As the UK celebrates Team GB’s phenomenal success at this year’s Olympics, CBRE has been considering the legacy of London’s 2012 Games, and reflecting on some of the fundamental changes our capital’s property market has witnessed in the years since.
London 2012 had an aim to ‘inspire a generation’ of sports people, but it also wanted to help drive wider regeneration. In our recent Olympic Legacy report, we examined 20 Olympic venues across the UK and found that in most cases price growth in these areas outperformed the wider area by an average of 29%.
In London, the Olympics acted as a catalyst for some of the capital’s largest regeneration projects.
Areas surrounding the two Wembley venues demonstrated house price growth of 99%, while new sites in Stratford saw growth of around 10%.
These areas have become established residential destinations, integrating homes, retail and commercial space, public realm and improved transport links to create new neighbourhoods, and are tangible examples of London 2012’s lasting impact on the built environment.
The past four years have brought considerable change. A new government and a new mayor have come to power, both of whom have committed to making housing in London a priority. There have been significant changes to property taxation policies, with the top end of the market being affected by stamp duty alterations. And the long-term impact of Brexit on the London property market is yet to be fully determined.
London leads the way
Despite this, London remains one of the world’s most economically and politically stable cities. Its ever-expanding population has resulted in a consistently robust residential market, with the average house price currently at £470,025, and over the past four years huge steps have been made to accommodate demand.
London has seen some of the most successful examples of placemaking in the world. Acres of land have been transformed, creating vibrant communities, new homes and better infrastructure. Not only does regeneration improve the urban aesthetic of our capital, it also has much deeper social and economic benefits.
Paddington has been one of the most successful of these regeneration programmes, accelerated by the arrival of several blue-chip companies to the area, as well as the Crossrail station in 2018. CBRE research shows that house prices in the area have increased by 12.9% per year.
September will see the launch of Meritas’s Paddington Exchange, a mixed-use development delivering more than 300 new homes - arguably the last piece of the Paddington regeneration story. The multi-billion-pound Royal Docks redevelopment and Knight Dragon’s transformation of Greenwich is the largest single regeneration initiative London has ever seen.
Construction is well under way at Nine Elms, bringing the former industrial site to life, while simultaneously creating 20,000 new homes and 25,000 jobs, and Tottenham Court Road continues to be revitalised, with Almacantar’s transformation of the iconic Centre Point building and piazza, positioned just moments from the new Crossrail station, spearheading the redevelopment.
It is critical that placemaking remains at the heart of London’s housing agenda if we are to continue to work towards fixing the supply and demand imbalance. Sadiq Khan has pledged to deliver 50,000 new homes a year, which is an ambitious target that will only be achievable if we continue to identify the parts of London that are not fulfilling their potential for housing provision, both in quality and quantity.
This period has also highlighted the increasing importance of non-political bodies, such as the London Chamber of Commerce and Industry. These bodies can provide valuable support and advice on housing policy and are a driving force for the future direction of property.
It has also become clear how closely aligned the provision of infrastructure is with housing delivery. As London’s boundaries continue to increase, so does the need for better connectivity.
New transport links enable housebuilders to unlock pockets of London that would not otherwise be viable for development, connecting residential destinations with business hubs and attracting commercial and retail centres to new areas.
Projects in the pipeline
CBRE research revealed that by the time Crossrail is operational in 2018 it will have added up to £35bn to the residential property industry around the 37 stations.
There have been some great steps made towards improving London’s transport links and with further projects in the pipeline, such as Crossrail 2 and the Bakerloo/Northern line extensions, infrastructure will continue to play a vital part in shaping London’s property market.
London has overcome many challenges since it hosted the Olympics, and the property market has remained strong and robust throughout.
We have just released our housing forecast and are positive about the year ahead, anticipating house price growth of 5% this year.
Mark Collins is chairman of residential at CBRE UK