Until recently, there was no indication that either residential or commercial construction might see any sort of downturn in central London.
While homes have continued to rise up all over the capital, the City of London has seen a surge in skyscraper construction, with the likes of the ‘Cheesegrater’ joining the Walkie Talkie and the Gherkin in an architecturally eclectic cluster of buildings best known by their nicknames.
Even this year, the City of London Corporation insisted that the future was still directed in an upwards direction, with six more tall buildings gaining planning permission.
This confidence ran contrary to the crystal ball gazing of some, who have suggested that London’s recent building boom – which has also included the Shard, the ever growing cluster of docklands skyscrapers and the Nine Elms development on the south bank – might run contrary to a new trend created by the pandemic.
With working from home now the norm and a crowded city bringing more social contacts – and thus infection risks – the property market has shown a marked shift towards the countryside. The latest Land Registry figures have revealed the highest increase in prices over the past year has been in Richmondshire in North Yorkshire, which includes much of the Yorkshire Dales National Park.
While this district has seen a 29 per cent price rise, London properties are up just one per cent, making the capital the worst-performing UK region. And this is not an isolated statistic: the data also revealed that the other three local authority areas to see prices rise over 20 per cent were also popular rural locations: the Derbyshire Dales, North Norfolk, and the Cotswolds.
Digging deeper, it is clear not all urban areas that are suffering. For instance, in the year to July the average house price rise per local authority across England rose seven per cent. Manchester, which has been enjoying its own skyscraper construction boom, was up 13.7 per cent and Liverpool did even better at 15.7 per cent, while Leeds was up 11.7 per cent and Sheffield 10.7 per cent.
By contrast, every that witnessed falling prices was in London: the City of London was down 10.1 per cent, with Westminster, Lambeth, Islington, Lewisham and Newham also recording declines and Camden no change.
Evidence is now emerging that some firms are starting to respond with a geographical shift in priorities. This week, developer Regal London announced that it has acquired a site in Watford for a major new development, featuring 168 homes and 150,000 sq ft of workspace. At 25 storeys, Watford, a fairly low-rise town until now, will be getting its own skyscraper.
Regal London’s statement made it clear this was not just another project, or ‘business as usual’. It comes hard on the heels of other acquisitions in Hackney and Wembley that are taking mixed-use development out of the traditional core areas of the capital.
Co-founder of Regal London Paul Eden described the recent series of land acquisitions as a “particularly active time” for the firm, which is now pursuing “strategic growth ambitions” that reflect a new reality in the wake of the pandemic.
He said the new development in Watford comes “at a time when many businesses and workers are reassessing their office needs and increasingly looking to convenient, exciting areas beyond the city centre.”
This approach, if adopted by a lot of developers, could see a further shift of people and business out of the heart of the capital, which may pose a challenge to authorities like the City of London Corporation with its ongoing skyscraper ambitions. At the same time, it could offer new opportunities and benefits for construction firms, businesses and residents in the suburbs.
Some might predict the same will happen to other major cities. But in at least some cases, any such prediction of a drift away from the centre would be counterbalanced by very powerful tides of change.
After all, central and inner London has been heavily populated for many years, whereas other cities have experienced the ‘doughnut effect’ of an almost unpopulated city centre and substantially depopulated inner cities surrounded by growing suburbs.
That has changed significantly in recent years, with Manchester leading the way in both population and construction growth, and Birmingham likely to benefit from hosting the 2022 Commonwealth Games.
For all these reasons, London may be treated as a special case, and a combination of economic factors, changed modes of work and altered lifestyles in the wake of the pandemic will mean more developers follow the lead of Regal London and shift focus to the suburbs.
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