As 2015 draws to a close, we spoke to Zoe Mercer, Frank Harris & Co. and Jackson-Stops & Staff’s Associate Director, Residential Development about the current new homes market and what to expect in 2016
Q: What trends are you noticing in the new homes market at the moment?
ZM: The biggest demand over the past couple of years has been for one bedroom flats of around 570sq.ft. This appeals to the biggest demographic for rental – singles or couples, even sharers. These have been particularly popular with overseas buyers.
In recent weeks we’ve noticed a slight change in the buyer demographic. We’ve sold a number of new homes, including penthouses, to older couples buying in London for the weekends – a kind of reverse Pied a Terre. You would think penthouses would be bought by people working in the City but it’s been couples of 60 plus, the so-called ‘grey pound’. These buyers have cash funds, or enough collateral to raise a loan and want to leave a legacy for their children.
Q: Do you still think there is room for rental and capital growth in London?
ZM: Absolutely. Yields in London tend to be lower than outside the capital but capital growth is consistently higher. Many buyers are focusing more on long-term capital growth and the opportunities are still there. For example, in SE1 (Waterloo and the South Bank) prices are still only £1,000 per square foot compared to £1,500 plus in other parts of the capital. It’s only a 10-minute walk across Blackfriars Bridge to the City so that represents fantastic value.
Q: Which areas would you advise buyers to look out for?
ZM: Elephant & Castle is the last area in Zone 1 that is ripe for incredible capital growth. The area is undergoing a £3b regeneration in a partnership between developer Lend Lease and Southwark Council. There are plans for around 3,000 new homes, new shops, restaurants and schools, and improved transport links. It’s a great location only around a mile from Westminster and a hop over the bridge into the City so it’s got everything going for it. Prices were around £500 to £600 per square foot and are now hitting £1,000 per square foot but there’s still plenty of room for growth.
Embassy Works, SW8 is an example of a niche development with an interesting history
ZM: Definitely. Blake Tower, the new Barbican development, is a good example. The developer Redrow is using a well-known interior designer, Conran and Partners, to do the interiors. They’re giving the apartments a level of style and detail that goes far beyond what we used to see in new developments. For example, all the kitchen joinery is bespoke and has the feel of quality furniture. The kitchen has terazzo work surfaces and splashbacks and the bathroom vanity basins are hand-finished with integrated brass handles. People expect that level of quality and craftsmanship nowadays.
Q: What are your expectations for 2016?
ZM: We have a number of new developments coming through, some of them more boutique schemes rather than big towers. We find that many owner-occupiers are looking for something a bit more niche. For example, we’ve got a development coming on the market in the Strand that has amazing views over the Law Courts. Another in Kensington Garden Square is built around one of London’s beautiful squares and one in Buckingham Gate overlooks Buckingham Palace. People like to buy a property that stands out from the norm and has a story behind it. I think we’ll see more of this type of development in the New Year.
To speak to Zoe about buying a new home in London, please call her on 020 7664 6649
or email her at email@example.com