This publication looks at the growing trend of international developers moving into London. This appears to be a rather recent phenomenon. Singaporean buyers would have heard of Oxley Groups first foray into London, via their Royal Docks project. Developers from other countries, especially China, are also moving into the London property market.
London needs new homes. Only 15,000 units were completed last year (2013) while the Greater London Authority suggests demand will be closer to 42,000 per annum over the next decade. Demand way exceeds supply - nobody disputes this.
JLL is confident that the recent entrants into the London Developers' market is not one-off. JLL cites China's Greenland Group, Qatari Diar, Hutchinson Whampoa (see my blog post on Convoys Wharf), Singapore's Oxley, Knight Dragon from Hong Kong and SP Setia of Malaysia. Certain members of the Kwok family also have interests in the Lillie Square, my Earl's Court development.
To quote, "London's lost capacity, and huge volume of undersupply, represents a big opportunity."
The report notes that one of the challenges that international developers face when expanding into London is the lack of scale. London's planning system is a lot more conservative and cautious, compared to where these developers are used to operate.
See the following table for examples of projects by international developers.
Canary Wharf
The report goes into a lot of detail and projects about Canary Wharf. This place has reignited over the past 18 months, following years of inactivity. They have more than 1,200 units under construction. Prices are soaring around the Wharf and the second-hand market is as active now as it's been since the credit crisis. At many developments, prices are 15-20% higher than a year ago, which is staggering.
The dynmics of Canary Wharf housing market have changed too. It is no longer Wharf workers only. Many people move here from West London or South London, attracted by the bright, new build product on offer as well as the lively leisure offerings and great connectivity. There are good restaurants, great shopping, and even escape routes like London City airport. All will get even easier when Crossrail arrives. People love to buy and rent here.
Interview Excerpts - Greendland in London (Page 6)
(GM of Greenland UK, Wenhao Qian)
Greenland Group has only recently entered the UK, with the first project in Wandsworth Town. They are also working on an ultra-high-rise apartment project at Canary Wharf which looks set to become the tallest luxury apartment building in the UK.
Why is Greenland investing in the UK?
London is the financial centre of the world, it is an international city, mature in economic terms, open and accessible and is the most diverse city in Europe. London is also very central in the British economic resurgence. Therefore, London is a milestone on the road of glboal market development for the Greenland Group.
Our thoughts on the Supply in London
Supply is tight, demand is high. What is new now is the entrance of international developers. All this bodes well for the London market - a huge magnet.
From a Singaporean perspective, can you not see that the supply is crazily tight in London?
Think of it this way. The entire Canary Wharf, which is now supposedly so hot, has fewer than 1,300 units in the pipeline. Already, Canary Wharf is one place in London where developers can get planning permission to build high.
A single medium sized condo development in Singapore can easily hit 500 units. Mandarin Gardens (East Coast Park), completed in 1986, has 1,000 units. Commonwealth Tower, just launched, will have a total of 845 units in two 43 storey blocks. The Pinnacle@Duxton, has almost 1,900 units.
The entire pipeline in London Canary Wharf - 1,300 units, and JLL is raving and ranting about it.
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| Commonwealth Tower - 845 units, just like that |
Nice blog and very interesting and useful posts.
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