATA IMPACT OF TAX CHANGES POPULATION HOUSING SUPPLY GAP BY BOROUGH
ROUND-UP PRICE FORECASTS AND COMMENTARY THE LETTINGS MARKET OUTPERFORMANCE
Information is not permitted without the prior written approval
The Wealth Report UK Housing Market London Residential London Development
of Knight Frank LLP. Knight Frank LLP is a limited liability
2015 Forecast Feb 2015 Review Winter 2015 Report 2014
partnership registered in England with registered number
OC305934. Our registered office is 55 Baker Street, London
Knight Frank Research Reports are available at KnightFrank.com/Research W1U 8AN, where you may look at a list of members’ names.You can also read
