RESIDENTIAL RESEARCH EASTERN PRIME CANARY WHARF AND ITS ENVIRONS 2015 ECONOMIC HOUSING SUPPLY THE CHANGING FACE FUNDAMENTALS AND DEMAND OF CANARY WHARF A PRIME RESIDENTIAL DISTRICT The growth of Canary Wharf to become one of Europe’s largest financial services employment clusters in the last 20 years has overshadowed its emergence as a leading prime London residential market. The next wave of development is likely to rebalance this view, supported by new infrastructure and amenities, which will reinforce the area’s position as a prime residential address. Canary Wharf is best known as one of amenities. The Canary Wharf Estate is Europe’s leading financial and business home to one of the busiest and most employment clusters which, alongside the vibrant shopping malls in the city. In total, City of London, form one of the world’s there are more than 300 shops, cafés, most important financial districts. supermarkets, bars and restaurants on the 89% Estate, open seven days a week, making It is home to the headquarters of major Population increase in banks, media companies and professional it an attractive residential environment as Canary Wharf and its services firms including Citigroup, JP well as a business centre. immediate surrounds Morgan, Credit Suisse, Thomson Reuters As one of the limited number of areas in between 2001 and 2011 and KPMG. London’s zone 1 and 2 where there is the It also sits within one of the fastest potential for large-scale redevelopment, growing areas of London. The population the Canary Wharf estate is now poised to of Canary Wharf and the area to its south further expand as residential district. in the Isle of Dogs rose by 89% between The development planned for this area, 2001 and 2011. including a school, will augment its appeal This growing population has been to a wider demographic, attracting families accompanied by an expansion of as well as young professionals, and serve MARKET ANALYSIS Property prices in Canary Wharf more established prime residential have risen by 27% since early 2013, neighbourhoods in West London. outstripping the 10% growth seen across prime central London over the same time, FIGURE 1 according to Knight Frank’s index. Price outperformance in Canary Wharf Indexed to 100 = June 2012 Such strong growth is partly underpinned by the improving UK economy, 135 something which is also reflected in the CANARY WHARF commercial property market in Canary 130 PRIME CENTRAL LONDON Wharf, with vacancy rates falling and 125 upward pressure on office rents. 120 The other effect at play on prices is the 115 return of the ‘ripple effect’, with house 110 price growth spreading outwards from 105 central London, as it did in previous UK 100 housing cycles. 95 Despite this outperformance in 90 June 12 June 13 June 14 June 15 price growth, average values are still significantly lower than those in Source: Knight Frank Residential Research 2 Please refer to the disclaimer at the end of this report to further change perception away from FIGURE 3 ‘pied a terre’ to ‘home’. The opening of Workforce growth CONNECTIVITY Crossrail will enhance its connectivity. Number of employees in Canary Wharf The extension of the appeal of the Canary Wharf estate through mixed land uses, cultural activity and amenity will cement its position as a prime location, and the ripple effect will provide an uplift to the wider Nearly thirty years ago, Canary Wharf market in the Isle of Dogs. was one of the most redundant areas of London. Today, as one of the Economic primary business hubs in the world, it is one of the most well-connected outperformance districts in the capital. Employment in Canary Wharf almost quadrupled in the 10 years to 2012, with the number of workers rising from 27,000 to over 100,000 during this time, according to figures from the ONS. The majority of jobs in the area are in 100,500 finance and insurance but there has been 27,400 The Jubilee Line provides quick notable business growth in emerging access to London Bridge, Bond tech industries. Street and north west London while Already some 7,000 employees the Docklands Light Railway (DLR) work in the technology, media and connects the area to the heart of the telecommunications (TMT) sector in City of London. London City Airport, Canary Wharf, helping London to clinch 2001 2012 which hosts flights to Europe’s the title of the ‘Fintech’ capital of Europe. Source: Knight Frank Residential Research / ONS major economic centres, is less Fintech start-ups based in Canary Wharf than 20 minutes away. The Jubilee benefit from being in close proximity to In terms of economic growth, Tower line will also become one of the first lines to have a 24-hour service on their natural client base in the banking, Hamlets has outperformed the UK for Friday and Saturday evenings from financial and professional services sectors. the past few years. Annual Gross Value the autumn of 2015. Added, a measure of economic activity, Some 40,000 additional jobs are forecast rose by 2% in 2013 and 3.8% in 2014, to be created in Tower Hamlets, the compared with 1.9% and 3% respectively borough in which Canary Wharf and across the UK. the Isle of Dogs are located, by 2025, according to Experian. Growth is expected to average 3.9% per year over the next five years outperforming both the UK and London over this time. From late 2018, Canary Wharf, as FIGURE 2 well as the nearby Royal Docks and Economic growth As well as strong economic growth and Queen Elizabeth Olympic Park, will be Total annual output (GVA) job creation, there will also be notable served by three Crossrail stations. The population growth. An extra 57,325 high-speed rail service will cut journey TOWER HAMLETS households are due to be created during 10% LONDON times to many destinations, with UK FORECAST the coming decade in the wider borough passengers able to reach Liverpool of Tower Hamlets, a 20% increase. This is Street in 6 minutes, and Heathrow in 8% a faster rate of growth than in London as less than 40 minutes. It will be the first whole, which is forecast to see a 13% line to directly connect London’s West rise in the number of households over the End, the City and Canary Wharf. 6% next decade. The station at Canary Wharf is already open and hosts a number of shops, 4% Emergence of a new restaurants and a cinema. The rooftop cultural centre is a public garden. 2% Canary Wharf and its surrounds are also emerging as a hub for culture and 0% entertainment as London’s ‘cultural 2011 2012 2013 2014 2015 2016 2017 2018 centre of gravity’ is enhanced by activity Source: Knight Frank Residential Research / Experian in the East. Please refer to the disclaimer at the end of this report 3 EASTERN PRIME 2015 RESIDENTIAL RESEARCH There is a popular arts and events across East London is changing. There FIGURE 5 programme already hosted on the Canary are plans for a £3.5 billion regeneration A growing borough Wharf Estate, with live music shows, project at Silvertown Quays, which will Forecast increase in private household population outdoor dance performances, sporting provide housing, retail and commercial Indexed to 100 = 2014 events, open-air theatre and exhibitions. business space. At Royal Albert Dock, a 125 125 TOWER HAMLETS TOWER HAMLETS As part of the wider shift east, the English £1.7 billion commercial hub for Chinese LONDON LONDON National Ballet (ENB) has announced and other Asian businesses is being 120 120 plans to relocate from its existing home in created by ABP. Kensington to London City Island, close 115 115 Businesses will also benefit from to Canary Wharf. The new facilities will Crossrail, with a wider pool of potential include space allowing members of the 110 110 employees to draw from, as shown in the public to see the ballet company’s work. commuter map (figure 2). 105 105 The ENB is not alone. In the neighbouring borough of Newham, there are plans 100 100 for a new education and cultural district Broadening appeal As part of the continued development 95 at the Queen Elizabeth Olympic Park. 95 The Victoria and Albert Museum, one at Canary Wharf, access to schools is 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 of the most recognizable landmarks in set to improve. As well as the opening 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Knight Frank Residential Research / GLA Kensington in West London, is set to of a primary school for 420 pupils, a display more of its collection in a new first for the immediate area which will space opening in the Park. enhance its appeal to growing families, The park may also become home to the the opening of Crossrail will make top- first base for the Smithsonian outside tier schools across London even more the US. Added to this, there are plans for accessible from Canary Wharf. University College London to open a campus in the area. Aspirational retail The layout of the new public realm in the A new business centre Canary Wharf Estate will create a vibrant There is also regeneration planned further and attractive high street with cafés, to the East, emphasizing how a wider area restaurants and daily markets. FIGURE 4 How Crossrail will expand the 30 minute ‘commuter zone’ from Canary Wharf Enfield Canary Wharf station Crossrail route Current commuting zone, 30 minutes travel time New commuting zone, 30 minutes travel time with Crossrail Romford Liverpool Street West Ealing Paddington Canary Wharf ! Greenwich Dartford Clapham Source: Knight Frank Residential Research Please refer to the disclaimer at the end of this report 4 EASTERN PRIME 2015 RESIDENTIAL RESEARCH Adding to the high street and luxury outlets Canary Wharf Group has already begun FIGURE 6 already accessible at the Canary Wharf work on Canary Wharf Residential, a A diverse community shopping malls, a range of independent mixed-use scheme of over 3,000 new Age of buyers and tenants in Canary Wharf (2014) retailers as well as more luxury brands homes, including over 600 affordable are set to arrive in the coming years, units, a school and a medical centre.