London Still Magnet for Residential Developers
Fears of a prolonged slowdown in residential development in Central London have evaporated following an exceptionally strong second quarter of 2017.
Land sales worth £722 million were completed in the quarter, almost 50 per cent higher than in the previous quarter and above any three-month period since the European referendum in June 2016.
“We expect land sales across London to remain above average for the remainder of 2017,” stated a major industry report. “Overseas investors will continue to take advantage of current market conditions whilst also capitalising on the current exchange rate. Both international and domestic developers are seeking sites in central London, particularly in the West End, where lot sizes are typically smaller, but supply in markedly constrained.”
There were three deals in Q2 2017 above £100 million, including the Nine Elms residential-led mixed use development, acquired by Chinese developer R&F properties, and One Waterloo, acquired by HB Reavis with planning permission for a 950,000 square foot mixed use development.
The sale of New Covent Garden Market, with contracts already exchanged for £500 million, could push the entire market higher still.
“Political uncertainty acted as a drag on development land sales during 2016, btu the rebound in activity during the first half of this year demonstrates the re-emerging appetite for development land in London,” concluded another report.