London Investment Remains Robust after Brexit

Brexit or no Brexit, London investment is as robust and in demand as it has ever been, and the city has two glittering new projects to show for it

London remains red hot. Though still plagued by chronic undersupply and high prices in prime central areas, neither issue has disincentivised investors worldwide from flocking to the city.

London retains an aspirational quality that has kept it on the investment radar for decades: as a hub of business, education and culture, in good times and bad it has been the place Britons, Europeans and millions of global citizens have aimed to be.

While the Brexit decision was indeed a shock (with London itself voting overwhelmingly to stay in the EU) it’s been business as usual. In fact, business has been better than expected, thanks to a weaker sterling that’s given investors more buying power and prices that show no signs of falling off. Planning applications and housing starts are both down, exacerbating the supply problem, which is keeping price growth strong.

“We’ve seen a surge in overseas capital coming in and benefiting from the weak currency. And that’s not just from international developers, but from individuals as well, all looking to benefit from that 30% gain,” states Peter Gibney, director of central and east London residential development for JLL.

While admitting some developers may be exercising a degree of caution, “Greenland took the bold move of going forward with this grand project, and it’s paid dividends. It’s been the most successful launch in quite some time,” he says of Shanghai-based Greenland Group’s The Spire.

Despite a strong showing for Greenland and ongoing excitement about King’s Cross and other select regenerations, there have been rumblings that some projects and districts – chiefly the Nine Elms/Battersea area – aren’t performing as well as expected.

Luke Mills, executive director for London Residential at CBRE, is quick to mention the city’s ongoing supply crunch, and that, “The perception is that those areas are struggling. But if you look at Nine Elms as a whole, it’s a huge success story. The US embassy has moved in and it was just announced that Apple is moving in.

“The area gets positive news every few months. It’s an easy area to knock because the supply was so huge. But every development has been a success story and Battersea is on to its third phase. And if you look at the whole regeneration area, despite huge supply, it’s achieved the fastest sales rates over the past five years – going against what everyone would imply.”

The numbers across London are indeed impressive. Currently, 60% of all available properties under construction are sold, a rate better than the pre-credit crunch of 40%, and Mills notes only 3% of all units that reach completion are unsold.

While the currency bounce is an added bonus for investors, London isn’t purely a currency play.

“The fundamentals will be there in 20 years time. The market is in an incredibly strong position.”

Bank on it

As if proving the point that the south side of the river is doing just fine, Braeburn Estate (a Canary Wharf Group and Qatari Diar Real Estate Investment Company partnership) has launched Southbank Place, a 5.7-acre mixed-used mega project that, when completed in 2019, will boast more than 500,000 square feet of new commercial and retail space, a new public square, a re-landscaped Jubilee Gardens and 877 new residences.

“We look at this from the perspective of a true, mixed-use offering. This isn’t just a standalone tower that sits in some part of London,” explains Brian De’ath, head of residential sales at Canary Wharf Group.

“We’re actually redeveloping the entire area and providing a whole host of different classes of use for it.”

At the heart of the development is the regenerated and reinvigorated Shell Centre, a 1950s tower that will be connected to new commercial buildings by bridge. But De’ath is confident the Waterloo location will do the heavy lifting for the project.

“South Bank is a hugely, culturally rich area. In London it’s seen as the artistic hub. There’s the Royal Festival Hall, the Old Vic theatre, numerous galleries, concert halls, and so on, a matter of yards away.

“Waterloo Station is probably the central transport hub in London itself. We’re re-provisioning a new entrance to the station from Southbank Place. People love that accessibility.

“Then there’s the Houses of Parliament, Big Ben, the London Eye. We like to think we might experiment in our marketing, but then we look at the surrounding elements and that shows off the scheme. It’s in an absolutely fantastic position within London itself.”

Southbank Place’s residential amenities include a 17,000 square foot spa, state-of-the-art fitness facilities, residents’ lounges and private dining spaces and five-star concierge services.

The towers currently being launched include the more traditionally opulent Belvedere Gardens, designed by GRID Architects with interiors by Goddard Littlefair; and 30 Casson Square, by Squire and Partners and the contemporary Johnson Naylor.

Prices at Belvedere begin approximately at £1.2 million (HK$12 million) for flats from 590 to 2,004 square feet, with 30 Casson Square prices ranging from £695,000 (HK$6.7 million) studios up to £3.6 million (HK$35 million) three-bedroom apartments (394 to 2,304 square feet).

CBRE and Savills (the Hong Kong selling agency) are predicting rental yields comparable with other central London districts: 2.5% to 3.5%.

So far, De’ath has noticed a healthy mix of end-users and investors expressing interest in Southbank Place, from weekday parliament staff to people who want to downsize from Victoria and Chelsea who no longer want the work of a house.

Being surrounded on all sides by city landmarks, the river and green views, connectivity options, and F&B and retail amenities has, to a degree, set Southbank Place apart from scores of other developments similar to it.

“To be fair, all developments in London are creating some of the best homes in London right now,” Mills says.

“But if you had a purchasers’ wish list this scheme would tick every box.”

New heights

Just around the bend in the river at the top of the Isle of Dogs is the location for the forthcoming The Spire by Greenland. Set in the city’s business hub, the 67-storey Spire will be the tallest residential tower in (for now) Europe when completed in 2021.

The Spire will sit a few minutes walk from Canary Wharf Tube station and the future Crossrail station and will feature 765 new residences wrapped inside a curving, three-petal façade that relates to the water below.

The Spire is Greenland’s second project in London, but the first this ambitious. Larry Malcic, senior vice-president and design principal at The Spire’s architect, HOK, describes the tower as at, “A point where the river bends, so that you have a view down the river to the City of London, Westminster and the Houses of Parliament.

“On the West India Quay side you have water on the east and west, so it becomes a great location for transport as well. It’s a very international location because Canary Wharf attracts people from all over Europe and the world to the financial centre.”

In addition, the buildings on the quay are protected structures (The Spire’s pale bronze aluminium ribs match historic buildings) that max out at three storeys, guaranteeing no view obstructions in the future.

The common perception of Canary Wharf as a business-only district that transforms into a ghost town after 6pm is one that’s slowly vanishing, as existing landlords feel compelled to redefine and re-energise the area.
“I think in the past five years we’ve seen a shift in attitudes from Canary Wharf being a Monday to Friday crash pad area,” Gibney says.

“It’s got one of the city’s largest shopping centres and a real sense of community, particularly because the listed docks have a real vibrancy in the evening. We’re starting to see people choose Canary Wharf to live in, even if they’re not working there.”

The Spire will comprise one to three-bedroom flats, plus top floor duplexes ranging in size from 569 to 1,959 square feet, priced starting at £685,000 (HK$6.7 million), complemented by restaurants, cafés and convenience commercial on the tower’s ground floor.

With interiors by Argent, the flats boast high ceilings, floor-to-ceiling windows and underfloor heating. Perhaps most notable is the planned 35th floor residents’ clubhouse – the location of the infinity swimming pool, health club and private cinema.

Gibney finishes: “The amenity space is one of the key defining factors. The 35th floor is a prime view space, so there’s a real commitment to the high quality of amenities and the experience the users are going to have.”