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Home , East London Tech City, Hackney Central, Hackney Central (ward), Hackney Wick, Hoxton

RESIDENTIAL RESEARCH

FOCUS ON: AND SURROUNDS 2017

SHOREDITCH HACKNEY FOCUS ON: HACKNEY AND SURROUNDS 2017

HACKNEY AND SURROUNDS Since 2009, house prices in Hackney have increased by 104%. In 2015, the borough ranked second in the UK for new business start-ups

As one of the host boroughs of the 2012 The growth in new businesses and amenity diversity; , Hackney Central and Olympics, Hackney has benefited is expected to continue to attract new . from multi-billion pound investment from residents to Hackney. Over the next 10 , the London Legacy years, the Department for Communities Shoreditch Development Corporation (LLDC), Mayor and Local Government (DCLG) estimates of London and the Government. a further 23,000 new households will be Immediately North East of the City created. At present, an examination of of London, Shoreditch is now firmly The upgrade of the rail the development pipeline for the borough established as a prime London address, line in 2007, which runs to Liverpool Street suggests that there are 8,500 new homes and is arguably one of Hackney’s most and Euston, as well as out towards Stratford, under construction or with planning Watford and Richmond, has increased permission, fewer than the 11,500 needed connectivity in Hackney for both businesses to meet demand over even the next five and residents. years. Furthermore, the council has placed SHOREDITCH Building on the improved connectivity, the considerable emphasis on estate renewal, KEY FACTS council has placed considerable emphasis and has embarked on a borough wide on attracting new companies to the area. estate regeneration programme covering HOUSE PRICE GROWTH This is reflected in data from 2015, as 2,760 homes. Q3 2014 – Q3 2016 Hackney ranked second in the UK for The ease with which people move around new business start-ups. Recent data from London means some of the influx in new the Government-backed ‘Start Up Loans residents is expected to be driven by 15% Company’ shows the borough has 1 those form central areas of the Capital. received more funding through the The latest internal migration data from NEW HOMES IN THE scheme than any other London borough the Office for National Statistics (ONS) DEVELOPMENT PIPELINE since it started in 2012. shows 34% more people moved into Such investment in business is supporting Hackney from Kensington and Chelsea, and and 1,710 the improving quality of amenity in Hackney. than moved in the other direction. Alongside an expanding arts scene, Hackney is home to a large number of boutique In the following sections of this report, we CAFES AND RESTAURANTS OPENED IN THE shops, bars and restaurants, interspersed look at three areas within Hackney and the with high-end retailers such as Versace. surrounding area that epitomise the areas LAST 5 YEARS*

FIGURE 1 FIGURE 2 232 Top 10 by house Top 10 London boroughs for price growth since April 2009 housing construction starts ART GALLERIES 2009-2016 AND STUDIOS 140% 20,000 120% 23 16,000 100% HOTELS 80% 12,000

60% 8,000 32 40% 4,000 20% GYM AND HEALTH CLUBS 0% 0 Barnet Hackney Haringey Hackney Lambeth Newham 45 Lewisham Southwark Waltham Forest Waltham Tower Hamlets Tower *VOA data based on one mile radius from

Source: Knight Frank Research/Land Registry Kensington & Chelsea Source: Molior London station

2 Please refer to the important notice at the end of this report FOCUS ON: HACKNEY AND SURROUNDS 2017 RESIDENTIAL RESEARCH

established residential markets. A tech and Shoreditch High Street station over the creative hotspot, the area’s success has last five years, with data from Molior London been underpinned by the rejuvenation of London identifying a further 1,710 homes Overground Market, the extension of the under construction or with planning within London Overground Line in a 10-minute walk from Shoreditch station. TfL took over ownership of the 2010 to incorporate Shoreditch High Street, London Overground in November Shoreditch also possesses a strong and Silicon Roundabout at , part 2007 – effectively bringing together private rented sector. Household and upgrading some existing services. of the East London Tech City Initiative. analysis by Mosaic shows a quarter of The extension of House prices in Shoreditch continue to households in Shoreditch are classified the London Overground began increase. The latest UK house price index as “metro high-flyers”, typically 20 and operating in 2010, adding stations in shows values in this area increased by 15% 30-somethings renting flats in highly Shoreditch, , and in the two years to Q3 2016, compared to a commutable areas of the city. , increasing connectivity for 1.7% decline in prime . the whole area. Silicon Roundabout is the main source Shoreditch lies within the Knight Frank of employment in Shoreditch according An analysis of house prices in and around the Overground rail line stations definition of prime central London east, to Hackney Council– with some of the indicates that it has had a positive with the more traditional markets of largest tech companies in the world such impact on house prices in the borough, and located in as and having office as show in figure 3. With the exception prime central London (PCL) west. Over the space there. It is the third-largest global of Hackney Wick, all locations in next five years PCL east is forecasted to tech cluster behind San Francisco and Hackney with an Overground station significantly outperform, and is expected New York. Start-up companies are at the have outperformed in comparison to to see cumulative growth of 15.9%, heart of the local economy. The Council house price growth in the wider compared to 8.8% in PCL west according also found Shoreditch has Europe’s borough since November 2007, to the Knight Frank house price forecast. highest concentration of tech and particularly in Shoreditch, Hoxton and creative businesses. Hackney Central, where values have As house prices have increased, so too increased by as much as 6-19% has developer activity. Some 785 new To support the growth of Shoreditch’s above the borough average. homes have been built within 800m of high tech industry, the area’s retail

FIGURE 3 Annual over/under performance of house prices compared to house price change in Hackney 2007-2016

3 FOCUS ON: HACKNEY AND SURROUNDS 2017

improved transport connectivity, reducing FIGURE 4 Shoreditch house prices vs London journey times to Liverpool Street to less HACKNEY and Prime Central London than 15 minutes. Both the West End Indexed 100 = Q3 2011 and can be reached within CENTRAL 25 minutes. 180 KEY FACTS Shoreditch As shown previously in figure 1, house 170 PCL prices in close proximity to Overground HOUSE PRICE GROWTH stations have outperformed the market Q3 2014 – Q3 2016 160 over this period, and house prices in Hackney Central continue to outstrip the 150 London market. Values from Q3 2014 to 24% 140 Q3 2016 increased by 24%, outpacing the 19% increase recorded across 130 London (figure 5).

NEW HOMES IN THE 120 DEVELOPMENT PIPELINE The regeneration of Hackney Central forms a key part of the council’s plans to 110 improve the borough’s housing, transport 434 100 and retail offering. Hackney Central has a designated Area Action Plan, mainly 90 CAFES AND RESTAURANTS focused on improving the quality of the OPENED IN THE 80 retail amenity by creating a balance 2011 2012 2013 2014 2015 2016 between independent retailers and highs LAST 5 YEARS* street brands. Source: Knight Frank Research This is being centred around a new 46 offering has improved significantly since cultural quarter linking the area around the financial crisis. This is founded on the Town Hall with Mare Street, now the growth of independent boutique permanently pedestrianised following GYM AND a trial period. Furthermore, Hackney shops, emphasised by the opening of HEALTH CLUBS Boxpark, the world’s first pop-up mall. Walk, a new £4.5 million luxury outlet, Shoreditch’s enhanced amenity is now opened in 2016 and is home to Burberry, 4 starting to attract a greater number of Aquascutum, Nike and Gieves and high-end retailers. Versace has opened Hawkes. On top of this, new fashion a store on Redchurch Street, and this studios and manufacturing space are LUXURY RETAIL also available. With the first phase now OUTLET STORE is expected to lead to further world- renowned brands moving into the City open, the owners of Hackney Walk have OPENED 2016 Fringe location. plans in place to extend the outlet to a The higher quality of Shoreditch’s retail amenity, coupled with its proximity to

*VOA data based on one mile radius from Hackney the City of London, has supported the FIGURE 5 Central station area’s growth as a tourist destination. Hackney Central & Hackney Wick A plethora of new hotels have opened house prices vs London in the area, most notably, Hoxton Hotel Indexed 100 = Q3 2014 and Boundary, while Ace Hotel and Nobu 130 Hotel are expected to open in Spring Hackney Central 2017. Futhermore, Shoreditch House is 125 Hackney Wick also home to a members club and will be Greater London joined by Curtain from May this year. 120

115 Hackney Central 110 The improving quality of amenity has also extended to other parts of the borough 105 of Hackney. One such area where this is being felt is Hackney Central. 100

This area has directly benefited from the 95 more frequent service provided by the 2014 2015 2016 London Overground, which significantly Source: Knight Frank Research/UK HPI

4 FOCUS ON: HACKNEY AND SURROUNDS 2017 RESIDENTIAL RESEARCH

similar size as Bicester Village, a luxury start construction. Tellingly, placemaking business hub, the former media centre outlet village in Oxfordshire. is at the heart of many of these has been transformed into Here East; developments. On top of the delivery of a 1.2 million sq ft complex which is home As a result of this, Hackney Central is new homes, retail and commercial space, to BT Sport. one of the most desirable addresses in the borough. Household analysis from public squares and parks will also be built Hackney Wick has the world’s largest Mosaic shows high earning city workers to form new communities. number of artists per square metre, are renting in the area due to its proximity Values in Hackney Wick have increased according to the LLDC, in charge of to central London. by 24.9% in the two years to Q3 2016, developing the Olympic Park and the surrounding area that includes Hackney Meanwhile, the area has proved popular significantly higher than the borough and Wick. The area is one of the leading with developers, with some 650 new Greater London averages. locations in the capital for the growing homes built over the last five years within Like Hackney Central, an Area Action live-work space trend. To support the 800m of Hackney Central station, and the Plan has also been set up for Hackney growing arts scene in East London, the development pipeline showing a further Wick. While focused on facilitating the LLDC is creating a cultural quarter that 440 new homes with planning permission. growth of cultural and creative industries can already name the and Albert Some 40% of these are expected to be within Hackney and across East London, Museum, Sadler’s Wells Theatre and The affordable units, a sign of the council’s establishing a town centre is at the heart University of Arts London as confirmed focus on achieving a borough-wide 50% of the action plan. tenants. The quarter is expected to be affordable housing target. open by 2021. Hackney Wick Hub, with the Overground station as its fulcrum, will include Hackney Wick improvement works to the wider public Hackney Wick is one of the more under- realm, and new space for shops, cafes, HACKNEY WICK developed parts of Hackney. However, restaurants and bars. This will help to KEY FACTS sitting on the edge of the OIympic Park cement Hackney Wick’s place as a key and Lower Opportunity Area, access point to the Queen Elizabeth Park. HOUSE PRICE GROWTH considerable change is anticipated over Due to its proximity to the QE Park, Q3 2014 – Q3 2016 the next five to ten years. Hackney Wick is already benefiting Over 3,000 new homes within 800m of from investment by the London Legacy Hackney Wick station have planning Development Corporation (LLDC). 24.9% permission, though the majority are yet to With plans to turn the Park into a NEW HOMES IN THE DEVELOPMENT PIPELINE FIGURE 6 Housing delivery and pipeline by location (800m from Overground station) 3,000

SHOREDITCH HACKNEY CENTRAL HACKNEY WICK ART GALLERIES AND STUDIOS

BUILT 2011-2016 38 785 UNITS 646 UNITS 41 UNITS CAFES AND RESTAURANTS OPENED IN THE UNDER LAST 5 YEARS* CONSTRUCTION 33 1039 UNITS 80 UNITS 164 UNITS GYM AND

HEALTH CLUBS NOT STARTED 6 671 UNITS 354 UNITS 2986 UNITS

*VOA data based on one mile radius from Source: Knight Frank Research/Molior London Hackney Wick station

5 FU L 2016202

ENFIELD

ARNET

ARRO ARINEY ALTAM FOREST REDRIDE ILLINDON AVERIN ISLINTON

RENT ACNEY CAMDEN ARIN DAENAM TOER NEAM CL AMLETS EALIN C C SOTAR

F REENIC ONSLO LAMET ELEY RICMONDPON ANDSORT LEISAM TAMES

INSTON PON TAMES ROMLEY STTON H F CROYDON C C C C CL C L

Source: K F HACKNEY CENTRAL KNIGHT FRANK KEY FACTS INTELLIGENCE For the latest news, views and analysis on the world of prime property, visit HOUSE PRICE GROWTH KnightFrank.com/blog Q3 2014 – Q3 2016

FIGURE 7 24% Hackney and surrounding area RESIDENTIAL RESEARCH NEW HOMES IN THE David Ramsdale DEVELOPMENT PIPELINE Senior Analyst +44 20 3866 8038 434 [email protected] ENFIELD Gráinne Gilmore CAFES AND RESTAURANTS Head of UK Residential Research ARNET OPENED IN THE +44 20 7861 5102 LAST 5 YEARS* ARRO ARINEY ALTAM [email protected] FOREST REDRIDE ILLINDON AVERIN ISLINTON 46 RENT ACNEY LONDON RESIDENTIAL CAMDEN ARIN DAENAM TOER NEAM Raul Cimesa GYM AND EALIN C CL AMLETS Partner, City and East Residential HEALTH CLUBS C SOTAR Development F REENIC +44 20 7718 5227 ONSLO LAMET 4 [email protected] ELEY RICMONDPON ANDSORT LEISAM LUXURY RETAIL TAMES Nick Parr OUTLET STORE Partner, City & East Residential INSTON MERTON PON Development OPENED 2016 TAMES ROMLEY +44 20 7718 5224 STTON CROYDON [email protected]

H F C C C C CL C L

Source: Knight Frank Research

Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs. RECENT MARKET-LEADING RESEARCH PUBLICATIONS

RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH Sector Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Market Sentiment London - Zone 1 (gross yields reported) Prime Central London (GIY)* 2.50% 2.50% 2.50% 2.50% 2.75% 2.75% 2.75%-3.00% 2.75%-3.00% STABLE Zone 1 Prime (GIY) (Outside PCL)* 3.75% 3.50% 3.50% 3.50% 3.50% 3.50% 3.50%-3.75% 3.50%-3.75% STABLE

London and South East Zone 2 Prime (NIY) 3.75% 4.00% 4.00% 4.00% 4.00% 3.50%-3.75% 3.50%-3.75% 3.50%-3.75% STABLE RESIDENTIAL Zones 3-4 Prime (NIY) 3.75%-4.00% 3.75%-4.00% 3.75%-4.00% 3.75%-4.00% 3.75%-4.00% 3.75% 3.75% 3.75% STABLE Greater London Prime (NIY) 4.25% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% POSITIVE DEVELOPMENT South East Prime (NIY) 4.50% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% POSITIVE Prime Regional Cities FINANCE REPORT Prime assets 4.25%-4.50% 4.25%-4.50% 4.25%-4.50% 4.25%-4.50% 4.25% 4.25% 4.25% 4.00-4.25% STABLE 2016/2017 Birmingham (NIY) (prime assets) 4.75% 4.50% 4.50% 4.50% 4.50% 4.50% 4.25% 4.25% STABLE Bristol (NIY) (prime assets) 4.25%-4.50% 4.25%-4.50% 4.25%-4.50% 4.25%-4.50% 4.25% 4.25% 4.25% 4.00-4.25% STABLE Leeds (NIY) (prime assets) 5.25% 5.00%-5.25% 5.00%-5.25% 5.00%-5.25% 5.00% 5.00% 4.75%-5.00% 4.50-4.75% POSITIVE Manchester (NIY) (prime assets) 4.75% 4.50% 4.50% 4.50% 4.25%-4.50% 4.25% 4.25% 4.25% STABLE Secondary Regional Cities Important Notice Prime assets 5.50%-6.00% 5.50%-6.00% 5.25%-5.75% 5.25%-5.75% 5.00%-5.50% 5.00%-5.50% 5.00%-5.50% 5.00%-5.50% POSITIVE

Ground Rents 10 Year RPI Uplifts 2.75% 2.75% 2.75% 2.75% 2.50% 2.50% 2.50% 2.50% STABLE 25 Year Doubling Reviews 3.25% 3.25% 3.25% 3.25% 3.25% 3.25%© Knight3.25% 3.25% STABLE Frank LLP 2017 – This report is Bonds & Rates 3 mth 0.56% 0.57% 0.58% 0.57% 0.59% 0.59% 0.38% 0.38% Base rate 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.25% 0.25% 5 year swap rates 1.57% 1.54% 1.56% 1.47% 1.00% 0.95% 0.49% 0.95% 10 yr gilts redemption yield 1.92% 2.04% 1.92% 1.91% 1.46% 1.39%published0.70% 1.44% for general information only and

Residential Based on rack rented properties and disregards bond type transactions. NIY - Where reported we have assumed an appropriate discount for operating costs. FOCUS ON: Property This yield guide is for indicative purposes only and was prepared on 18 January 2017. *Our PCL yield is based on tenanted blocks with a minimum of 6 units, covering locations such as Mayfair, Knightsbridge, Kensingtonnot etc, situated withinto Knight Frank'sbe definition ofrelied Prime upon in any way. Although Tax update Central London. Yields in the PCL and Zone 1 Prime categories are reported gross in line with market practice and no allowance has been made for operating costs within this yield guide. SOUTHBANK Yields in the London and South East categories are reflective of income-focused transactions of institutional assets. 2016 JANUARY 2017 Regional locations: We have provided an indication of yields in respect of a number of example locations, illustrating the spread of yields in this classification. These yields are reported in respect of institutional quality, stabilised assets. TIMELINE OF TAX CHANGES high standards have been used in the REFORMS IN DETAIL PROPERTY CONSIDERATIONS DEVELOPMENT PIPELINE PRICE PERFORMANCE ANALYSIS INVESTMENT POTENTIAL 2016 SURVEY RESULTS REGIONAL LENDING ANALYSED FOCUS KnightFrank.co.uk preparation of the information, analysis, views The Southbank Residential Development UK Tax Update - UK Private Rented and projections presented in this report, no Review - 2017 Finance Report - 2016 2017 Sector Update - Jan 2017 responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or

RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH UK RESIDENTIAL PRIME CENTRAL UK RESIDENTIAL damage resultant from any use of, reliance on PRIME CENTRAL MARKET UPDATE MARKET FORECAST LONDON SALES INDEX LONDON RENTAL INDEX or reference to the contents of this document. This report analyses the performance of single-unit NEW SUPPLY SHOWS SIGNS OF HOUSING POLICY TAKES SUBDUED OUTLOOK FOR PRICE GROWTH rental properties in the second-hand prime central SALES VOLUMES STRENGTHEN London market between £500 and £5,000-plus per While the UK economy and housing market have held up far better than expected following week. For an analysis of the build-to-rent market RECEDING IN PRIME CENTRAL CENTRE STAGE and the institutional private rented sector in London the Brexit vote, the outlook for both remains uncertain. IN NOVEMBER AS ASKING PRICES and the rest of the UK, please see our Private Boosting the supply of housing is a key priority for policymakers, as a result here LONDON Rented Sector Update report . anticipation is building for the Housing White Paper, due for release shortly, Both the London and wider UK housing investors which will limit upwards High stock levels continue to put downwards pressure on rental values but the Headlines November ADJUST to see if the policies it contains can help unlock further housebuilding markets outperformed expectations pressure on prices. trend is showing early signs of a reversal, says Tom Bill Despite a backdrop of political uncertainty, sales volumes are rising as across the UK. As a general report, this material does not following the referendum. After a sharp Looking at the prime London market, we 2016 lower asking prices release pent-up demand, says Tom Bill dip in confidence just after the vote, believe that a 7% fall in prices across the Both the London and wider UK housing The prime central London lettings market in market in November fell -17% compared to to the end of March 2016 was 189,650 – conditions have improved into the western part of central London in 2016 December 2016 Economic and housing markets have outperformed expectations 2016 was marked by high stock levels and the same month in 2015, which was the first Key facts Jan 2017 indicating that in the year to March 2017 the autumn. On most measures the means that we are close to the bottom in market overview following the EU Referendum The second half of 2016 was marked by a third highest figure after 10.8% in February and Annual rental value growth eased to -5.1% falling rental values. year-on-year decline in 2016. If the rate of Average UK house prices rose by important 200,000 units-a-year barrier will be mainstream UK market continues to terms of price adjustment in this market. December 2016 steady improvement in sales volumes as 18% in March. in December new stock continues to slow, there could be 0.8% in December, taking the annual The celebrations to see in the New Year breached. Yet some estimate that we need perform strongly – with annual price Although there could be some further The trend was caused primarily by an November was the second highest vendors lowered asking prices to reflect the a stabilising effect on rental values at the start had barely ended on January 3rd, but the many more houses every year than this – the growth likely to end this year at 5%. adjustment downwards in prime outer Price growth in 2017 is expected to be Further analysis shows to what extent uncertain outlook for price growth in the sales increase to 4.5% according to data month for sales volumes in 2016 after a changed regulatory backdrop in prime central of 2017. Government was already issuing its second Lords Economic Affairs Committee put the Most regional markets have seen London markets through 2017. notably slower than this year, in all regions transactions have stabilised since the summer. The number of new instructions fell -17% market following a series of tax changes, from Nationwide necessarily represent the view of Knight Frank stamp duty spike in March London. announcement of the year on housing. Its figure at 300,000. While sales volumes were -38% lower in June which meant more vendors decided to let their For now, however, prime central London positive growth, the exception being For rental markets – it has been a mixed in November, the first decline in 2016 first was to highlight plans for new Garden remains a tenants’ market due to the high But creating new homes where they are Wales. The ripple of price growth from An analysis of sales volumes for this year compared to 2015, this gap had halved to -19% property until greater clarity emerged. Average prices in prime central Villages and Towns, and the second was year for landlords in central London, However, the fundamentals of the UK needed in the country is a complex task, London continued in 2016 and we The number of Knight Frank sales in shows that following a spike in March ahead by November. The equivalent figure compared levels of stock that came onto the market in the release of more detail on Starter Homes demand from tenants has been strong, housing market remain largely unchanged The number of tenancies agreed in Despite the seasonal slowdown, November London (PCL) fell by 6.3% in 2016, with hurdles for developers in accessing expect the end of year position to be November was higher than the same of a stamp duty hike and fewer transactions in to 2014 narrowed to -18% from -45% over the 2016, primarily in higher price brackets. – new houses that will be sold at a 20% but this has been offset by a strong supply 2016 was the first month that marked a but with wide variations across land, some parts of the planning system that the East of and the South month in 2014 and 2015 subsequent months as uncertainty around the same time period. November was 34% higher than the discount to qualifying first-time buyers. This of rental properties. In our view there is a reversal of this trend, suggesting rental value Activity levels remained high as the Christmas sub-markets… and the increasing issue of affordability in East will both see stronger growth than Between 2017 and 2021 UK house prices EU referendum intensified, activity has risen same month in 2015 scheme was first mooted in late 2014, but risk of further rental falls next year but not Whether strengthening sales volumes in the declines may be starting to bottom out. holiday period approached. The number some locations. that in Greater London. are forecast to rise by 14.2% cumulatively steadily in recent months. has yet to start. on the scale of the adjustments seen this Year-on-year decline in sales volumes second half of 2016 will provide a reliable of tenancies agreed in November was LLP in relation to particular properties or Annual rental value growth last peaked …while activity levels in PCL in Household sentiment is also a key issue, Looking into next year we believe that the year. The wider UK rental market looks narrowed to -19% in November from This pattern is in contrast to last year, when indicator for the first six months of 2017 remains Average prime gross yield was 3.21% 34% higher than the same month in 2015, at 4.2% in May 2015, the month of the November 2016 were higher than that and the performance of the UK economy slowdown in prices which has been relatively positive with modest rental -38% in June there was a pick-up following the May general to be seen. Political uncertainty is unlikely to which compared to a rise of 23.6% over Net additional dwellings, England UK general election, and has been on a in November 2015 and 2014 has a bearing on this. In this regard, the evident in central London over the past growth expected. Rents could rise further election, as figure 2 shows. subside in the early part of next year as the the first eleven months of the year (figure Macro View: The difficulty of assumptions downwards trajectory since then. UK economy performed better than many 12-months will spread to the wider if landlords begin to sell properties in an UK triggers the process to leave the European 2). The number of viewings rose 17.8% 250,000 Annual growth declined to -6.3% in In respect of the first eleven months of 2016, in 2017 expected last year, and the IMF has just region, with Greater London prices down effort to offset to the impact of tax rises. Union, Donald Trump potentially charts a new However, November saw a minor between January and November, while new Average rents across Great Britain rose December Knight Frank data shows November accounted revised up its forecasts for growth this year. marginally in 2017. This slowdown in the prospective tenants increased 6.9%. 200,000 for 14.1% of total sales, the second highest economic course in the US and ahead of improvement, with rental value growth of by 2.3% in the year to November 2016, New data shows inflation starting to creep capital will likely be experienced across month after March. Indeed, the number of elections in several European countries. -5.1% compared to a figure of -5.2% in Furthermore, despite ongoing weaker demand rising by 2.4% in England alone up. This will put a renewed focus on base projects. Reproduction of this report in whole the rest of the country with price growth Knight Frank Residential Market Forecasts Macro View: The difficulty of Knight Frank sales was higher in November October. among company executives due to the 150,000 rates, although the likelihood of the Bank of down notably on 2016 levels. However, as the 2016 sales volumes data shows, assumptions in 2017 2016 than the same month in 2014 and 2015. uncertain global economic backdrop, many England making a sudden move is slim. For sufficient pent-up demand has formed for buyers Falling rental values coupled with impending The main drivers for weaker market 2016 2017 2018 2019 2020 2021 2017-2021 markets experienced an uptick in viewings 100,000 those who can access the housing market, Mainstream residential sales markets We observe a similar though less marked uptick to act when they perceive value. Average values tax changes that will affect landlords in 2017 performance relate to economic and new prospective tenants ahead of the mortgage rates remain near record lows. in the wider London market, with November fell -6.3% in the year to December 2016, and we have had a dampening effect on new supply. uncertainty surrounding the Brexit UK 5.0% 1.0% 2.5% 3.0% 3.0% 4.0% 14.2% holiday period among executives who delayed 50,000 accounting for 10.1% of sales recorded on expect to see broadly flat price growth in 2017 as process, which we believe will impact London 7.0% -1.0% 2.0% 2.5% 3.0% 5.5% 12.5% The number of new properties placed on the acting until after the US general election. North East 0.0% 0.5% 2.5% 2.5% 2.0% 1.5% 9.3% LonRes in the first eleven months of 2016, the declines start to bottom out. Housing Transactions: UK negatively on consumer confidence in the 0 North West 4.0% 0.5% 2.0% 2.5% 3.0% 2.0% 10.4% or in part is not allowed without prior written run up to and just after the serving of the FIGURE 1 FIGURE 2 1,800,000 formal “notice to quit” the EU. In addition Yorks & Humber 3.5% 1.0% 3.0% 3.5% 3.0% 2.0% 13.1% FIGURE 1 FIGURE 2 Rental value growth in prime central London New supply falls while demand remains 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 1,600,000 the impact of reforms to the taxation of East Midlands 5.5% 1.5% 3.0% 3.5% 4.0% 4.5% 17.6% Price growth in prime central London Sales volumes increased in late 2016 resilient West Midlands 4.5% 1.5% 3.0% 4.0% 4.0% 4.0% 17.6% Percentage of total sales, January to November Source: Knight Frank Research/DCLG 1,400,000 landlords will reduce demand from 2016 versus 2015 East 7.5% 1.5% 2.5% 4.0% 3.5% 5.5% 18.1% 12-month change 12-month change GRÁINNE GILMORE 1,200,000 South East 8.0% 1.0% 2.0% 4.0% 4.0% 5.0% 17.0% 2% 6-month change 6-month change Head of UK Residential Research If the Government’s focus on boosting the 25% 2015 2% 1,000,000 Quarterly change Quarterly change 34% delivery of new homes had not already South West 4.5% 2.0% 2.0% 3.5% 3.5% 4.5% 16.5% 1% 2016 TOM BILL 1% Monthly change 29% 800,000 Wales -0.5% 0.0% 2.0% 2.5% 2.0% 2.0% 8.8% Monthly change TOM BILL “ The data showing the been clear, this was a reminder. However, Head of London 0% 24% 23% approval of Knight Frank LLP to the form 20% Head of London the real meat of the Government’s plans, 600,000 Scotland 2.0% 0.1% 2.3% 2.7% 2.8% 2.8% 11.0% Residential Research 0% 18% growth in delivery of “ The UK housing market -1% Residential Research the Housing White Paper, has yet to make Prime residential sales markets -1% 10% 400,000 has so far outperformed -2% 15% 7% new homes in England an appearance. 200,000 Prime Central London East* 1.0% 1.0% 3.5% 3.0% 3.5% 4.0% 15.9% -2% expectations following “As the 2016 sales volumes -3% “If the rate of new stock is positive, and indicates Prime Central London West** -7.0% 0.0% 1.0% 1.5% 3.0% 3.0% 8.8% There have been strong hints from the 0 the referendum, however, data shows, sufficient pent-up -3% Jan-Nov Nov -4% 10% continues to slow, there could that in the year to March Housing Minister that some of the focus will 2013 2006 2007 2008 2009 2010 2011 2012 2014 2015 price growth is expected Prime Outer London -1.5% -1.5% 2.5% 3.0% 3.0% 4.0% 11.4% demand has formed in the last be a stabilising effect on rental 2016* -5% -4% -17% 2017 the important be on increasing the supply of housing by Residential rental markets Source: Knight Frank Research/HMRC to moderate next year as two years for buyers to act 5% values at the start of 2017” looking at all forms of tenure, by encouraging -6% -5% 200,000 units-a-year •estimate UK 1.2% 1.4% 2.0% 2.0% 2.0% 2.0% 9.8% and content within which it appears. Knight economic uncertainty and when they perceive value” new forms of development – such as

Follow Tom at @TomBill_KF New New Prime Central London East* -2.5% 0.0% 2.0% 3.5% 3.0% 3.0% 12.0% -7% -6% barrier will be breached.” modular building – and support for small and

0% Agreed tax reforms impact on Follow Tom at @TomBill_KF Tenants Initial data suggests that transaction levels Viewings

Prime Central London West** -6.5% -2.0% 1.0% 2.0% 2.0% 2.0% 5.0% Tenancies Follow Gráinne at @ggilmorekf medium-sized developers.

The Market remained fairly steady last year across the consumer confidence.” Prospective Jul Jul-16 Apr Jan Oct Jun Apr-16 Feb Mar Jan-16 Oct-16 Aug Sep Jun-16 Nov Mar-16 Feb-16 May Dec-15 Aug-16 Sep-16 Dec-16 Nov-16 Jul-16 Properties On Properties May-16

Prime Outer London 1.5% 2.0% 3.0% 3.5% 3.0% 3.0% 15.4% Apr-16 Jan-16 Oct-16 For the latest news, views and analysis Jun-16 For the latest news, views and analysis Mar-16 Feb-16 Dec-15 Aug-16 Sep-16 Dec-16 Nov-16 May-16 For the latest news, views and analysis The data on the delivery of new homes is UK, although some parts of the market For the latest news, views and analysis on the world of prime property, visit on the world of prime property, visit Source: Knight Frank Research on the world of prime property, visit positive – the most recent estimates of net have been affected by successive stamp on the world of prime property, visit Global Briefing or @kfglobalbrief Global Briefing or @kfglobalbrief Source: Knight Frank Research Source: Knight Frank Research *City & Fringe, Islington, , King’s Cross and Riverside Source: Knight Frank Research Source: Knight Frank Research Global Briefing or @kfglobalbrief supply of housing in England in the year duty changes. Global Briefing or @kfglobalbrief **, Kensington, South Kensington, Chelsea, Knightsbridge, , Hyde Park, , Mayfair, St John’s Wood Frank LLP is a limited liability partnership UK Housing Market Prime Central London Prime Central London UK Residential Market registered in England with registered number Forecast - Nov 2016 Sales Index - Dec 2016 Rental Index - Dec 2016 Update - Jan 2017 OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may Knight Frank Research Reports are available at KnightFrank.com/Research look at a list of members’ names.