13 Nov

City of London Development

Having seen Canary Wharf rise literally and metaphorically in terms of office use they are now very aggressive in fighting back [The City of London] and wish to retain office space.” This has led to this huge development of land on the periphery and, where possible within the City of London, prestige developments like Heron Tower. The City of London will always trump everywhere else in terms of pre-existing infrastructure, it’s so easy for people to commute to. Now the City is seeing massive investment in both commercial and residential development as part of a renewed confidence from property investors.
Commercial development has a residential by-product, if you are increasing office space and bringing more people in, these people need to live somewhere and they are not all going to commute, especially if they are coming in from continental Europe, where they are not used to commuting large distances.
We identify Aldgate and eastern areas following the new Crossrail route as the new residential hotspots, being the last area to be developed on the periphery of The City. It’s a beauty contest without a doubt combined with Location, good access to work or transport. There is no particular demand for new build from tenants, they [city workers] don’t particularly care if a property is brand new or twenty years old as long as the location is good, the building is very well maintained and the property itself is up to current standards. We’ve been very successful with the resale and rental of properties that are 10-25 years old.
There is very definitely a two-tier market at the moment, whereby [as well as local buyers] you’ve have investment coming in from Asia. These buyer from Asia concentrate on buying brand new properties off-plan at what we consider to be inflated prices. We believe that developers are forward pricing these flats; they’re extremely expensive for what they offer but they’re taking advantage of a lot of money coming from the Far East with many purchases are completed without any financial gearing.

We believe that the market in The City is unlike any others in the country with its own quirks and intricacies saying: The City of London is a very odd market because there is traditionally a very low turnover of property and the reason behind it, quite simply, is that the impetus for most people to move home do not exist in The City. You can’t get closer to work or better transport links, maybe you’ve got a growing family, what tends to happen is they rent out the property out or use it as a Pied-a-Terre. Property in The City is still cheaper than the West End and Kensington and Chelsea. We’ve just sold agreed the sale of a one-bedroom flat converted some 18 years ago at £1,200 sq ft, which is a price that wasn’t even being thought of 12 months ago. While many professional bodies including my own, RICS, are very worried about any housing bubble or boom, the housing market in London is unique compared to the rest of the country. That said it’s generally believed that confidence in The City, now that we’re out of the worst of the financial crisis, is the driving force behind development on the periphery and we don’t see that abating anytime soon.
 

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