London set for £38bn worth of prime residential development
The value of proposed and under-construction high-end residential development in the capital has reached £38 billion, according to research
Around 15,000 units are currently earmarked for development in London over the next ten years according to EC Harris, representing a 70 per cent increase on last year’s pipeline.
The total floor area is equivalent to the size of the Olympic Park, claimed the consultancy.
Around 25 per cent of the units are planned in Chelsea and Fulham, with 17 per cent on the South bank and 12 per cent in the City and its fringe.
The pipeline’s largest schemes include the redevelopment of Earls Court and Battersea Power Station.
Mark Farmer, head of residential at EC Harris said: ‘The size of the pipeline is a reflection of a massive vote of confidence in London and in UK plc and will have only been enhanced by this summer’s Olympics showcase.
‘London prime residential continues to act as a magnet for global investment, and offers clear opportunities for properly organised and funded developers and investors to generate healthy returns. However, this positivity is tempered by some notes of caution.
‘There are significant risks to the realisation of the pipeline including the sustainability of the unprecedented levels of international investor and sales demand fuelling the lower end of the prime market, a lack of development funding and a scalability of specialist development skills needed to deliver these opportunities.’
The report cited a series of issues for developers to consider when progressing prime London residential schemes:
- Eurozone crisis: The financial volatility across Europe means that London is still being viewed as a safe haven for investment, but any devaluing of the euro could make London more expensive than in recent years.
- Stamp duty charges: Recent UK government changes to the prime residential property threshold mean that there is a new price point of £2million for prime London property which developers need to adapt their schemes towards.
- Sales & marketing strategy: As the pipeline shows, this is a crowded market, so the best product is important, even in prime residential – location, specification, interior space standards, amenities and even added value concierge type services are even more important.
- Planning system: The UK is undergoing changes to its planning regime which could impact the viability of London prime residential and the speed of the planning process. For example, providing planning exemption for office to residential conversion projects could speed up the ability to convert period properties in the likes of Belgravia, Mayfair or Chelsea from their current office use back to residential.
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