London's top property growth areas
David Spittles begins a news series looking at London's potential growth areas - where homebuyers can be part of the action from the start
The energising impact of the 2012 Games endures despite government austerity cuts. London remains alive with regeneration projects, transport upgrades, and cultural and employment shifts that are creating new property hotspots and fresh buying opportunities.
Throughout this month we will be taking a closer look at London’s potential growth areas — because, as we all know, the clever buyer gets in at the beginning. We’ll be identifying districts where new transport links are providing more mobility and regeneration is creating buying opportunities.
Between now and 2013 a huge range of new developments will be launched, both big and small. They include homes in prestigious central neighbourhoods, in up-and-coming locations, on the waterfront and in leafy suburbs. Some are ready to move into now, while others can be snapped up off-plan.
More than ever, the capital city is a collection of micro markets where local factors and dynamics — well-regarded schools, historic architecture, fashionable bars and restaurants, specialist street markets, new boutiques and shops or a “destination” development — can lift prices beyond the area norm.
WHAT'S HOT AND WHERE
* The Shard
Europe’s tallest residential and office tower is helping to turn London Bridge from a transport hub into a red-hot commercial centre.
The east-west link will bring six new stations — including at Tottenham Court Road where big price hikes are expected
* Major transport upgrades
The East London line extension to Clapham Junction, creating an Overground orbital rail route, and a Northern line extension to Battersea will send property ripples around the capital
Nine Elms at Vauxhall will soon become London’s — and Europe’s — biggest city regeneration scheme
* Priority projects
Revamps of Elephant & Castle, Waterloo, Tottenham Hale and Woolwich will transform local housing scenes. Portobello Square will breathe new life into North Kensington, and Fulham’s waterfront will receive a comprehensive makeover
Opportunities in emerging areas
Even in posh postcodes there are pockets of opportunity — for example, where landed estate owners such as Grosvenor invest in improvement schemes. Plus there are emerging districts where prices have not reached their full potential. Other places are under a veil, poised to be uncovered.
Areas move at different speeds. Sometimes you cannot define why an area is on the up but you can detect it, feel the vibe. It is not always because of carefully planned regeneration, rather a confluence of people with imagination, and spirit, wanting to make their area special; it could be a new collection of young creatives taking responsibility for their area, wealthy bankers moving to Notting Hill, or design and media entrepreneurs setting up shop in Shoreditch because of relatively cheap rents.
Those who embrace new areas and frontiers often get rewarded for their boldness — like those who moved to the Docklands in the Eighties, to the South Bank in the Nineties, or King’s Cross at the start of the Millennium. But the point about regeneration is that it normally takes at least five years, and more usually 10 or 20 years, for the full impact to be felt. So you have to be patient to get the full benefits. Nine Elms, between Battersea and Vauxhall, billed as central London’s last significant regeneration area, falls into this category.
Do not overlook the regeneration ripple effect. Big infrastructure or development projects also benefit bordering areas — cheaper and unfashionable today, but perhaps trendy and more expensive tomorrow.
2020 vision: integrating transport and housing
Transport upgrades provide the biggest boost to property values, meaning rewards for early-bird buyers who are aware of the changes to come.
The recently-completed East London line extension and the London Orbital Overground have opened up areas that were previously under the radar, leading to price rises of up to 15 per cent more than the market average, says estate agent Kinleigh Folkard and Hayward.
This year, the Northern line extension to Battersea (made possible by a £1 billion government loan) will get under way, while Transport for London has announced a new pot of funding (£300 million) that will focus on eight priority projects, among them Elephant & Castle, Waterloo, Woolwich and Tottenham Hale.
Mayor Boris Johnson’s London Plan envisages much closer integration of public transport and housing by “encouraging patterns and forms of development that reduce the need to travel, especially by car”. This applies particularly to key regeneration zones such as Vauxhall and amounts to “not just a transport policy but an economic strategy for London”.
This year will also be when many more buyers wake up to the impact of Crossrail. The new east-west link will bring six new stations to the capital’s main business districts and an estimated £42 billion boost to the economy.
Analysis by property consultancy Jones Lang LaSalle suggests the price of homes near stations along the route will increase by up to 57 per cent between now and 2018, outperforming the rest of the housing market.
Properties in central London, particularly in the Tottenham Court Road area, will see big price rises.
In today’s cost-conscious climate, homebuyers want the best possible value for their money. The hunt for more affordable locations is seeing Chelsea residents move to Fulham, for example.
Fulham residents are crossing the river to put down roots in Battersea and Balham. Others are moving from Parsons Green to Putney, from Hammersmith to Shepherd’s Bush, from Clapham to Dulwich, from Highbury to Finsbury Park.
It is helpful for buyers to get a handle on “square foot values”, the measure used by developers and estate agents. London values typically range from £400 a sq ft (Lewisham) to £4,000 per sq ft (Mayfair), a huge spread. The pounds-per-square foot formula gives buyers an instant insight into the disparity in values between and within areas — and where a bargain may exist.
One remarkable thing about London is the street-by-street differences in character and house prices. Council estates and handsome period terraces are often cheek by jowl. Local authority blocks can hold down the value of neighbouring private homes but council estate regeneration often results in a price boost to the area.
Renamed Portobello Square, up to 1,000 new homes — many of them for private sale — are being built and the area’s original Victorian street pattern reinstated. Prices from £457,500. Call 020 7758 8478.
Certain locations in travel Zones 1 and 2 stand out as comparatively good value in spite of general price hikes over the years. Elephant & Castle is the only Zone 1 location where you can buy brand-new for less than £600 a sq ft.
South Bank riverside districts are tipped to jump in price during the next five years. “Nine Elms to Vauxhall Cross will change out of all recognition, while the extension of Tate Modern, due for completion next year , will see Bankside values rising even higher,” says Hamptons’ Matthew Smith.
Boosted by the awesome Shard tower, the London Bridge/Bermondsey/ Borough triangle is red hot. “The Shard is helping to transform London Bridge’s image from transport hub to leading commercial centre,” says James Hyman of estate agent Cluttons.
Murano, in Crosby Row, has been open since October and is the closest new development to the Shard — 17 apartments priced from £445,000. Call Felicity J Lord on 020 7089 6490.
Residential development tends to feed off new business and commercial hubs for the financial sector, technology companies and fashion and design brands.
Other places in transition to watch are Holborn and Farringdon (where a number of office-to-residential conversions are in the pipeline), Victoria, and Westminster’s parliamentary quarter.
Developers are also continuing to unlock canalbank industrial sites for attractive waterfront living, while a second wave of regeneration is starting at Royal Docks, a giant tract of land the size of Venice, with 12 miles of waterfront — a new district only a short hop from Canary Wharf and born-again Stratford.
Image gallery: fifteen hot London homes under £250,000