Our appetite for a new home in the capital remains undiminished despite the fragile UK economy and turmoil in the eurozone.
Today in London there are just 639 complete new homes for sale. This compares with 900 homes during the bull market of 2001 to 2006 and almost 2,000 homes during December 2010.
This scarcity is driving prices up, and in some areas — Westminster/Victoria — new homes are fetching 50 per cent plus more on a pounds-per-square foot basis than similar size resale properties.
“Nobody we speak to can completely understand what is driving these new homes prices — even the sales agents are scratching their heads wondering what is going on,” says Tim Craine of industry analyst Molior, whose data excludes small developments of fewer than 20 private sale homes.
This demand is, of course, giving builders the confidence to build in small niche areas and bring forward plots and buildings that have been neglected for a generation or more.
The result is a wider range of schemes — from boutique to big — giving buyers more housing choice. But buyers have to be quick off the mark.
The average asking price for London new-build homes is £599 a square foot, which seems reasonable, but Craine adds that inner-city “fringe locations” are achieving surprisingly high values. “Is Aldgate, for example, worth £800 a square foot?” he asks, implying that developers are pushing values up to prices beyond their true area value. The Aldgate reference is a swipe at One Commercial Street, a 21-storey tower with 133 apartments priced from £395,000 (for a studio).
In January, Redrow, the developer, snapped up the east London site for £38.95 million, almost £4 million more than the figure paid by the previous owner in October 2007, considered the peak of the market. About 40 apartments were sold overseas before last month’s UK launch. “Then they put the UK prices 25 per cent higher and it is raising a few eyebrows,” says Craine.
Certainly, it is rare to find a part of London so close to the Square Mile where a development boom is only just getting into its stride. So maybe it is an area with the potential to catch up quickly. As the banking crisis accelerates and offices are closed, the sites are being snapped up and converted to residential use. This is transforming a once anonymous business district that was dead after office hours into a dynamic space.
A NEW URBAN QUARTER
Until 2008, seven-acre Goodman’s Fields on Alie Street was a gated business park occupied by Royal Bank of Scotland. Berkeley Group, the new owner, is opening up the site as a new “urban quarter” — a mix of homes, shops, restaurants plus a public park and plaza.
Part of the site includes a handsome Edwardian building on Leman Street which is being split into 59 tasteful flats. Prices start at £775,000. Call 020 3217 1000 for more details.
Moments away is Altitude, a 27-storey tower under construction, where the first phase of 235 flats has been launched. Completion is due in 2014. Prices from £432,000. Call Barratt on 0844 811 4334. Aldgate borders fast-gentrifying Spitalfields and also Whitechapel, which is the cheapest district in travel zone one (less than £600 a square foot).
When Docklands was born in the 1980s, the money men leapfrogged from the City to Canary Wharf, leaving this old East End district to fend for itself. Artists and ethnic businesses kept a flame burning and now planners want to reinvent the district as a commercial zone called “Eastside”.
One Commercial Street aspires to be at the centre of this with its homes. Broadly speaking, inside travel zones one and two developers are bullish and ever keen to buy land.
STAY ONE STEP AHEAD
Research by Savills highlights three areas of “hidden value” waiting to be unlocked — Elephant & Castle, Fitzrovia and West Hampstead.
“They are underpriced relative to their transport links and the quality of neighbourhood.”
Regeneration and transport upgrades such as the east-west Crossrail link, combined with accelerating gentrification and a property shortage, are fuelling demand. A lifestyle preference to live within walking distance or a short bike ride of the main employment centres is another reason.
With its media companies and quirky shops, bohemian Fitzrovia remains defiantly unposh — more “vibey” than Marylebone, which some say has become too chi chi.
Derwent, which owns a cluster of 20 buildings in Fitzrovia, has a masterplan for a new shopping, office and residential quarter, to be kick-started by redevelopment of advertising agency Saatchi and Saatchi’s Charlotte Street headquarters.
This project will include 55 apartments and a new public space, or “pocket park”, inspired by Paley Park in Manhattan’s smart Midtown business district. And coming soon are 291 homes at Fitzroy Place, the new name for the redeveloped Middlesex Hospital on Mortimer Street.
Neighbouring Bloomsbury is another area buyers are setting their sights on. Regeneration includes Bedford Estate’s reinstatement of a traditional high street leading towards Russell Square and the British Museum, while smaller scale refurbishments of barristers’ chambers and university departments are spawning new homes.
Three thoughtfully-designed modern townhouses have been built in Wakefield Mews, which back on to historic St George’s Gardens.
The homes fit exquisitely into this charming conservation area. Each has a floating central staircase, the centrepiece of a light-filled atrium, plus an open courtyard and roof terrace. The price is £2.5 million. Call Hurford Salvi Carr on 020 7250 1012.