Booming central London new home pipeline swells 31%

Aaron Morby 10 years ago
Share

A flood of developers looking to cash-in on posh London housing demand has pumped the project pipeline to 20,000 homes over the next 10 years.

In its latest report on the central or prime London property market, EC Harris reveals that the number of units being planned has shot up from 15,446 last year.

But the cost consultant warns that there are growing risks from developer overcrowding and a shortage of specialist construction skills going forward.

According to the research there is now a pipeline of 150 major residential schemes planed for central London, with delivery expected to peak in 2017.

The authors say a dangerous property bubble is likely to be avoided because many are only proceeding when largely pre-let.

But it does warn that increased competition for sites, and rising construction costs could challenge the economics of more marginal schemes that are having to raise specifications to attract buyers.

Traditional prime residential specialists are now competing with volume house builders, commercial mixed-use developers and foreign investors looking to carry out development directly.

Mark Farmer, Head of Residential, EC Harris said: “The increasing challenge for investors and developers is to avoid over-paying for sites at a critical time when construction costs are increasing, the sales market is much more competitive and there is increasing scepticism about the real sustainability of rates of prime sales value growth seen in recent times.

“What has been a window of opportunity for developers over the last few years with reducing build costs and increasing sales values is rapidly closing and becoming a much more challenging environment.”

The pipeline of schemes running to 2022 is said to have a sales value of £50bn at today’s prices.

The number of projects coming through in traditional core prime central London such as Mayfair, Belgravia and Knightsbridge where schemes are over £1,650/ft2 value, appears fairly static

But there is a flurry of development plans for ‘edge of core prime’ areas in the wider central London market such as The South Bank, Bayswater and Paddington, Chelsea & Fulham and City and fringe.

Schemes at the lower end sales range at between £1,250/ft2 and £1,650/ft2 have ballooned in the last 12 months.

More than 4,600 additional units have entered the scope of the pipeline this year in this value band. This has come from a combination of new schemes together with existing schemes which have ‘leap frogged’ into the scope of the study due to significant sales value inflation.

Farmer warns there are clear dangers for developers against a backdrop of increasing cost uplift pressures exist and a much more indeterminate medium to long term sales market.

“Any softening of the market will be felt most by those developments which have aspirational values targets not underpinned by core location and quality fundamentals,” he added.

Latest news

More Osborne companies file administration notices

Three more divisions lodge notices with court
2 hours ago

McLaren wins multi-storey urban logistics contract

South London win with British Land is pioneering urban logistics hub
1 hour ago

Big social housing schemes at risk over funding uncertainty

Housing associations warn uncertainty over public funding beyond 2026 is curbing new schemes
1 hour ago

Kier wins Worcestershire town centre renewal

Firm secures Bromsgrove commercial and cultural hub project
30 mins ago

BAM signs Kent school contract at £42m

Sevenoaks school rebuild signed off at £8m more than first estimates
1 hour ago

RG Group signs £121m Newcastle rental homes job

Developer Olympian Homes advances 519 flats plan at Pottery Lane site
3 days ago

Geoffrey Osborne files administration notice

Contractor in talks to save parts of the business
3 days ago

Winners named for £260m Manchester Uni framework

B&K, Henry Bros, Graham, Robertson and Vinci among new line-up
3 days ago

Shed specialist Benniman rides out market lull

Worcestershire warehouse builder says industrial and logistics work is picking up again
3 days ago

Another contractor cleared after high profile immigration raid

Adana Construction employees were working legally on site swooped on by Home Office
3 days ago

McAleer & Rushe wants to meet new London suppliers

Contractor holding Meet the Buyer event in London: Register now
3 days ago

McAlpine signs £500m Broadgate dual towers deal

Work to start on iconic 36-storey and 21-storey towers
4 days ago

Worker rescued from collapsed four metre deep trench

Fire crews take six hours to save trapped builder near Blackwall Tunnel
4 days ago

Gove puts another major building scheme on hold

Secretary of State starts another planning fight after M&S defeat
5 days ago

Greenwich University tenders £300m framework

Up to five firms will carry out upgrade and newbuild work at three campuses
4 days ago

Work starts on Manchester 26-storey Obsidian tower

Contractor Domis starts Salboy's 10th Manchester scheme in seven years
4 days ago

Race for £1.3bn West Midlands social homes framework

The Community Housing Group reboots tender race for new build housing
4 days ago

Delancey submits £400m King’s Cross lab plans

200,000 sq ft lab/office project will be built above railway and tube tunnels just 4.5m below
5 days ago

Winners revealed for £150m fire safety framework

New deal will help organisations comply with the Building Safety Act
4 days ago

Sellar plans £500m City tower next to Walkie-Talkie

Consultation starts on London 60 Gracechurch Street tower
5 days ago

Severfield ends year on high with record order book

Orders top £500m with strong future pipeline of opportunities ahead
5 days ago

Second senior director exits National Highways

Commercial director Malcolm Dare set to move on to new role
5 days ago

New scheme fuels London lab building boom

Plans in for 160,000 sq ft Whitechapel scheme near Royal London hospital
5 days ago

Contract race starts for next £155m section of A9 dualling

Prior Information Notice published for Tay Crossing to Ballinluig stretch
6 days ago

£55m Sheffield build-to-rent scheme approved

Demolition to start later this year for 158-flat Sheffield Garden project
6 days ago

London back as most expensive place to build in world

Capital leapfrogs Geneva to top costliest construction rankings
6 days ago

Gas supplier Regent to buy TClarke for £90m

£491m turnover listed building services specialist to be sold
6 days ago

Steel contractor Billington launches into bridge market

Steelwork firm hires staff from failed architectural and bridge specialist SH Structures
6 days ago

McGee employees benefit from rise in profits

Pre-tax profit doubles boosting payouts for Employee Ownership Trust
6 days ago

Lendlease veteran is latest new McAlpine director

Paul Sims joins as Operations Director after 40 years at rival contractor
7 days ago

Contractor services