RESIDENTIAL RESEARCH

VAUXHALL REPORT 2015

MARKET OVERVIEW DEVELOPMENT IMPROVING TRANSPORT ANALYSIS INFRASTRUCTURE OVERVIEW is the best-connected area of the Vauxhall, and Battersea (VNEB) Opportunity Area, a 195-hectare riverside district that is one of the largest regeneration zones in central .

In the years following the financial crisis, the 20% growth in average house prices Vauxhall underground station is currently strong price growth in has across the UK over the same period. undergoing a £36 million revamp, part of partly been driven by buyers looking for a Prices in the wider borough of a wider transport upgrade in the area. safe haven against the backdrop of global have also outperformed. and political instability. The market is also The changes happening in the public underpinned by an undersupply of housing realm around Vauxhall are being reflected in the capital. A wide transformation in development, with renowned architects working on iconic buildings which are This strong price growth in core prime Vauxhall is set to be dramatically set to enhance the environment in this central London markets such as remodelled in the coming years to re- central London location. Some of the key Kensington and Knightsbridge, has led, establish a pedestrian-friendly town centre. development schemes in and around in recent years, to buyers increasingly There are plans to redesign the one-way Vauxhall are shown in figure 3. seeking opportunities in areas close to traffic gyratory, creating a notable increase prime central locations. in public spaces. There will be room for Vauxhall is also well positioned to benefit Buyers are also increasingly focusing on more cafés and restaurants as well as from the wider regeneration happening in investment fundamentals such as location, retail outlets. The whole area will be the VNEB Opportunity Area. But the local infrastructure and regeneration potential. opened up for pedestrians through to market fundamentals are also strong, not Albert Embankment. least because of Vauxhall’s connectivity Vauxhall is the key infrastructure hub adjacent to Nine Elms, central London’s

biggest regeneration scheme that includes FIGURE 2 the iconic Battersea Power Station Walk times from Vauxhall station development. Given Vauxhall’s position – a short walk across the Thames from the Charing Houses of Parliament and Victoria (figure Cross 2), it occupies a privileged position as the HYDE SOUTHBANK gateway between this transforming Nine PARK Elms district and central London. Hyde Park GREEN Corner PARK ST. JAMES’S Waterloo PARK Average residential prices in Vauxhall have Westminster risen by 69% since the beginning of 2010, Knightsbridge as figure 1 shows. This exceeds the 45% St. James’s Lambeth Park North growth seen in prime central London and BELGRAVIA Victoria Elephant & Castle FIGURE 1 Price performance in Vauxhall vs Sloane Square Pimlico prime central London Average prices, indexed 100=January 2010

180 Vauxhall 170 Oval 160 NINE ELMS 150 BATTERSEA PARK 140

130 Walk time fom 120 Vauxhall station < 5 minutes Stockwell 110 5-10 minutes VAUXHALL 10-15 minutes 100 PRIME CENTRAL LONDON 15-20 minutes 90 20-25 minutes North 2010 2011 2012 2013 2014

Source: Knight Frank Residential Research/ Macrobond Source: Knight Frank Residential Research

2 Please refer to the disclaimer at the end of this report VAUXHALL 2015 RESIDENTIAL RESEARCH

Victoria FIGURE 3 Key developments of 100+ units with planning permission granted or currently under construction

No. of units Not started Under construction < 250 2 1 Development Developer Status 251 - 500 1 22-29 Albert Embankment St. James 501 - 1,000 2 The Corniche St. James Pimlico 3 Vauxhall Sky Gardens Frasers Property UK Ltd. Spring >1,001 Gardens 4 Grand South Landstart / Vincent Goldstein

Construction status 5 Vauxhall Cross Wendover Investments Ltd.

Not started Vauxhall 6 Aykon DAMAC Properties 5 Under construction Vauxhall 7 Keybridge House A2Dominion / Mount Anvil Northern Line extension THAMES 10 8 Vauxhall Square CLS Holdings PLC due to open 2020 RIVER 6 American 8 9 The Residence Bellway Homes Embassy Vauxhall Park 10 One Nine Elms Dalian 14 9 12 11 Nine Elms Point BDWZest 3 4 7 Developments LLP

11 12 Riverlight St. James

13 13 Nine Elms Parkside Royal Mail Group PLC BATTERSEA 12 15 PARK Nine Elms 14 Embassy Gardens Ballymore Group 15 The Garden (New Covent VSM Estates Limited Nine Elms Garden Market) 15 Source: Knight Frank Residential Research

to the rest of the capital, which we and more than half a million square metres three or four other diplomatic missions 6 examine in detail later. of new business space, as a new London mulling a move to the area, including the residential neighbourhood is created. Chinese Embassy. The VNEB Opportunity Area is one of several large-scale regeneration areas The area also has the potential to Well connected in central London. Its prime riverside develop into a new diplomatic quarter, location, transport potential and ambitious As shown in figure 2, it is possible to with the opening of the new United reach many key areas in central London scale and vision helps distinguish it from States Embassy in 2017 followed by the within 25 minutes or less. In addition, other schemes. Dutch Embassy. There are thought to be ’s PTAL scoring Spanning the London boroughs of Wandsworth and Lambeth, this includes more than 20 inter-connected FIGURE 4 developments that stretch from Lambeth How far tenants in London want to live from the nearest transport link Bridge in the east to Chelsea Bridge in the west. 1 KM+ 750 M As a whole, the VNEB Opportunity Area EEN ETR W ES is forecast to provide 25,000 new jobs ET -1 B 500-75 K and 18,000 new homes for 30,000 new EN 0 M M 91% OF LONDON E E W T TENANTS WANT TO LIVE residents, playing its part in an attempt by T 50-50 R E 2 0 E WITHIN A 12-MINUTE B N M local authorities to address the shortage of E E S WALK OF THE NEAREST E 250 M T R TRANSPORT LINK housing supply in the capital. W IN E

T H T E

S R

E T

I

E

B The area will also benefit from new public S W 16% WITHIN 250 METRES realm works and the transformation of brownfield sites into parks and gardens, 24% BETWEEN 250-500 METRES including the Linear Park, a continuous 22% BETWEEN 500-750 METRES stretch of green that will run from Battersea 29% BETWEEN 750 METRES-1 KM to Vauxhall. There will be high-quality retail 5% 1 KM+ and leisure sites as areas like New Covent 4% Don’t know/No preference Garden Market and Battersea Power Station are re-developed, as well as other cultural attractions, community facilities Source: Knight Frank Tenant Survey 2014

Please refer to the disclaimer at the end of this report 3 E THAN 5 MOR KM 2-5 KM

WITHIN 1KM

IN 750 ME ITH TR E W S N 500 ME 14% WITHIN 250 METRES HI T T R I 250 M E 20% WITHIN 500 METRES W IN E S H T 17% WITHIN 750 METRES

T R

I

E S

W 27% WITHIN 1 KM 11% 2-5 KM 1% MORE THAN 5 KM

9% Don’t know/No preference GLOBAL BRIEFING For the latest news, views and analysis on the world of prime property, visit KnightFrankblog.com/global-briefing system, which measures the distance Road, and Battersea Power Station. These to the nearest public transport stop and stations could open as early as 2019 and RESIDENTIAL RESEARCH service frequency, gives Vauxhall the provide a direct link to the West End and highest possible score. the City in 15 minutes or less. Gráinne Gilmore Head of UK Residential Research This is the result of having the second The infrastructure plan also includes two +44 20 7861 5102 busiest bus station in London, a tube riverbus piers on the Thames, new bus [email protected] station two stops from London Victoria routes and an extension of the city’s cycle and a frequent overground train service hire scheme. There are also plans for a new RESIDENTIAL DEVELOPMENT into London Waterloo. It also shows that pedestrian and cycle bridge across the Mark Wilkinson using just the tube network in rush-hour, Thames, connecting Nine Elms directly to Partner, Residential Development the whole of the West End and the City are Pimlico on the north bank. +44 20 7861 5414 accessible within 30 minutes, with Victoria The extension of the Northern Line will not [email protected] a 3-minute tube ride and Oxford Circus a only enhance the connectivity of the area Alex Carr 7-minute journey. but will also underline Vauxhall’s position Partner, Residential Development The importance of locations which are as a central transport hub, providing quick +44 20 7861 5444 close to transport hubs was underlined access to the West End and the City. [email protected] in Knight Frank’s recent Tenant Survey, the largest survey of private rented sector Outlook tenants ever conducted across the UK. Vauxhall is primed to benefit from the This showed that while more than half large-scale regeneration, infrastructure of tenants across the country said that investment and place-making currently proximity to transport was a priority when underway. As conditions in the wider choosing a rental property, more than London market start to normalise, these 80% of those living in the capital said that are the key factors that will underpin this was a key factor. Figure 4 shows how performance. What could also set far tenants in London would ideally like to Vauxhall apart is its location. Sitting just live from their nearest transport hub. on the cusp of the current boundaries of Transport is also a key part of the VNEB prime central London, this area, which Opportunity Area. There will be a £1 is undergoing a notable transformation, billion injection into infrastructure. This may see increased buyer interest from will encompass two new stations on the those seeking value in a central and well- Northern Line, Nine Elms on Wandsworth connected part of the capital.

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LONDON ANALYSING PROPERTY MARKET PERFORMANCE Disclaimer HOTSPOTS FROM READING TO SHENFIELD 2015 RESIDENTIAL DEVELOPMENT OPPORTUNITY AREAS 2015 © Knight Frank LLP 2015 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the CITY CENTRAL preparation of the information, analysis, views EXAMINING LONDON’S NEW PRIME RESIDENTIAL DISTRICTS FROM FARRINGDON TO WHITECHAPEL 2015

HOW HAVE PRICES MEASURING SUPPLY OUTLOOK HOUSING DELIVERY IMPROVING TRANSPORT PERFORMED? ESTABLISHED PRIME GROWTH AS A FUTURE and projections presented in this report, no ACROSS LONDON INFRASTRUCTURE MARKET FORECASTS RESIDENTIAL MARKET COMMERCIAL DISTRICT TRENDS responsibility or liability whatsoever can be The Wealth Report London Development Crossrail - 2015 London: City Central 2015 Hotspots 2015 - 2015 accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on

RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH UK RESIDENTIAL RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH UK RESIDENTIAL or reference to the contents of this document. MARKET UPDATE MARKET FORECAST

POST-BUDGET MARKET UPDATE TENANT SURVEY: HOUSING FORECAST OVERVIEW As a general report, this material does not The Chancellor focussed on buy-to-let landlords, non-doms and the The Conservative Party’s recent surprise election victory has led to a planning regime in his summer Budget. Meanwhile, residential price spate of frothy house-price forecasts. The reality is likely to be more growth continued to ease across the UK, as rental growth strengthened. LONDON FOCUS sober, argues Liam Bailey Gráinne Gilmore examines the latest data. LONDON We last reviewed our UK house-price Speech, and with the benefit of a month’s London has seen the biggest growth renters are the most likely to factor the In terms of location vs affordability, a Headlines May 2015 UK housing and move could also drive up rents if costs are forecast in February. At that point, despite a post-election market activity. Key facts July 2015 passed on, but competition in the market in the private rented sector out of distance of a rented property from transport significantly higher proportion of Londoners, economic overview Our immediate post-election slowing economy, we left our outlook for The risk from higher interest rates, and will likely curb such increases. RESIDENTIAL any region in the UK over the last links into their decisions, with 58% of 18-24 especially younger tenants, are prepared UK house prices fell by 0.2% in June, forecast review has left our existing modest future growth unchanged. Since then House prices continued to ease in June decade. The expansion of rented year olds across Great Britain saying it was to live in smaller types of accommodation therefore potential future affordability necessarily represent the view of Knight Frank five-year forecast largely unchanged, forward-looking economic indicators, such taking annual growth to 3.3%, down according to figures from Nationwide accommodation as a form of tenure a key factor in choosing a privately rented to ensure they are in a good location at an pressures, global economic risks and the Building Society, with average prices House price sentiment rises as our own House Price Sentiment Index, from 4.6% in May has been driven not only by the property. Overall, nearly two-thirds (63%) affordable price. As shown in figure 2, more our risk monitor however has uncertainty surrounding the outcome of the slipping by 0.2% during the month. This House Price Sentiment Index, June 2015, UK have begun to tick upwards. REVIEW dynamics of affordability in the London of London tenants surveyed want to be than half (54%) of 18 to 24 year olds said undergone a substantial overhaul promised UK referendum on EU membership took annual growth to 3.3%, with 7.3% by 2017, collectively mean we don’t foresee Prices Compared to one month ago, what do you housing market, but also a preference within a 9-minute walk of a transport they would be happy to live in a studio A majority win for the Conservative Party at Prices in prime central London rose growth in London. The picture on prices rising 70 THE GENERAL ELECTION AND think has happened to the value of your home? for more flexible living arrangements. link such as the bus stop, tube or train flat (with communal entertaining space) the General Election on 7 May, means fears an immediate upswing in UK price growth by 0.5% in June, as annual growth is not entirely clear however. Halifax’s Cumulative growth in UK prices will 65 if doing so made the rent more affordable of weak government for the next five years above our existing forecast. eased to 2% THE PRIME LONDON MARKET Affordability Close to Close to Close tostationClose, compared to toClose 51% toof tenantsClose total a little over 18% in the five years monthly house price data showed a 1.7% 60 We have drilled down into the results work/ transport shopssurveyedfriends across and Britain.amenities to good in a central area. Some 39% of 25-34 year have, in the short-term at least, disappeared. Although our view on prime London prices rise in prices in June. of our country-wide tenant survey, the (cafes, gym etc) to the end of 2019 55 university links family schools olds and 42% of 35-44 year olds in London In light of this, and allied to improvements LLP in relation to particular properties or SPRING 2015 has turned positive, we are monitoring the Additionally, the house price sentiment No 50 largest survey of this type ever conducted, Prime country house prices are up change would also be prepared to choose a studio in economic and consumer sentiment, we volume of new housing supply, especially to focus on the private rental trends in FIGURE 2 index, produced by Knight Frank and 45 in a central location for an affordable rent. 2.3% year-on-year Space vs Location While political risk for the prime have revisited our forecast for UK house- new-build, which has the potential to weigh Markit Economics, a forward indicator for London, to help inform and shape thinking 40 % of respondents who would consider living in a When asked if they would live in a “micro- London market has fallen, affordability price growth. on price growth. house price movements, ticked up slightly on how the sector may develop. 35 studio flat making central locations more affordable flat”, a small studio flat around 300 sq ft in constraints and rising stock volumes House price sentiment index, in June after falling in May. However, with the exception of moving the In terms of key risks, while we have 30 The first key finding is that Londoners, size, in a building with communal entertaining will limit price growth in the near term bellwether for market, ticked up Prices prediction for our Prime Central London downgraded the impact of political risk, falling Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 while just as concerned with the space which was in a “perfect” location, 45% in June of 18-24 year olds in London indicated that Index from 0% to +1% in 2015 (there appears we remain mindful that the previous Annual change in house prices, UK Knight Frank Residential Research / Markit Economics affordability of rental accommodation as 18-24 Source: UK rents and prime central London sufficient momentum in central London to Conservative-led administration was arguably Annual change in house prices, UK those in the rest of Great Britain, place they would consider such an option, while projects. Reproduction of this report in whole Prices rents will rise 2.2% and 3.5% deliver modest positive growth this year), we the most activist in recent history regarding Therising Chancellor80 also changed the rules much greater emphasis on proximity 32% of 25-34 year olds and 37% of 35-44 25-34 have held firm on our view for other markets 12.5% 75 year olds also agreed. This is much higher respectively in 2015 high-value property taxation. But interest rate Land Registry surrounding non-domiciled residents in the to transport links, as shown in figure Nationwide 70 than the overall GB average of 27%. for the moment. We will be reviewing our and global economic uncertainty in our view 10.0% ONS UK, cutting the timeframe for those claiming 1 below. Nearly four-fifths (79%) of Halifax 65 35-44 figures again in June, following the Queen’s remain the key risks for house prices. non-dom status to 15 years and scrapping 60 respondents based in London said When it comes to the maximum Londoners Interest rate rises and the risk of a 7.5% General the inheritance55 of non-dom status. ThereElection that being close to transport links was are prepared to pay in rent, the figure is renewed global economic slowdown 5.0% No changewas also50 a change to rules for those holding important to them when choosing 45+ slightly higher than the country-wide average. LONDON (BY AGE) remain the biggest risks to the UK 45 Knight Frank Residential Market Forecast May 2015 2.5% property in an offshore company, meaning privately rented property. This fits with the The mean average of our survey responses housing market 40 or in part is not allowed without prior written that they will be liable for inheritance tax. increased dependence on public transport for those in the Capital shows that the 0.0% 35 Average 2014 2015 2016 2017 2018 2019 2015-2019 in the Capital, and is also supported by GB maximum respondents were prepared to 30 60 Mainstream residential sales markets -2.5% Additionally,Prices the chancellor announced ALL falling May-10 May-11 May-12 May-13 May-14 May-15 the uplift in capital values seen around pay was 42% of their gross monthly plans to increase the tax free allowance for 25-34 (UK) 0% 10% 20% 30% 40% 50% 60% UK 7.2% 3.5% 2.5% 3.0% 4.0% 4.0% 18.2% -5.0% transport links in the sales market, for personal income, compared to 40% LONDON ALL 2010 2011 2012 2013 2014 2015 inheritance tax for couples who pass on 50 example, Crossrail stations. Younger Source: Knight Frank Tenant Survey 2014 across Britain. London 17.8% 3.5% 4.0% 5.0% 5.5% 5.5% 25.8% Source: Knight Frank Residential Research / Macrobond their home to their children. The increase FIG2 South East 10.6% 5.0% 3.0% 3.5% 5.0% 5.0% 23.4% 40 will be tapered from 2017 eventually rising South West 8.0% 4.0% 2.5% 3.0% 4.5% 4.0% 19.3% to £1m in 2020-21. An allowance will be put FIGURE 1 Which of these are important to you when choosing a rental property? FIGURE 3 East Anglia 9.8% 4.5% 3.0% 3.5% 4.5% 5.0% 22.2% While the market is underpinned by record 30 in place to protect downsizers. % of respondents who identified each factor East Midlands 6.0% 3.5% 2.0% 2.5% 4.0% 4.0% 17.0% approval of Knight Frank LLP to the form low interest rates, there are still issues around % of respondents prepared to pay GRÁINNE GILMORE more than 40% of gross income West Midlands 6.8% 3.5% 2.0% 2.5% 4.0% 4.0% 17.0% Head of UK Residential Research accessing mortgage finance and affordability 20 which are having an impact. Prime London price growth eases on rent: North East 4.4% 3.0% 2.0% 2.0% 3.0% 3.5% 14.2% Annual change in values in prime central and GB 10 North West 3.8% 3.0% 1.5% 2.0% 3.5% 3.5% 14.2% For owner-occupiers, the summer Budget did prime outer London “ The government has 450,000 LONDON Yorkshire & Humber 1.5% 3.0% 2.0% 2.0% 3.5% 3.5% 14.8% not include major reforms to property taxes, 7% 18-24 LIAM BAILEY ramped up pressure on 400,000 POL 0 Wales 1.4% 3.0% 2.0% 2.5% 4.0% 4.0% 16.5% however buy-to-let landlords who pay higher PCL 18 25 40% 50% 60%+ Don’t 18-24 Global Head of Research 350,000 25-34 local authorities around rate tax will see the mortgage interest relief 6% -24 -34 know Scotland 4.2% 3.5% 2.5% 3.0% 4.0% 4.0% 18.2% 300,000 planning, emphasising that they can claim cut from 2017, falling to 20% 5% 35-44 LONDON and content within which it appears. Knight 25-34 “ Don’t assume the election Prime residential sales markets increasing the supply of by 2020. The move came just days after the 250,000 4% 45-54 33% result means political risks Prime Central London 6.7% 1.0% 4.5% 5.0% 5.0% 6.0% 23.3% Bank of England flagged concerns that rising 200,000 new homes is high on its 3% 35-44 Prime Outer London 10.5% 3.0% 5.5% 5.0% 5.0% 5.0% 25.8% interest rates could pose a challenge to some 150,000 55-64 85% 85% 53% 79% 55% 58% 51% 55% 33% 39% 34% 29% 12% have disappeared for the “to do” list.” LONDON 7% GB landlords in its Financial Stability Review. 100,0002% prime London market.” Residential rental markets 65-74 Follow Gráinne at @ggilmorekf 50,000 45+ 1% 25% Follow Liam at @LiamBaileyResi UK Mainstream 2.0% 2.2% 2.3% 2.3% 2.4% 2.4% 12.1%

The new rules could see landlords reviewing LONDON (BY AGE) 0 75+ the offers they make on new property as they Prime Central London 4.0% 3.5% 3.3% 3.3% 3.0% 3.0% 17.1% For the latest news, views and analysis 0% Affordability Close to Close to Close to Close to Close to Close For the latest news, views and analysis Jan Feb Mar Apr May Jun 1965 on the world of prime property, visit will have to factor in the new tax environment. 1953 1956 1959 1962 1968 1971 1974 1977 20151980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 transport work/place shops amenitiesAveragefriends and to good Prime Outer London 0.5% 4.0% 3.3% 3.0% 2.8% 2.8% 16.8%

GB on the world of prime property, visit PRICE PERFORMANCE THE RESURGENT links of study (cafes, gym etc) family schools Frank LLP is a limited liability partnership Global Briefing or @kfglobalbrief There has been some speculation that the Source: Knight Frank Residential Research POST-ELECTION ANALYSIS UK MAP OF LONDON RENTAL MARKET Global Briefing or @kfglobalbrief Source: Knight Frank Residential Research 0% 10% Source:20% 30% Knight40% Frank Tenant50% Survey60% 2014 0% 10% 20% 30% 40% 50% 60% Source: Knight Frank Tenant Survey 2014 FIG5 registered in England with registered number UK 450,000 450,000

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