New Homes Market – First Half 2014

By on Friday, July 18th, 2014 in Market Trends, New Homes.


A number of smaller high quality boutique developments were launched to the market in Bloomsbury, Clerkenwell and City fringe in the first half of 2014 along with larger developments at Kings Cross, the Southbank and in Docklands close to Canary Wharf.

With the exception of higher value apartments priced at over £2 million, where supply was plentiful, all developments continued to attract strong interest and sales to predominantly cash and lowly geared purchasers.

New Homes Market – First Half 2014

While international sales did take place it was at a much lower level in Midtown and the City than in previous years. We believe this was in part due to the lower rental returns available in central London that for new homes have now dipped below 4% as the combination of higher prices and static rents made central London less attractive compared with other markets including developments in zones 2 and 3 where rental returns of 5% are still possible. It is not surprising that exhibition rooms in the Far East continued to produce results for new developments in Docklands where rental projections can still show 5%.

In March The Mayor of London, Boris Johnson asked developers at the international property forum at MIPIM in Cannes to join him in a new deal to market and sell London homes to Londoners first. The initiative was supported by the major developer groups, London First, London Chamber of Commerce and the Home Builders Federation and signed by 50 big and small developers in London.

While we support the Mayor’s initiative, the fact remains that fewer domestic purchasers are prepared to put down cash deposits up to 3 years ahead of projected completions and so London’s house builders have continued to use Hong Kong and Singapore sales exhibitions to underwrite their sales targets.

The Mayor explained, ‘I do not in any way want to deter international investment – you can see astonishing transformation in London thanks to international investment – and I recognise the important economic contributions migrants make to our city. ‘But you will understand however, I want Londoners to be able to live near where they work and to raise their families in our boroughs.’

This initiative has come about after growing political and social concern about London prices being pushed up by demand from overseas buyers who are adding to their property portfolios and then leaving properties empty. While this may be true in West London boroughs such as Westminster and Kensington and Chelsea it is our experience that the overwhelming majority of investment sales across Midtown, City and Docklands are dependent on rental income and are not left empty.

The pricing of London’s development pipeline outperformed the general sales market in the first half of 2014 with asking prices jumping by an average of 8% compared to the 3% growth in average sales prices that we cover in our sales report.

New homes premiums are not unusual but with almost universal reports of a shortage of homes being built in London, the premiums being asked are making buyers think long and hard before making offers. The consequence of these higher asking prices has been a slow down in the sales rate across developments in Midtown, City and Docklands as buyers take longer to commit to making reservations and look at other locations before making a commitment to purchase. A higher percentage of buyers in the first half of 2014 required mortgages and a greater number had properties to sell in order to meet developers’ new price expectations.

Demand for entry level one bedroom apartments, as has been reported elsewhere in this report, ensured long waiting lists and high capital and £/sq ft prices being achieved in new developments. The sales rate of higher value homes above £2 million remains slow as demand has not kept pace with the increasing supply of these luxury homes where many penthouses are priced in excess of £3 million. Accordingly there is a range of £/sq ft rates across any development and it is the capital sums that ultimately attract and reflect demand for each individual home.

As we move towards the General Election in May 2015 we expect market conditions to remain largely unchanged with well designed new homes across Midtown, City and Docklands selling to buyers who are buying for long term investment and personal use rather than short term buy to let returns.

New Homes Market – First Half 2014NEW DEVELOPMENTS

In the first half of 2014 a number of high quality well located residential developments were launched including:

33 Blackfriars EC4 by Northridge Capital a comprehensive refurbishment of 16 two and three bedroom apartments located off Ludgate Hill close to St Pauls Cathedral. 7 of the 16 units were sold off plan with completion expected by the end of 2014. Prices ranged from £835,000 to £1,950,000 and averaged £1,200 / sq ft.

In Midtown at The Grays, Grays Inn Road WC1 a development of 13 apartments including studio, one bedroom and two bedroom apartments were offered in Hong Kong with 7 reservations being taken at prices approaching £1,750 / sq ft.

63 Compton EC1 a new landmark Clerkenwell building of only 4 outstanding apartments with south facing roof terraces, was completed in June by NORD. Prices range from £1,750,000 to £1,825,000 with direct lift access and a share in the freehold. The penthouse was sold within 7 days of launch.

Also in Clerkenwell at 62-68 Rosebery Avenue EC1 4 new two bedroom duplex penthouses with outstanding south facing views and terraces by Londonewcastle were launched with prices ranging from £1,375,000 to £1,700,000 in June. Again two sales were agreed within 10 days of release.

At Canaletto, 259 City Road EC1 a 31 storey tower of 190 private apartments by Groveworld launched offering residents 24 hour concierge service, a restaurant, private Club Canaletto with a sky terrace, 24 floors above London, a fabulous 15 metre swimming pool, spa and gymnasium. At half year it was reported that 133 apartments had sold with the latest pricing starting from £830,000 for a one bedroom apartment on the 19th floor. Prices averaged £1,200 / sq ft.

Next door at The Lexicon, 261 City Road EC1 a new 36 storey tower by SOM architects was launched by Mount Anvil on 5th June 2014 with completion scheduled for spring 2016. The building offers 146 private apartments.

In May Telford Homes successfully launched Vibe, Dalston E8 in the UK and overseas, a redevelopment of Holy Trinity School. 75 pre sales were secured both in the UK in the Far East with 26 apartments held back scheduled to be launched in the autumn.

At Kings Cross Argent launched The Plimsoll Building N1C in March in the UK and Asia following the success of The Art House and Tapestry Building. It was reported that 102 units of the 178 apartments had been sold with prices exceeding £1,400 / sq ft. Completion is due by the end of 2015.

In Docklands Galliard was the star performer with Royal Gateway at Canning Town, a development of 336 apartments that was launched in the UK off plan in February 2014 with the earliest completion scheduled for September 2016. By the end of February 70% of the apartments had sold in the UK or as the Galliard adverts proclaimed; 268 in a three day sales release.

The Royal Gateway E16 scheme, designed by architects Studio Egret West, will see 336 new homes built in five blocks on a two acre former bakery and light industry site by early 2017. Prices started from £250,000 for a 550 sq ft one bed flat, making them less than half the price of homes in many new apartment blocks on the Thames. £2,000 deposits were taken at the launch weekend held in the UK. By April it was announced that 80% had been sold and that the prices of the remaining units started from £280,000.

In June a similar level of interest was shown for a development of 24 new apartments at 321 Holloway Road N7 that we launched for Rooff, where over 300 pre-registered applicants reserved 15 apartments within 24 hours at prices averaging £700 / sq ft. This reflects a wider trend of purchasers seeking affordability which has resulted in a flight to value within transport zones 2 and 3 in London.

In the second half of 2014 Helical Bar are launching Barts Square EC1 at Little Britain next to St Bartholmew Hospital in the City and demand from UK and overseas buyers is expected to be high due to the combination of location, specification and the developer’s highly held reputation. At completion there will be a total of 215 private apartments. Also in the City Brookfield and Concord Pacific will be launching Principal Tower, Bishopsgate EC2 a 50 storey luxury block of 243 apartments. These two landmark projects are expected to rival The Heron as the City’s premier residential address.

In Wapping St George received planning permission in March for London Dock, Pennington Street E1 totalling 1,561 private apartments on the site of the former News International Headquarters. The first launch, Admiralty Wharf, is due in October 2014.

In July we will be launching a development of 8 spacious two bedroom apartments with spectacular views towards the West End, Primrose Hill and The City at 21 John Street WC1 in a 7 storey converted 1930s office building. This development is set to propel Bloomsbury prices north of £1,500 / sq ft.

In September we will be launching a development of 13 new one and two bedroom apartments at Chancery Quarter WC1 opposite Chancery Lane underground station on Grays Inn Road. The building is close to the Law Courts, the City and Bloomsbury and will offer buyers the opportunity of living in a high quality comfort cooled building with private balconies. Pricing for the two bedroom apartments is expected to start from £950,000 with completion due by the end of the year.

At Kings Cross a development of 8 two bedroom penthouse apartments is being created above a refurbished office building at the Spitfire Building, Collier Street N1. The apartments are situated on the 4th and 5th floors, all have terraces and the west facing apartments benefit from outstanding views over St Pancras. Pricing is expected to range from £700,000 to £950,000.

We support the trend to give greater recognition to the architects and interior design teams in the marketing and promotion of London’s new developments. London’s design community has some of the world’s leading architects and design practices and a proven track record of creating value through design.

New Homes Market – First Half 2014

David Salvi

Director at Hurford Salvi Carr
David oversees the Company residential agency departments and specialises in bespoke marketing and PR campaigns for new developments and individual properties. He is an authority on the London Property Market, regularly quoted by the national press. He heads the research side of the agency which provides detailed analysis of current market trends, sub market activity and the planning pipeline as well as trend markets.

Telephone: 020 7250 1012
New Homes Market – First Half 2014

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