Areas to watch in London

As the London market takes off, David Spittles offers expert insider advice on where to start looking for that new home
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The long winter and harsh economic climate have left us all a little dazed. But with spring arriving, where should an investor's fancy turn?

With no tempting investment opportunities offered by the banks or stock market - and little point in storing money in an ISA with interest rates at half of one per cent - property still reigns as the wise place to put savings to create a nest egg or a pension pot.

'Value for money is every homebuyer's holy grail'

Homes & Property has been talking to all the key people, getting the inside news and the latest plans from developers for this everchanging city.

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So here is our definitive guide to where to buy in a good-value neighbourhood to provide you with both a home and a solid investment. Buying decisions are influenced by the fact that London is a collection of micro-markets where local factors such as well regarded schools can lift prices beyond the area norm. But there are also improving or "emerging" districts benefiting from regeneration, where prices have not reached their full potential. Other places are poised to become hotspots.

For buyers, the key is knowing about the investment (transport routes, regeneration, new uplifting designer buildings) going into an area and being able to spot the properties with potential and the well-priced homes coming up for sale. Clued-up buyers know their patch, keep a close eye on specific streets and developments, speak to estate agents and shopkeepers - and even attend local planning meetings.

The cost of buying in London
The cost of buying in London (£ a square foot): this formula illustrates the value gap between properties and areas

Sense of adventure

Property pioneers who gamble on new frontiers often get rewarded for their sense of adventure - like those who moved to Docklands in the 1980s. Regeneration does not bring short-term rewards, but be brave over five years at least, possibly 10 or even 20 years, for the full impact to be felt.

The patient reap the full rewards, but you must have enough money for the wait. An issue for buyers in regeneration zones is that developers are prone to hype the location and set values higher than might be expected.

By coming up with new design ideas and lifestyle extras, developers can lift the image of a location beyond its traditional appeal. Do not overlook the regeneration ripple effect.

Big infrastructure or development projects also benefit bordering areas - cheaper today but perhaps trendy tomorrow.

Square-foot values

While first-time buyers will have a different set of priorities to, say, a couple trading up or parents with toddlers, value for money is every homebuyer's holy grail. For this reason it makes sense to understand square-foot values, the measure of valuation used by developers and estate agents.

This formula gives you an instant insight into the value gap between properties and areas (see table, left). Superprime developments aside, inner London values typically range from £400 to £1,400 a square foot, according to research by Savills.

You can pay more than £2,000 a square foot in parts of Chelsea and Knightsbridge, and less than £300 in Lewisham.

Cheapest is not always best value. Higher-priced pockets of the West End and the City are being revitalised and could "outperform" as they improve.

Neighbourhoods to watch

In the short term, look at Fitzrovia, the rectangle enclosed by Tottenham Court Road, Oxford Street, Great Portland Street and Euston Road. Despite the W1 postcode, it is cheaper than many people expect. The area is a media haunt and defiantly "unposh", with a villagey ambience. However, moves are afoot to push the district upmarket. Landowner Derwent is creating a boutique shopping zone to complement the fashionable scene around Charlotte Street.

Stanhope, the new owner of the old Middlesex Hospital, plans a big apartment complex less expensive than the luxury development proposed by the previous owners, Candy & Candy.

Fitzrovia Apartments
From £240,000: new flats at Fitzrovia Apartments. For more details, call Druce on 020 7935 65335
About £350,000 is the entry price for a one-bedroom flat in Fitzrovia. Decent two-bedroom mansion-block apartments can be picked up for between £500,000 and £750,000. Georgian Fitzroy Square is the area's best address. A five-storey freehold building is on the market for £3.5 million. Previously offices, it has planning permission for conversion back to a single residence. Call Martin Cramer Associates on 020 7727 7272.

Fitzrovia Apartments (right), in Bolsover Street, comprises a new medical outpatients facility for the Royal National Orthopaedic Hospital plus studio offices and 70 luxury apartments. It is being built in two phases, with the first homes nearing completion, and the second phase ready in 2011. Prices from £675,000. Call estate agent Druce on 020 7935 6535.

A portfolio of 21 apartments in period buildings fronting Great Titchfield Street is being sold by Hurford Salvi Carr. Prices range from £240,000 to £695,000. Call 020 7299 3322.

Well connected

With the capital's centre of gravity shifting east, the London Bridge area has become a handy midway point between central London and Docklands. It is one of the best connected places in the capital, with Tube and Thameslink trains. The Square Mile, Bankside and Borough Market are all within short walking distance.

The biggest change is yet to come: the Shard of Glass, the supersize skyscraper now rising on the forecourt of London Bridge train station. When complete in summer 2012, it will be Europe's tallest tower, three times the height of St Paul's Cathedral. The 1.4 million sq ft "vertical village" of shops, offices, hotel rooms and apartments will transform the immediate vicinity. The station is getting a makeover, too. About 40 per cent of space in the Shard has been pre-let. Thousands will eventually work there.

London Bridge Quarter is the name of the wider development area. Southwark council wants to transform the scruffy, blocked-off complex of Victorian railway arches along St Thomas Street into a pedestrian-friendly zone linking with Hays Galleria and villagey Bermondsey Street.

Shard developer Sellar Property and its Qatari investment partner have proposed three residential and office towers, a lido, cafés, bars, shops and a new school alongside. The 30-acre campus of Guy's Hospital on land adjoining London Bridge station is also a redevelopment candidate.

Nine Elms
The new "moated" US Embassy at Nine Elms will be completed in 2017

Diplomatic move

Dominated by the brooding bulk of derelict Battersea power station, it is hard to imagine the sparkling new riverside district that Nine Elms will become within a decade or so.

With a fresh masterplan in place, 2010 marks the start of the change that will finally transform this run-down industrial strip. At 450 acres, the area is bigger than Battersea Park, providing a rare opportunity to create a central, large-scale new neighbourhood.

The US government's decision to build a new embassy at Nine Elms (left) will bring a prestigious "white collar" presence to the area. Work on the new embassy, designed as a glass cube in a parkland setting, will be completed by 2017.

Treasury Holdings, owner of the power station, is proposing a riverbank community providing "the normal stuff people do at weekends - culture, entertainment and shopping". Alongside new homes and a "green" office quarter will be shops, hotels, bars, restaurants and leisure outlets.

A spur to buying

Also proposed is a new spur of the Northern line, from Kennington, which will link the power station site to the Underground network - necessary because there will be as many as 25,000 employees.

New Covent Garden Market, which moved to Nine Elms in 1974, will return to its historic role as London's "larder" under plans to redevelop the 57-acre site. With about 240 small traders, it will be rebranded as The Garden as a rival Borough Market, which attracts thousands of shoppers and tourists.

The project will be funded by building hundreds of flats on land occupied by the flower market. Tideway Wharf, an industrial estate next to Battersea power station, is another big waterfront residential scheme in the pipeline, while decommissioning of old gasholders will free up land for more development. National Grid, the owner, has proposed homes in modern eye-catching towers featuring "sky gardens".

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