• Press Release
  • April 11, 2016
  • United Kingdom

35,000 new 'prime' homes planned to hit the UK capital despite rapidly changing market

United Kingdom - The number of ‘prime’ homes due to be constructed in London over the coming ten years has hit over 35,000 – a 40 percent increase on 2014 – Arcadis has identified. The combined sales value of these properties is estimated at over £77 billion, and when combined the total floor space of these homes comes in at over 40 million square feet – far greater than the area of the whole of the City of London (30.7 million sq.ft).

In its analysis Arcadis, the leading global design and consultancy firm for natural and built assets, identified 196 sites that span the breadth of the capital. The number of homes planned in these locations comes in at 35,055. This significant growth on the previous year demonstrates the extent to which the capital’s high-end residential market is still viewed favourably in spite of the rapidly evolving UK housing market.  

Rising construction costs and growing land values have seen input costs rise, while a softening in demand due to successive stamp duty reform combined with economic slowdown in countries such as China has seen buyer interest ease. As a consequence, some investors may eventually reposition these assets away from ‘prime’ housing and into premium office space, mixed use or even a greater number of smaller homes as they look to markets that offer a greater margin.  

In terms of location, it is Chelsea and Fulham that have seen the greatest level of investment, followed by the Southbank and around the City, evidence that ‘Prime London’ is not confined to the West End but is now widely diffused across the capital.   

Number of homes in development by location (top ten)
1. Chelsea & Fulham                     10,914
2. Southbank                                    8,863
3. City & fringe                                 5,898
4. Victoria & Pimlico                      1,960
5. Midtown                                        1,754
6. Docklands                                    1,600
7. Kensington                                  1,104
8. Bayswater & Paddington        933
9. Mayfair                                          589
10. St John’s Wood                      427

Estimated approx. total sales value of homes by location (top ten)
1. Chelsea & Fulham                    £20bn
2. Southbank                                  £14.2bn
3. City & fringe                               £7.3bn
4. Mayfair                                         £6bn
5. Belgravia                                     £5.6bn
6. Victoria & Pimlico                    £5.1bn
7. Midtown                                      £4.7bn
8. St John’s Wood                       £4bn
9. Kensington                                £3.7bn
10. Knightsbridge                        £2.4bn

Number of homes in development by year (including percentage growth) 
2015                                 35,005 (+40%)
2014                                 25,000 (+25%)
2013                                 20,000 (+29%)
2012                                 15,503 (+70%) 
2011                                 9119

Mark Cleverly, Arcadis head of Commercial Development, said:

“Since around 2009, the value of prime residential property in central London has seen dramatic rises, making it one of the hottest markets in recent memory. So, it is hardly surprising that we have seen ongoing interest from investors all over the world. What is interesting, though, is the continuous geographical spread we are seeing. Prime housing is springing up around regeneration areas and on the outskirts of the financial district, suggesting the days of the West End dominating the high-end property market may be over.

“That said, things are changing. It remains to be seen how the market responds to the new set of challenges being thrown at it. Land, materials and labour are growing in price, meaning the costs involved in actually building these homes is growing significantly. This, coupled with a recent gradual easing off of buyer demand could affect margins and mean investors opt to convert their developments to target the more buoyant office and commercial markets. With no obvious end in sight to the unpredictability of the global economy this approach could soon become the norm.”

See the full London prime residential property statistics here.

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Kerri Moore

Corporate Communications +44 (0)207 812 2258 Ask me a question
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