Within the past year the expansion of Canary Wharf and Isle of Dogs has continued thanks to continued confidence in the areas property boom. As 2016 takes hold the area is getting even more developed as new property construction continues despite fears that the London property market may be cooling off. Because the financial district continues to be the largest employer for financial services in Europe the demand for housing and retail space continues.
As The U.K. ponders its role in the Brexit referendum some investors, many foreign, may be taking a more wait and see approach to the London property market and the possible effect it might have on the British pound and property pricing. The first half of 2016 has seen some pull back in investment volumes but post referendum the second half could restore some certainty to the London market.
In a recent report JR Capital of London said its Middle Eastern clients are being offered bargains for Canary Wharf property sales. In an interview with the Standard, JR’s director, Michael Ferris, stated: “We have been offered discounts of up to 20% if we buy flats in bulk off plan for investors, and for some individual homes costing £7 million and above we have seen 30% come off the asking price.” Additionally, ‘discounts are partly in response to a glut of new homes in Canary Wharf, with thousands under construction.’ The new 3% additional stamp duty rate has also strained purchases of second or buy-to-let homes.
Adrian Owen, residential head at BNP Paribas Real Estate was quoted in the Standard as saying, “Property developers are allowing agents to put more incentives in place to seal deals, such as agreeing to cover stamp-duty taxes or being more accepting of price negotiations.”
Mr. Owen added: “In line with other industries, the property market is not immune to either political or economic uncertainty. However, the values of homes at the next phase of Canary Wharf reflect the very high specification of the apartments and their prime location, delivered by a high quality developer. Sales are progressing very positively with a high level of interest from prospective buyers. Over 80% of apartments at our first development at Canary Wharf known as 10 Park Drive have already sold and we are not considering discounting apartments.”
Regardless of market conditions a number of new developments are taking shape in Canary Wharf with one of those being the £500 million West Ferry Printworks. Deputy Mayor Sir Edward Lester made the announcement commenting that the new development would provide “enormous benefits” along with a new school and affordable housing. The project will include four 30 storey residential blocks to be built on the edge of Milwall Outer Dock and Watersports Centre. Also planned is a secondary school on the Isle of Dogs, 722 residential units, community spaces, retail and office space. One concern is the buildings impact on wind currents as the area is popular for boating with Sir Edward being called upon to help mitigate the situation. Developers had previously agreed to pay £546,000 to help control the issue.
The tallest residential property, Hertsmere House, is set to be built by West India Quay having received approval this past February by the Mayor of London and Tower Hamlet Councillors. There was opposition to the building by some of the neighbours regarding the density and scale of the property with one calling it a ‘stand-alone monster’. Some objected to the new properties location as it will sit beside a Grade I listed Georgian warehouse and the Credit Suisse property. Objections came also from The Canary Wharf Group, the Museum of London Docklands and Credit Suisse. The developer Greenland Group of Shanghai will build the ‘petal’ shaped tower with 67 storeys, 861 new homes and ground level piazzas. An additional 60 affordable homes with 45% being for families at Dalgliesh Street will be constructed.
Property consultant Knight Frank has reported earlier this year that, ‘Canary Wharf is set to have the strongest Central London office rental growth in 2016 with an increase of 12.8%, followed by Shoreditch at 10% and Midtown at 9.6%.’ Their prediction is based on affordability and the development
Affordability of rents will lead to an increase, along with the development of Crossrail, integrating Canary Wharf with the rest of Central London. Knight Frank believes this will bring more people eastward to Canary Wharf especially with high tech firms who need increased sizes of offices.’
For Shoreditch’s, Knight Franks outlook is ‘an increase in office rents will principally be driven by Tech sector expansion. The tech sector was the largest source of demand for office space in Central London in 2015, for the fifth consecutive year.’
Rents in Shoreditch have grown by nearly 24% in 2015, which is double the 12% increase seen in the neighbouring London’s City Core the traditional financial district.
Article by Kevin Murphy: www.kevinmurphy.london