More private-sale homes are being built in London than at any time since the Eighties, as developers respond to spiralling demand.
Buyers’ appetite for a property in the capital remains undiminished despite the fragile economy and political turmoil around the globe.
While wealthy international buyers see prime London as a safe haven — a gold-plated, bulletproof investment — rooted Londoners are making property decisions based on the more timeless themes of career, family, schooling and lifestyle, and are searching out good-value locations and improving neighbourhoods.
Developers’ hunger for sites is opening up micro areas and bringing forward buildings that have been neglected for a generation or more.
The result is a wider range of housing schemes — from boutique to big - giving buyers variety and choice. “Post-Lehman, developers are leaner, homes are better designed and funding requires a more thorough business plan, meaning speculators are absent,” says Tim Craine, managing director of Molior London, which analyses the capital’s development scene.
Sales totalled 12,700 units last year, against 8,500 in 2010 and less than 7,000 in 2009.
The hunger for homes is bringing forward buildings that have been neglected for a generation
Construction starts last year were 37 per cent ahead of starts in 2010 and the surge is expected to continue throughout this year.
Such is demand that almost 50 per cent of homes under construction are bought off-plan, with many snapped up by foreign buyers at overseas roadshows held before developments are formally launched in the capital. This marketing ploy is disliked more and more by Londoners who feel strongly that the marketing of new-build should start at home, and that they should be given first choice.
Developers argue that they need quick cash sales so they can satisfy the bankers funding the deals — but UK buyers argue that the market is vigorous at home and that there is no need to sell overseas.
Central and inner London is the focus of development because that is where the market is most robust. Prices for the most luxurious homes (those valued over £5 million) are continuing to rise — up a staggering 42 per cent since March 2009. “However, leading price growth at the moment is property in the £1 million to £2.5 million bracket,” says Liam Bailey, head of residential research at Knight Frank.
Homes in this sector are “affordable” compared to the stratospherically priced properties favoured by the super-rich in Knightsbridge. And many buyers would prefer the charming, village-like feel of Marylebone, where there is great value to be found in homes that are roughly half the price of those in Knightsbridge.
Builders are unlocking some areas of super-smart Belgravia and Kensington for more realistic prices. Berkeley Homes has been quietly marketing 71 apartments at Ebury Square, Belgravia, and 243 homes at 375 Kensington High Street. Coming soon are 206 apartments in the Strand and others at John Islip Street, Westminster. Prices from £805,000. Call 020 7720 4000.
Huge regeneration projects on their way
Other projects set to make a mark include Chelsea Barracks, with 448 homes, and Lots Road power station, with 800 homes. The former US Naval headquarters in Grosvenor Square has been bought by restaurateur Richard Caring, who plans 31 flats.
The old Libyan school in Glebe Place, Chelsea, will have 10 apartments. Audley Square car park in Mayfair is to be turned into 24 apartments. De Vere Gardens, overlooking Kensington Gardens, has 97 apartments. The redeveloped Commonwealth Institute on Kensington High Street will have 62 homes.
Buyers prefer Marylebone which offers great value homes at roughly half the price of Knightsbridge
Yet the bulk of new-build due to appear over the next few years will be outside the super-prime pockets, and these developments will be well located and dwarf anything done in London in recent memory.
Big regeneration projects such as the 450-acre Nine Elms zone and the 66-acre Earls Court Exhibition Centre promise many thousands more homes in central areas.
Coming to the South Bank, a rising star, are several new residential towers — at Blackfriars and Albert Embankment. Victoria is also to get a big injection of homes as part of a Land Securities redevelopment of an island site close to the station.
In tandem with this are niche developments, often office-to-residential schemes, on the cusp of the West End. Currently, 1.8 million square feet of unused central London office space is awaiting planning consent for change of use to homes.
As with the loft-living enclaves of Clerkenwell and Shoreditch, former commercial districts can quickly become established residential areas. Midtown - which takes in Holborn and the former Fleet Street newspaper district, between the West End and City - is one such transforming area.
Five large lateral apartments in a building designed by Sir Edwin Lutyens are for sale at Lincoln’s Inn (prices from £2 million), while West One is a boutique scheme of apartments in the old rag trade district, just north of Soho (prices from £850,000). Call Savills on 020 7016 3865.
* Studying square foot prices is one way of identifying good-value areas. It gives homebuyers a meaningful insight into the relative cost of neighbourhoods at a time when London has become a collection of property micro markets. And you do not have to move to the suburbs to get a cheaper home. Next week David Spittles reveals the districts and developments where you can get more for your money.