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As we enter a new era of confidence and recovery
LONDON, 2nd April 2014 - Latest residential research by JLL reports that activity in the Central London development market has reached post-crisis peaks as we enter a new era of confidence and recovery.
New unit sales have risen by 63% between 2012 and 2013 to 12,000 units while price growth accelerated to 12.1% last year.But the big story is that developers have responded to the better conditions. New unit starts soared by 97% between 2012 and 2013 with over 13,500 starts last year and there are now over 20,700 units under construction in Central London.
Neil Chegwidden, Residential Research Director at JLL and author of the report comments: “What is important is that the resurgence is balanced. We continue to see international purchasers looking to buy UK real estate but adding to this are increasing numbers of UK-based purchasers, including investors that are creating an unprecedented depth of demand in the Central London development market.”
Central London prices have increased significantly in recent years and as a result new benchmarks have been set right across the London market. In many submarkets we are seeing average pricing north of £1,000 psf, while in five of our areas top prices exceed £3,000 psf.
One of the markets that has demonstrated the highest levels of activity in London is Canary Wharf where new unit sales have increased from 400 in 2012 to 1,050 in 2013 pushing values up to an average of £750 psf, with some of the best units commanding values of £1,100 psf. Annual price growth has accelerated to 14.4% which is notably higher than the 12.1% average seen across the whole of Central London.
Max Wilkinson, City & East London Development Director at JLL comments: “Canary Wharf has proven to be a particularly robust residential market over the last five years; however it is only recently that it has emerged from a pure commercial district to a truly mixed-use environment with a real sense of vibrancy and community feel. Already benefitting from excellent transport links, the addition of Crossrail in 2018 will only enhance residential values further.”
Looking forward, JLL expects the Central London development market to remain fundamentally strong, although it may experience some bumps along the way. Government intervention such as Help to Buy, CGT levied on international purchasers and the uncertainty surrounding the 2015 General Election are all likely factors to impact the market, the most pressing being how Government intervention on Stamp Duty and CGT will influence the number of schemes coming to market. But feedback to date from developers has been benign; although unwelcome, they do not believe CGT will dramatically affect supply in the long-term.
Chegwidden concludes: “We expect significant domestic and international demand in Central London to compete for new supply during the next few years. Political as well as market influences are likely to disrupt a smooth upward growth profile, but fundamentally we believe there will be strong upward pressure on prices and an even more active marketplace.”
To download the full report and watch our latest video on the Central London development market, please click here
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