Savills World Research UK Development

Spotlight Development Spring 2015

Towards 50,000 homes a year Accelerating housing delivery to meet the capital’s demand

savills.co.uk/research Spring 2015

Outlook solving london’s housing crisis

London needs to capitalise on infrastructure Contents improvements to deliver the necessary housing

n this report we have identified There could be further capacity, if: enough land to bring forward an additional 58,000 homes over ■ Densities are increased: In this the next decade. This is the study we have applied existing We have identified 21 locations that can equivalent of just under 6,000 densities to our calculations. However, deliver 58,000 by 2025 provided proposals Iextra new homes a year. Given that the higher densities can be achieved by existing five year pipeline is expected reintroducing traditional streetscapes for new infrastructure are adopted to deliver an average of 32,000 new with mansion blocks and terraced See pages 4-5 homes a year across the capital, housing as well as tower blocks. These according to our estimates, these extra options will be explored more fully in a homes will bring the London annual future report. rate of housebuilding to 38,000. While this brings us closer to the Mayor’s ■ More public land is released target of building at least 42,000 a year, for residential development: The reaching these numbers depends on GLA has already made great strides Where will the new homes go? We map the following triggers: earmarking non-operational assets for out the sites expected to come forward disposal. The recent creation of the for development over the next five years ■ Delivering infrastructure London Land Commission to identify improvements is key: Plans for public sector land for development See pages 6-7 new train and tube lines would not should help deliver greater numbers of only increase transport capacity but homes on brownfield sites. also have the potential to open up new parts of the city for development ■ Look beyond the M25: There is a and boost housing delivery. Hence back log of housing need to consider. the benefits of investment in projects The revisions to the London Plan (within Housing delivery to double within Housing such as 2 need to be the SHMA) state the figure for housing Zones. Political drive and funding are regarded both in terms of transport need is 62,000 homes a year once major catalysts for development enhancements and housing delivery. historical undersupply is taken into It is crucial that new station openings account. While brownfield development See pages 8-9 are coordinated with plans for within London’s boundaries is the residential development. preferred option, there must be a dialogue with neighbouring Local ■ Housing zones: Our analysis shows Authorities to ensure surrounding that the delivery of housing is set to councils play their part. double within the nine Housing Zones Investment in transport improvements in our study area. Therefore, we expect ■ Green Belt: We also need to have is essential to open up new parts that the remaining 11 Housing Zones an open debate about the potential for are likely to bring significant numbers if sustainable development in the Green of the city for housing momentum is kept up. Belt. A recent paper by London First See pages 10-11 shows 22% of land within London’s ■ Support a wider tenure mix: Our boundary is Green Belt. This fact research shows that the biggest gap alone deserves attention. n between supply and demand is in the lower price brackets. Building homes for a mix of tenures would help to address this imbalance. Providing Susan Emmett Case Studies: we take a closer This publication homes for private rent at scale, in UK Residential This document was published in March 2015. The data used in the charts and tables is the professionally managed blocks and +44 (0) 20 3107 5460 look at six different areas latest available at the time of going to press. Sources are included for all the charts. We have backed by institutional investment, [email protected] See pages 12-13 used a standard set of notes and abbreviations throughout the document. can also help speed up the delivery. @saemmett

savills.co.uk/research 03 Spotlight | London Development Spring 2015

Housebuilding Table 1 Building THE Homes 21 areas with potential for greater housing delivery Ticked boxes indicate the catalysts for change London Needs LAND POLICY PLACE IMPROVEMENTS Identified Sites Identified Public Industrial Housing Opportunity Major Ongoing Proximity of Sites Land Land Zone Area Infrastructure Placemaking Period Stock Lower Lee Valley       

Clapham Junction We’ve identified 21 hotspots he combination of within a new neighbourhood will       which could deliver an additional several factors such further boost housing capacity (see as a change in land page 13). East London Riverside       58,000 new homes by 2025 use, political will and new infrastructure can Future hotspots Southall actT as a catalyst to development, By mapping out eight key factors       where there have been constraints that influence housing delivery and to delivery. highlighting where they converge, Upper Lee Valley Words: Susan Emmett In this report, we have analysed we have identified 21 future hotspots      Twitter: @saemmett how the availability of development for development (see Table 1). While sites, the location of public assets this list is not exhaustive, these Thamesmead      and the potential re-use of some locations provide some of the best employment land, set in the context opportunities to bring forward the Harrow of the GLA’s Housing Zones and greatest volume of homes at speed.      Opportunity Areas, can accelerate Our monitoring of development housing delivery. sites suggests there is potential to Old Oak Common      We have also assessed how build 200,000 private homes and  new and proposed rail links such 70,000 Affordable Homes in these 21 Elephant & Castle “Reaching these numbers as Crossrail 1 and 2 would boost locations. According to our analysis      depends on strong leadership future housing delivery by improving of the development pipeline in these access to outer boroughs and areas, 32,000 new homes would Wimbledon      and funding for key opening up new neighbourhoods have been built anyway over the next for development. Where there is five years without the intervention of Quays / infrastructure projects” potential for development at scale, the catalysts we have listed. Surrey Canal       Susan Emmett, Savills Research such as Old Oak Common, the creation of an employment centre More, faster Brent Cross to Hendon However, by making best use of       the catalysts we have identified GRAph 1 Hounslow and building for a wider range of     Demand vs supply The biggest supply gap is in the lower value markets tenures, we can accelerate these

n Occupier demand n 2015-2019 average annual forecast supply numbers. We estimate that there is Crystal Palace to Croydon capacity to build another 24,000 new      14,000 homes in these 21 locations within the next five years and a further Ilford      12,000 34,000 new homes after that. This brings the total additional capacity to Barking Town Centre 58,000 over the next 10 years – the     10,000 equivalent of just under 6,000 extra homes a year. Alexandra Palace     8,000 However, reaching these numbers 8,650 depends on strong political Ealing leadership, a more creative approach     6,000 to existing assets, particularly public and under-used employment land Euston     Private homes completions 4,000 and ultimately funding for new infrastructure. Big ticket items such South East London as Crossrail 2 and the Bakerloo     2,000 extension are essential to encourage more development in more peripheral Waterloo/ Southbank areas. While at a more local level,    0 roads, bridges and improvement to Lower Mainstream (Less than £450psf) Mid Mainstream (£450psf - £700psf) Upper Mainstream (£700psf - £1,000psf) the public realm could be necessary Source: Molior, CACI, Savills Research to make sites work. n Source: Savills Research

04 savills.co.uk/research 05 Spotlight | London Development Spring 2015

Development land As we have explained on the previous of delivery that include: Royal Docks, of building at least 42,000 homes proportion of land is used for non- page, by looking at the places where Greenwich Peninsula, Canary Wharf, a year. domestic purposes. Where will site potential converges with a raft of Nine Elms, Colindale and Wembley. Sites drawn from a combination In locations where development other catalysts, we have identified 21 However, there is potential for more. of assets belonging to the GLA, is being triggered by the catalysts development hotspots. Here we take We have also considered many more Central Government Estate, NHS we have discussed, employment the homes go? a closer look at the spread of sites sites which are not currently coming and Local Authorities could sites which are under-utilised which underpin our analysis. forward in the next five years but significantly boost housing delivery. could be appropriate for residential which could be accelerated with the Map 2 shows GLA holdings already development, boosting delivery. n Identified sites catalysts we have discussed, such as earmarked for disposal. Savills has identified the supply of land the confirmation of Crossrail 2. However, funding worth for new housing and reviewed when Constraints to delivery of these sites £1million for a new London Land the land is likely to come forward for include the complexity and speed Commission to help create a record Development first requires land. We vailability of land development. We have taken a view of the planning process, the need of surplus public sector land in for development on the likelihood of sales on each site for vacant possession, site viability, London will be key to identifying have identified known private sites, is a prerequisite during the next five years, with phasing market capacity, (especially for big additional new sites. public assets and concentrations of for increasing and in line with market capacity. sites running beyond the five year accelerating housing Map 1 shows the projected period), and the assembly of funding. Land in other use non-domestic land uses delivery.A Where sites exist or concentrations of supply coming Changes in employment patterns The London Plan target could potentially come forward, forward over the next five years. The Public land means that there are now a number is set at building 42,000 catalysts such as infrastructure darker the shade of red, the higher the Using some public land for housing of employment sites in London new homes a year Words: Katy Warrick improvements and political volume of private homes expected to could be a major component of which may be under-utilised. Twitter: @katywarrick intervention can act to bring be sold in the next five years. We have accelerating housing delivery and Map 2 also highlights in forward more new homes. therefore highlighted existing hotspots reaching the London Plan target blue the areas where a high

Map 1 Map 2 Supply pipeline (2015-2019) and future development hotspots Concentrations of non-domestic land and key GLA Group Assets

Alexandra Palace Upper Lee Valley

Brent Cross to Hendon

Lower Lee Valley Ilford Old Oak Common Harrow

Barking Town Centre

Ealing

East London Riverside

Southall

Hounslow

Thamesmead and Abbey Wood

KEY Euston Surrey Quays Surrey Canal GLA Group Assets Non operational, by status Waterloo/Southbank ● Saleable/ in disposal process ● Other non-operational assets KEY Clapham Junction 2015-2019 Supply pipeline Total Non-Domestic Land Concentration of private units (sq m) GLUD 2005 by OA ■ More than 1,000 ■ Over 60 ■ 500 to 1,000 ■ 50 to 60 Wimbledon ■ 250 to 500 ■ 40 to 50 ■ 100 to 250 ■ 30 to 40 ■ 50 to 100 ■ 20 than 30 Elephant and Castle Crystal Palace to Croydon SE London ■ Less than 50 ■ Less than 20

Source: Savills Research Source: Savills Research

06 savills.co.uk/research 07 Spotlight | London Development Spring 2015

Policy Delivery to Double

Within Housing Zones GLA Housing Zones are The confirmed 11 Housing £7m investment to support expected to fast track Zones are driven by a 4,000 new homes in Croydon Words: Natalie Ingham 32,757 new homes £317m investment

Political drive and investment Map 3 can act as a major catalyst to GLA Housing Zones (purple), possible Future Housing Zones (pink) and Opportunity Areas (light pink) open up new parts of London Number of homes to be delivered by GLA Housing Zones

f the 21 locations we have identified as development hotspots, nine have Harrow Tottenham been awarded Housing Zones status by the GLA. 1,956 OTwo more Housing Zones, in Waltham 5,294 Forest and Wembley, have recently been announced and a further nine zones are to be announced shortly. The £400m programme, jointly funded by the Mayor and central Government, will act as a significant catalyst to housing Waltham delivery by providing key infrastructure Southall Forest improvement, greater planning certainty for developers and political focus to drive 4,345 schemes forward. 2,477 The initiative is designed to be flexible. Plans to boost development are being driven by each London borough and are based around local circumstances rather than a centrally imposed formula. The Hounslow Barking Town confirmed 11 zones are expected to deliver Centre 32,757 homes following an investment of £317m. 3,478 Within the nine Housing Zones included 2,295 in our study area, we estimate at least 8,900 new homes could be delivered before 2019, with a further 19,000 expected by 2025. Other programmes supporting growth include the recently Wembley Thamesmead/ announced investment of £7 million for Abbey Wood (x2) the Croydon Growth Zone, which aims to 2,380 create 4,000 homes and 10,000 jobs. 2,826 Opportunity areas Beyond that, the Opportunity Areas identified in the London Plan highlight key stores of brownfield land which could be used for volume development. Clapham New While there is no funding pot associated with Opportunity Areas, it is likely many Junction Bermondsey of the new Housing Zones will emerge within these locations. These are locations 5,356 2,372 with significant capacity for new housing, commercial and other development linked to existing or potential improvement to public transport. n Source: Savills Research

08 savills.co.uk/research 09 Spotlight | London Development Spring 2015

London infrastructure Map 4 LINKING transport London’s future infrastructure improvements, confirmed and suggested and housing

Words: Natalie Ingham The budget for Crossrail 1 Cost of a second Crossrail £3bn funding for extension £1.7bn extension of DLR is set at £14.8bn line estimated at £27.5bn of the Bakerloo Line between Bank & Victoria New rail and tube lines are analysis shows property values in some areas immediately surrounding essential to opening up new new Crossrail 1 stations have already parts of the city for housing outperformed the rest of the borough Proposed regional ahead of the line’s opening in 2018. HS2 extensions to Crossrail 2 However, value uplift has by no ransport improvements means occurred uniformly along the and new station line. The strongest performance openings can act as a has been recorded where there catalyst for development has been a corresponding increase and regeneration, in development activity. Hence includingT additional housebuilding. reduction in journey times and However, given the time taken increased connectivity must be to approve and implement large accompanied by place improvement, projects, the effects of new including mixed use development infrastructure are longer term and the creation of public space. compared to the other catalysts we Where development is occurring, have identified in this report. new build schemes are selling at a Proposed international and regional interchanges To deliver the transport infrastructure premium to existing stock, benefitting Proposed international London needs by 2050 will cost over from the value uplift larger scale and regional interchanges £100bn according to figures from Arup development can provide. This Proposed and TfL. The budget for Crossrail 1, demonstrates the need to proactively extension to Barking Riverside already underway, is set at £14.8 billion. integrate housing into the planning The cost of a second Crossrail line, for Crossrail 2. Crossrail 1 line: proposed extensions running diagonally from south west to the north east, has been estimated at Investment costs £27.5 billion including a 66% optimism The cost of Crossrail 1 will be met by Proposed Crossrail 2 line: bias and the cost of rolling stock. Government, the safeguarded route Smaller projects are also important and London businesses. Around including a £3 billion extension of half of the costs will be met by the the Bakerloo line and a £1.7 billion Mayor of London through TfL and extension to Nine Elms extension of the DLR between Bank the GLA, including contributions and Victoria. Extending the London raised through the Crossrail Business Overground line to Barking Riverside Rate Supplement, Section 106 and would cost about £200 million. Community Infrastructure Levy (CIL). Similarly, a significant contribution for Crossrail 2 opportunity Crossrail 2 is expected to come from Proposed DLR extensions HS1 While the central aim of Crossrail 2 is sources outside central Government. to provide additional transport capacity, Research from London First suggests the reach of Crossrail 2 could unlock a combination of funds from fares, Proposed regional the latent potential of many outer London taxes (business rates and extensions to Crossrail 2 London areas, particularly if plans for council tax) and developers should new stations are accompanied by plans contribute to the costs. The group, Proposed Bakerloo line for regeneration, more new homes and which represents London businesses, extension: two possible routes new employment space. also argues for a degree of fiscal Up to 500 meters from proposed devolution to support big projects. Crossrail 2 stations, there is currently Beyond that, capturing new value capacity on identifiable development created by development, particularly sites for 20,000 new homes. However, in emerging neighbourhoods, the new line will bring opportunity for should help support the costs. Tax more if plans for transport improvement increment financing (TIF) structures, and housing are closely integrated. which rely on future gains in taxes The development of Crossrail 1 to subsidise current projects, are provides some valuable lessons. Our worth investigating. n Source: Savills Research

10 savills.co.uk/research 11 Spotlight | London Development Spring 2015

Case studies spEeding up Clapham Junction Catalysts: Situated within the 57 acre ‘Clapham Junction to Battersea Riverside’ housing delivery Housing Zone, which the GLA say will attract 5,000 homes in Clapham Creation of 24,000 £1.4 billion of investment for 5,000 new  homes, new commercial space and 1,300 new Junction to Battersea new homes in jobs. Proposed public transport improvements Riverside Housing Zone Old Oak Common include Crossrail 2 and the upgrade of Clapham Junction Transport hub.

Six London areas where here is no easy solution and the creation of new centres USPs: Redevelopment of the Winstanley and to the London housing of employment, can accelerate  York Road Estates will drive place making effort. different approaches apply Good transport links to West End and City. crisis and no single housing delivery where potential 5,000 new homes formula that can be sites are available. Between 2,800 and applied across the As London’s centres of 3,800 additional homes expected to be delivered Old Oak Common capitalT to instigate faster house employment become more in Euston in Harrow Words: Edward Green building. The GLA has recognised dispersed from the West End and this in its flexible approach to the the City, the emergence of new hubs Catalysts: This 950 hectare site, which Housing Zones programme which for retail and office development will cuts across the boroughs of Hammersmith is borough led and tailor made to also boost the capacity for housing. & Fulham, Brent and Ealing and encompasses the Park Royal Industrial Estate and each location. This is particularly the case in very Wormwood Scrubs Common, has the Our report has looked at the key large regeneration schemes such as potential to become a whole new district role that political drive and funding Old Oak Common.  of the capital and employment centre. The tottenham play in opening up new areas and These catalysts do not apply Mayor’s vision for regeneration here sees supporting the viability of new uniformly across our study areas. the creation of 24,000 homes and more than Catalysts: This part of Haringey has great schemes. We have also assessed Here we take a closer look at 55,000 jobs. Plans will be driven by the newly potential. Housing Zone investment will how further catalysts, such as new six case studies where different created Old Oak and Park Royal Development instigate the delivery of almost 2,000 new infrastructure, place improvement solutions apply. n Corporation (OPDC). homes around a redeveloped station. GLA funding for two new bridges will USPs: Located within an Opportunity Area, open up the Lee Valley Regional Park. The Old Oak Common could become a transport  wider regeneration of Tottenham, which also  super hub linking London to the rest of the lies within the Upper Lee Valley Opportunity UK provided there is an interchange between Area, will bring forward even greater numbers Crossrail 1 and . and create 5,000 new jobs. There are over 20 possible private sites within the area including Hale Wharf and various plots of vacant land Ilford owned by National Grid.

Catalysts: The largest town centre in the USPs: A new Crossrail 2 station at Tottenham borough of Redbridge, and currently awaiting Hale as well as the redevelopment of a Crossrail 1 station, Ilford will benefit from  Tottenham Hotspur football stadium would act  travel improvements as an already established as further catalysts for regeneration. residential area.

Euston USPs: Ilford has great potential with Crossrail  1 but more sites need to come forward. Catalysts: Flagship station for HS2. Euston is expected to become a core hub serviced by both Crossrail 2 and High Harrow  Speed 2. The overall number of new homes and jobs which could be delivered here are Catalysts: Harrow town centre sits within dependent upon the final design of Euston the “Heart of Harrow” Housing Zone where Station. Three main options are being explored. more than 5,000 homes are expected to be delivered in the next 10 years. The council-led USPs: Euston and the surrounding area  transformation centres on three major sites could see huge improvement of place with and involves the reallocation of some the potential to mimic the success of its of its operations to release sites for residential close neighbour King’s Cross. The project development.  is estimated to provide between 7,700 and 14,100 jobs, 20,000 sqm of retail floor space USPs: According to the GLA, the Housing Zone around the station and between 2,800 and  will also accelerate delivery of the council’s 600 home private rented sector programme. 3,800 additional homes. Retail Park, Tottenham Hale Clapham Junction

12 savills.co.uk/research 13 Spotlight | London Development

Research publications Budget 2015 round-up Our latest reports outlined plans to help ■ Public land: £1 million to fund the On a national level: meet a target of 400,000 new homes in London Land Commission which will Residential Research London by 2025. Here are some of the create a database of public sector and ■ Commercially-driven: The savills.co.uk/research/uk/residential-research key measures: brownfield land that could be used for government is to adopt a more Spotlight | Prime Rental Markets residential developments. commercially-driven approach to Market in Minutes | Prime London Residential ■ Mayor power: Devolving further land and property asset management Market in Minutes | Prime Regional Residential powers over planning and skills to the ■ Brent Cross: £97 million of funding across the central government estate. Mayor of London. This will allow the and ring fencing of the local 50% share Departments are to pay market-level Mayor to accelerate the provision of new of business rate growth to support Barnet rents for freehold assets they own. homes by reducing planning delays. and GLA’s regeneration plans for Brent Cross. This will unlock 7,500 homes and ■ Compulsory purchase consultation: ■ Croxley rail link: The government will create 4.9 million sq ft of new commercial The government has launched a provide a further £34 million to support development space for up to 27,000 jobs. consultation into the compulsory the delivery of the Croxley rail link project, purchase regime to make it clearer, subject to a £16 million contribution from ■ Croydon: £7 million to support Croydon faster and fairer to support brownfield and final approval Growth Zone which could unlock 4,000 development. of the scheme. homes and 10,000 jobs. For more publications, visit savills.co.uk/research Follow us on Twitter @Savills Savills team Savills Research

Susan Emmett Jim Ward Katy Warrick Natalie Ingham Edward Green UK Residential UK Development London Development UK Development London Development 020 3107 5460 020 7409 8841 020 7016 3884 020 3107 5459 020 7409 5902 [email protected] [email protected] [email protected] [email protected] [email protected] @saemmett @katywarrick

London Residential Development

Dominic Grace Paul McGowan David Williams Piers Nickalls Ingrid Reynolds Head of London Mixed Use Development Greater London Housing Development Residential Development Development 020 7409 8709 Commercial Sales & Regeneration 020 7409 9996 020 7016 3844 [email protected] and Leasing 020 7016 3828 [email protected] [email protected] 020 7409 8704 [email protected] [email protected]

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