A report has found that £38bn of prime residential development is planned for London – a 70 per cent increase since last year.
The findings, by consultancy EC Harris, found that an amount of floor area the size of the Stratford Olympic Park is set to be developed in the next decade, with potential peak deliver in 2016/2017.
15,000 units are planned, according to the firm’s “London Prime Residential Development Pipeline”. 125 schemes are at some stage of acquisition, planning and construction, fuelled by strong overseas demand for new residential property, and rising values.
The research is based on a ‘snapshot’ anaylsis of new private residential development projects currently being built or planned through to 2022.
Most development is planned for the Chelsea & Fulham area, with a quarter of units planned there. 17 per cent were on the South Bank, followed by the City and Fringe at 12 per cent.
Schemes totalling around 3,800 units are expected to come to market in 2016. The pipeline includes major regeneration schemes planned at Earl’s Court and Battersea Power Station, each expecting to deliver several hundred residential units.
Less than 500 new build prime units came to market during 2012, signalling that an huge increase in capacity is required to deliver the developments.
E C Harris residential head Mark Farmer said the pipeline represented “a massive vote of confidence in London and in UK plc and will have only been enhanced by this summer’s Olympics showcase”.
He added: “London prime residential continues to act as a magnet for global investment, and offers clear opportunities for properly organised and funded developers and investors to generate healthy returns.”
“However, this positivity is tempered by some notes of caution. There are significant risks to the realisation of the pipeline including the sustainability of the unprecedented levels of international investor and sales demand fuelling the lower end of the prime market, a lack of development funding and a scalability of specialist development skills needed to deliver these opportunities.”
“What is undeniable though is the sheer size of the pipeline based on current sentiment which is staggering.”