East London Residential Our Patch, Our View Q3 2016 2–3
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East London residential Our Patch, Our View Q3 2016 2–3 CBRE East London Our patch Canary Wharf Heron Quays CBRE East London South Quay Tower Hamlets Newham Hackney Redbridge Crossharbour City of London Barking and Dagenham Overview Overall, growth in the London market Investors accounted for 82% of sales: an remained robust, albeit with a slight encouraging sign that investor sentiment for moderation in Q3. Nationwide recorded the East London and the wider London annual growth of 7.1%, down from the 9.9% residential market remains positive, despite recorded in Q2. This growth was driven by the additional rate of Stamp Duty. Overseas strong activity in the first quarter of 2016, as investment levels also remained mostly investors clambered to avoid paying an unchanged compared with Q2, indicating additional 3% Stamp Duty on their that international buyer interest has persisted purchases. Since then, activity in Greater through an uncertain few months. London has slowed with sales volumes down 13% overall in the first half of 2016 compared Market distortions aside, the fundamental with the same period last year. drivers of London’s property market are not affected by the decision to leave the EU. In Some four months have now passed since fact, the declining interest rates and the the UK voted to leave the European Union, continued strength of the mortgage market Havering and the industry is closely monitoring its continues to underpin demand, particularly impact. However, the distortionary effect of in the main stream market, which is further the new Stamp Duty rules means that there stimulated by the London help-to-buy will still be some time before we can draw scheme. In addition, the fall in Sterling has any conclusions. generated renewed interest from international buyers. Bexley CBRE East London did experience a slight fall in activity in the third quarter, We hope you enjoy the latest edition of Our as the impact of Stamp Duty and Patch, Our View. If you would like any further post-referendum uncertainty continued to information please do not hesitate to contact feed through the market. In addition, the a member of the team, whose details can be third quarter is typically quieter as people found at the back of this report. enjoy their summer breaks. However, while activity declined, it still remained robust. Southwark Lewisham Royal Borough of Greenwich Joseph Selby Senior Director T: +44 (0)20 7519 5913 E: [email protected] 4–5 East London: The metamorphosis of East London has The evolution of the tech industry has backwater into a top residential and leisure As well as a creative migration, new industry further open up East London, bringing been in motion since the 1980s when a brought further workers and residents to East location. Olympic stadiums and arenas have and significant regeneration, East London several other property markets into focus. an overview pioneering population of artists and other London. What began as a cluster of digital been recycled, with West Ham United taking has also been the benefactor of several creatives established themselves in companies surrounding Old Street residence in the redeveloped Olympic infrastructure developments. London City The multifaceted evolution of East London Shoreditch, Hoxton and Clerkenwell. This roundabout has resulted in an explosion of Stadium, and the Copper Box Arena now Airport, opened in 1986, now serves 4.3m has translated into strong growth of its Over the last several decades laid the artistic foundation of these tech companies throughout markets such as home to London Lions Basketball Club. passengers a year, with a current investment residential property market. To August 2016 neighbourhoods, transforming them and Shoreditch and Clerkenwell. The area now Homes at the former Athletes Village, now programme aimed at increasing this to house prices in East London increased by East London has been boosting their appeal – as a result, these hosts more than 10,000 tech companies known as East Village, are also in high 8m by 2030. The extension of the Jubilee 14.1%, compared with 12.1% across wider completely transformed. districts now command some of the highest generating £12.5bn of annual revenue. demand. This development, along with Line in 1999 made areas including Canary London. Over the longer term, prices have house prices in the capital. Amazon will also join the ranks in 2017; its other schemes spread across the Queen Wharf, North Greenwich and Stratford more risen 78% over the last five years, outpacing It is now a highly desirable new UK headquarters next to Liverpool Street Elizabeth Olympic Park will deliver 11,000 accessible. A further benefit comes with the wider London by a margin of 12%. This place to live and new With the unabated growth in popularity of station will host 5,000 employees. new homes to the area. Westfield Stratford recently introduced 24 hour weekend strong growth is set to continue as the these City Fringe neighbourhoods, the City, one of the largest urban shopping service. The opening of Crossrail, now titled volume of regeneration increases and the infrastructure and industry migration of artists, creatives and However, as demand for tech space in the centres in Europe, also makes Stratford a the Elizabeth Line, in 2018/19 is going to migration to the east continues. continues to draw people fashionistas has continued east over time to City Fringe has grown, so have rents. As a major retail and leisure location. Building on new, previously overlooked areas. This result, the tech industry along with it its the success of the Olympic Legacy, Here Average house price index to the area. As a result, evolution has brought brands like Burberry workers, has spread further east to more East is based in the heart of the Olympic this region of London is and other high end retailers to Hackney affordable areas. An example of this is Park set to create a new hub for individuals 200 Central, and attracted art institutions such as Fish Island in Hackney Wick – with its major and companies in the arts, education and seeing a significant amount the London Film School and the English concentration of artists and studio spaces, tech industries. As if to cement its evolution, 180 of development, with National Ballet from their historic homes in this canalside community is a hub of earlier this year Stratford was officially West London to Leamouth Peninsula and its creativity and innovation. Set alongside re-zoned on London’s tube map, bringing 160 areas like Stratford and brand new community, London City Island. long-established residential and business it into zone 2, and thereby more closely the London Docks now communities, this has become one of associated with Central London. 140 The next phase of East London’s London’s most exciting new destinations. putting East London in the transformation came with the completion of Based in East India Dock, Republic is Major regeneration in East London is also (Base = Jan 2007) 120 Canary Wharf in the 1990s. This brought a another new campus for start-up companies underway in Greenwich, with the Greenwich global spotlight. house price index Average new population of financiers to the area, where, at less than £35psf, rents Peninsula development set to deliver 100 many of whom chose to live in the now will be half of those paid in Shoreditch and over 15,700 new homes, 900,000 sq ft of trendy Shoreditch and surrounding areas. the West End. business and retail space, numerous leisure 80 Today Canary Wharf is set to become a top facilities and nearly 50 acres of green space 2011 2014 2012 2013 2015 2016 2010 2007 2008 residential location in its own right. There are The summer Olympics in 2012 placed upon completion. 2009 a total of over 20,000 new homes in the another East London market on the East London London pipeline across the Isle of Dogs, over 3,000 residential map. Since the end of the games, of which are on the Canary Wharf Estate. Stratford has been transformed from derelict 6–7 Sales overview CBRE East London Reason for purchase Q3 2016 Owners Investors Q3 2016 sales snapshot % Percentage Despite the impact of Brexit 90 and additional Stamp Duty, Average sales value £589,160 82% 70 75% buyer appetite remained Average new build £psf £912 strong in the third quarter. 50 Specifically, investors Average resale £psf £625 30 Number of sales remained highly active; an 25% encouraging sign that they Highest £psf £1,788 10 17% have not been discouraged Q2 2016 Q3 2016 by the additional 3% levy. A successful launch of the final building at Purchaser origin Q3 2016 London City Island, Caledonia House, % Percentage generated a large number of sales this quarter. The Stage in Shoreditch also continued to be a popular development, UK 61 Asia 26 particularly among overseas investors. Other 9 High levels of interest remain at Precision Europe 4 in Greenwich, where UK investors were the main buyer group in Q3. CBRE Research, Q3 2016 Overall, these new-build developments contributed to a total sales volume of nearly 100 for CBRE East London in Q3. The average sale value was £912psf, down Sales forecast 21% from Q2. This largely reflects the sale of lower value units, with 14% of sales over The summer holidays coupled with the £1,250psf in Q3, compared with 40% in Q2. continued impact of Brexit and Stamp Duty In contrast, 57% of sales were between caused a relatively muted third quarter. We £750 and £1,250psf this quarter, compared expect activity to pick up during Q4, as an with 37% in Q2.