x Abu Dhabi, UAETuesday 25 July 2017

New village life for Londoners

A raft of major regeneration and developments is transforming once down-trodden areas of London. These dynamic emerging districts are spurring a migration of property buyers.

The Battersea power station. Simon Dawson / Bloomberg News
The Battersea power station. Simon Dawson / Bloomberg News

In the United Kingdom, Londoners like to talk about where they live and work as a collection of villages.

The old villages are places such as Notting Hill, Primrose Hill, St John's Wood and Chelsea, while work was undertaken in Mayfair or the City, the financial district of the capital.

But the new villages are grittier and are places where people can both live and work; eat, socialise, relax and get on with making money.

The new villages are in previously over-looked areas - close to transport hubs - and not, usually, very attractive.

The emerging districts of London include: Shoreditch and Old Street, where the technology, media and telecoms sectors have found a natural home; the South Bank; Stratford and the Olympic Park; King's Cross; Nine Elms and Battersea; Victoria; and Wood Wharf, next to Canary Wharf.

One factor the new areas share is that improved transport infrastructure is underpinning their development.

King's Cross has been helped by the arrival of the UK's first high-speed rail link to the Channel Tunnel and Wood Wharf by the creation of Crossrail, the east to west railway that will connect the east of London rapidly to Heathrow when it opens in 2018.

Another feature these neighbourhoods share is overseas investors are flocking to pump money into these areas, despite the fact that the districts are not in prime London postcodes.

Rasheed Hassan, the director of cross-border investment at Savills, says overseas investors are "quite keen" on emerging districts.

"People are sitting on fantastic sites but they need some finance - whether equity or debt.

"We have done a number of deals where we are matching a UK expert with an overseas investor, which helps to unlock development," he says.

The best example of such a deal is Battersea Power Station, where Malaysian money has enabled the project to be unlocked.

Other similar examples include Greenwich Peninsula, where Quintain, a British property company, is working with the Hong Kong investor Knight Dragon. Equally, Delancey - a privately-owned developer and investor, has partnered with Qatari investors at the Olympic Athletes Village to bring about a new East End district.

London's new villages could provide the trophy assets of the future, but in the meantime they provide potentially rich hunting grounds for overseas investors.

Philip Pearce, the executive director for central London markets at Savills, says there is a general migration in the city from west to east, in the commercial property arena.

"It's not just the TMT [technology, media and telecoms] sector that has been moving east. Traditional West End-based tenants are moving because of high rents and rates, combined with constrained supply that has led to a lack of choice," he says.

For example, ConocoPhillips, the US multinational energy corporation, is moving from Portman Square, close to Oxford Circus, to close to St Paul's Cathedral, on the edge of the City.

Some West End occupiers see Southwark - home to Western Europe's tallest building The Shard - as an economic alternative to the West End.

King's Cross

King's Cross, where inter-city trains depart for the north of England and Scotland, is one of the city's hottest new property districts. The 67 acre site is the largest area of urban redevelopment in Europe and in three years' time it will become the UK headquarters of Google, which is building its own 1 million square foot campus there, in a £650 million (Dh3.7 billion) development.

King's Cross is already home to Central St Martins - one of the UK's most influential art schools - bringing creative and cool young students to the neighbourhood. BNP Paribas Real Estate will also move its London office there in the next two years.

Since Google signed on, property experts are expecting TMT occupiers to make a beeline for the area. However, the chances are professional and corporate occupiers are just as likely as start-ups and tech companies to look at the area.

Plans allow for 50 new buildings at King's Cross, providing 3.4 million sq ft of space. There will also be 2,000 new homes and 10 public squares. Some 5,000 people will come to live, study and work in the area.

Victoria

Traditionally the home of the civil service, the area near the railway station is undergoing a £2bn makeover and has already drawn a new breed of corporate and creative tenants. They are attracted by the new buildings that are being developed by the area's big landlords, particularly Land Securities and Derwent London and by rents and rates that are markedly lower than in Mayfair.

"We continue to see the evolution of Victoria through the diverse tenant mix it is attracting," says Kaela Fenn-Smith, the head of leasing at Land Securities, the UK's biggest property company.

Burberry, the luxury fashion label, will move into new offices this year, while Jimmy Choo, known for its high-end shoes, has also taken office space on Victoria Street. Giorgio Armani, another haute couture house, has become the latest fashion name to sign up to space at the new development Howick Place, where the British designer Tom Ford is already located.

Land Securities recently launched the Nova Building, a residential block inspired by Charles Rennie Mackintosh, the late Scottish arts and crafts artist, with lots of large, light, open-plan New York-style flats.

Prices are likely to be about £1,400 per sq ft or £740,00 for a studio to £3.8m for a three-bedroom flat and completion is expected in 2016.

"People want to be in an area that is pioneering - for example King's Cross. Victoria feels like that right now," says Richard Howard, the senior director in DTZ's West End office.

Wood Wharf

Wood Wharf is the latest development of Canary Wharf Group. The 20-acre area is to the north-east of the Isle of Dogs, next to Canary Wharf's famous three towers. It will house offices, shops and homes and is due for completion in 2018, when the Crossrail trains begin to run from central London to Canary.

The Docklands developer has been taking control of the site from other landowners since 2011 and is now revising a masterplan for the area.

The wharf, which was once used for the shipping and storage of timber and for ship repairs, will be a departure from the developer's earlier type of project.

Canary Wharf's main customers in the past were from the financial services sector or law firms that supported the banks, but it is now intending to provide accommodation that will suit smaller companies and a broader mix of tenants.

"This part of London is now much more than a global financial centre. What has emerged is an exciting cultural and lifestyle district that is attracting the world's creative and technology companies," says the firm's masterplanner, Sir Terry Farrell.

 

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