Issue One

THE CHELSEA VIEW

Local insight Local knowledge

Good, strong local market knowledge is at the heart of our business.

At a time when new developments in Chelsea, Kensington and Battersea, new travel links and a new wave of international purchasers and residents are dramatically reshaping the borough, such knowledge is essential. This regular guide is designed to give an insight into the many exciting developments that will affect property ownership in Chelsea now and for years to come.

For further information on any articles contained herein or any other local property issues, please do not hesitate to contact us. We would be delighted to hear from you.

Kind regards.

Guy WatsonManaging Director 020 7881 8080 guy@champions.co.uk

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Grosvenor Waterside A riverside success story

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With London’s population soaring by 100,000 a year and urban land prices at unprecedented levels, property developers are increasingly being forced to look beyond the traditional prime enclaves and “place-make” schemes on redundant commercial or industrial sites in less obvious positions.

As a result, the last ten years have seen some of the last remaining significant brownfield sites along and around the banks of the Thames snapped up and masterplanned, as improvements to the capital’s infrastructure make such residential schemes a significantly more attractive, and viable, option for today’s buyers.

In South West London alone, much has been made of the upcoming residential transformations of Nine Elms, Battersea Power Station and Chelsea Barracks, but 2013 also saw Hong Kong-based group Hutchison Whampoa break ground on a £1bn scheme to redevelop the Lots Road Power Station, and another much-anticipated Londonewcastle-designed riverside site enter the crucial planning stage.

Few can argue with the logic; unsightly areas of London are reborn, creating new communities and jobs, whilst addressing the chronic housing shortage and boosting the local and national economy.

It could be argued that as pure residential locations, however, they remain untested. Considering the colossal sums at stake, these developers will be heartened by St James’ success with its Grosvenor

Waterside scheme; an ambitious regeneration of a Victorian dock in Chelsea, originally the mouth of the now-defunct Grosvenor Canal, still presided over by the towering Grade II-listed Western Pumping Station.

Transforming this once unloved inlet of the Thames - itself credited with facilitating the development of neighbouring Belgravia and Pimlico in the 19th century – Berkeley Group-owned St James set out to carve an “urban village” from the derelict 7.5 acre site, re-imagining it as a brand new residential community and thriving cultural hub.

A residential community and thriving hub.

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The firm received planning permission in 2000 from Westminster Council for a series of buildings designed by a group of high-profile architecture firms, including Twigg Brown and Allies & Morrison, and eventually delivered 917 residential units across nine buildings, along with 32,000 square feet of commercial space.

A combination of avant-garde design, innovative place-making strategy and a sought-after waterside setting

combined to establish a unique proposition for the area, juxtaposing the traditional period terraces and garden squares and attracting an entirely new type of buyer.

A package of features including a 24-hour concierge, landscaped grounds, leisure facilities and underground parking completed the offering and helped to set the tone for the raft of new residential schemes across the capital that followed.

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Sales values have been healthy since 2004

Grosvenor Waterside price per sq ft

It certainly appears to have worked. Sales volumes and values have been healthy since 2003 – when the first off-plan units became available – and have continued to perform, with two of the flagship ninth floor penthouses achieving £5m each on the open market last year, at over £1,600 per square foot.

A range of one, two and three-bedroom apartments are currently available in each of the “houses”, but a combined unit with six bedrooms and over 3,400 square feet of space has been the most expensive to hit the market so far, at an impressive £6.5m.

The smallest studios are now attracting valuations in excess of £1,500 per square foot, whilst prices for the two bedroom apartments have ranged from £895,000 to £3.825m over the last 12 months.

On the lettings market, one-bedroom units are currently achieving in the region of £600 per week, whilst some of the larger apartments have attracted up to £1,650 per week putting them in the same price bracket as some of Chelsea’s most prestigious established addresses.

Deft as the execution has clearly been, however, there is no great secret to Grosvenor Waterside’s success.

The location, within comfortable walking distance of Chelsea, Belgravia and Pimlico is a valuable asset, only to be enhanced by the neighbouring Chelsea Barracks.

Penthouses achieved £5mon the open market lastyear, at £1,600 per sq ft.

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We’re expecting both prices and the number of property transactions to go up in 2014 throughout London, but not in quite the same way that we’ve become used to over the last few years.

The market in London’s “Golden Postcodes” - W1, SW1, SW3, SW7, W8 – has been out-stripping the rest of the capital and the UK by a significant margin since 2007, driven in large part by a perceived (and widely reported) “safe haven” status amongst investors and the global high net worth community. Towards the end of 2013, however, there was a noticeable shift in buyers’ behaviour: demand in the prime fringes – such as SW10 and W11 – began to take-over from the more central hotspots, with prices rising faster on the edges than in the traditional prime heartlands.

This, together with a marked increase in the quantity of sales, is likely to be the key trend for the coming twelve months.While 2013 was far from subdued, the number of properties offered for sale was dwarfed by the number of potential buyers.

The last few months, however, have seen a groundswell of new vendor enquiries gather momentum. This should mean a more open and active market in 2014.

Competition for the best properties, however, will remain fierce, with good family homes and strong locations always creating a stir – if priced correctly. Sensible pricing is, as ever, paramount to a successful sale.

Looking further ahead, price increases are more than likely to carry on for the next five years, with the potential for a 25% increase in prime SW prices by 2019. Similarly, transaction levels are all set to climb further as the supply of new-build properties increases.

After a marked lull in activity, the pipeline of new luxury property developments is beginning to flow with pace and volume once again. A number of major projects – outlined on the next page – are due to complete in and around Chelsea over the coming years, and are likely to re-draw the area’s property market map.

2014 – 2019House PricesChampions’ Property

Market in 2014Predictions

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+3% +1%

+8%

+6.5%

+5%

Key FactThe market in London’s “Golden Postcodes” – W1, SW1, SW3, SW7, W8 – has been out-stripping the rest of the capital and the UK by a significant margin since 2007.

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+10%

2014 ForecastsPrices in Prime Fringe areas

+8%

+5%+8% +5%

Transaction levels

Prices across Golden Postcodes

Some major new luxury property developments are set to redraw the K&C home-buyers’ map, stretching the boundaries of Chelsea and creating entire new districts as well as new homes.

Developing Chelsea Chelsea BarracksThe 13-acre Chelsea Barracks site has been mired in controversy for nearly eight years – Prince Charles became involved at one point – but owner Qatari Diar is now all set to proceed with a scheme that could deliver up to 450 new homes, as well as a range of cultural spaces, shops and community facilities. Designs have not yet been fully finalised; consultations are promised “in due course”.

Key FactsArea: SW3Status: PlanningCompletion Date: TBCSize: 13 acresNumber of New Homes: 363 (estimated)

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13

8acres

Chelsea Waterfront (Lots Road Power Station)One of the biggest new developments on the North bank of the Thames for over 100 years, Hutchison Whampoa’s Sir Terry Farrell-designed eight-acre power station scheme hasn’t had quite the same media attention as its opposite number in Battersea, but is still a major project that promises to comprehensively revitalise the often overlooked Lots Road area.

Key FactsArea: SW10Status: Under ConstructionCompletion Date: 2015/16 (Phase 1)2017/18 (Phase 2)Size: 8 acresNumber of New Homes: 706

Size of development

acres

Key FactsArea: SW8Status: Under Construction / Available NowCompletion Date: 2016 (Phase One)Size: 39 acresNumber of New Homes: 866 (Phase One)

Earls Court MasterplanCapital & Counties secured formal outline planning consent for its ten million square foot Terry Farrell-designed Earls Court uber-development at the end of 2013. The scheme, which won the World Architecture Award for Best Future Masterplan, will create a “remarkable new district” with four brand new urban villages over 69 acres, centred around the evocatively-named Lost River Park.

Key FactsArea: SW5, SW10, W14Status: Plans ApprovedCompletion Date: TBCSize: 69 acresNumber of New Homes: 7,500

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69

39

Battersea Power StationPossibly London’s most famous property development, SP Setia’s Rafael Viñoly-designed scheme is on an epic scale, covering 39 acres within a mile of Sloane Square. Phase One – called Circus West – has already sold out, leading the way for a massive south-of-the-river regeneration opposite Chelsea and Pimlico.

acres

acres

House prices are forecast to rise by an average of 13%.

Homes within new station “walk zones” escalating by up to 40%.

Kings Road Tube Station

A tube station on the Kings Road has been on the cards since 1904, when it was first put before Parliament; now, 110 years later, it looks as though it may actually happen. A Public Consultation into possible routes for Crossrail 2 – also known as the Chelsea-Hackney line – found that 96% of respondents supported the principle of a new line.

Potential Kings Road Underground Station locations

Dovehouse Street, on the site of the fire station and/or Dovehouse Green

Beaufort Street, at the junction with the Kings Road

World's End, next to Cremorne Gardens

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Perhaps surprisingly, there was a marked “cluster of opposition” to the plans outlined in the Public Consultation in and around SW3, with some respondents “strongly opposing” the principle of a new line, although it seems that the main concerns were over potential disruption during construction rather than over long-term effects.

The purpose of the Consultation was to garner feedback on whether an underground-only (“Metro,” linking Wimbledon to Alexandra Palace) option or an overland/underground combination (“Regional,” running from Twickenham to Alexandra Palace) would work best: results were inconclusive, with marginally stronger support for the Regional option but a practical recognition that the Metro would be cheaper, quicker and therefore more likely to get the go-ahead within the next century.

A location for the new Kings Road station, which could be flanked by stops at Parsons Green and Sloane Square, has not been set, although three sites are in the running (see left box). “Safeguarding” of potential routes has been underway since 1991, with planners making sure that new buildings don’t obstruct the construction of new tunnels or train lines; the Consultation’s results are designed to inform the next stage of the safeguarding process.

Property prices will inevitably be affected by the creation of a new station in Chelsea, which has always been something of a public transport void (of the 253 miles of track used in London’s underground network, just 10 miles are in Kensington & Chelsea). Along the full Crossrail route, house prices are forecast to rise by an average of 13%, with homes within new station “walk zones” escalating by up to 40%.

In Chelsea, however, the effect on residential prices is likely to be less pronounced as there is already a significant price premium in play.

Crossrail 2 timeline

2014: Protect a preferred route from development by using a legal process known as safeguarding

2014–15: Planning work on the preferred (Metro/Regional) option

Late 2015: Undertake a public consultation on the preferred option

2016–19: Detailed design, further consultation and application for planning powers

2020–2030: Construct and test Crossrail 2

Early 2030s: Crossrail 2 opens to the public

96% of respondents supported the principle

of a new line.

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Egerton Crescent has been given the title of “Nation’s Most Expensive Address”, with an average sale price of A £7,369,000.Five of the ten most expensive streets are, according to the Land Registry’s data vaults, in Kensington & Chelsea, with Cadogan Square B (£5,746,000), Prince Consort Road C (£5,499,000), and Drayton Gardens (£5,234,000) all making the Top Ten.

Only post codes and streets where there are records of at least seven transactions between 2008 and 2013 have been included in the survey, meaning that many of the traditional priciest places – such as Kensington Palace Gardens – don’t make the list.

Egerton Crescent named UK’s most expensive address

“Aggressive opposition” from some property developers has put a spanner in the works of RBKC council plans to stop the rise of “iceberg houses”.

A consultation into proposals to limit new basements to just one storey, cut the extent to which excavations can extend under a garden from 85% to 50%, and to put a blanket ban on digging under listed buildings, was met with frantic lobbying by developers and contractors. “This means that the examination [into consultation evidence] will take place later in 2014 than originally expected,” said a council spokesperson. A revised timetable has yet to be announced. Westminster Council recently followed in K&C’s footsteps, launching a consultation into restricting basement developments which can, according to one councillor, reach “the depths of a nuclear submarine.”

The Basements Bill, which aims to formalise the regulation of underground permitted development rights, is still in its infancy: it had its first reading in the House of Commons in November, and is scheduled for a second reading in May.

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Developers dig-in over mega-basement ban

£7,369,000£5,746,000£5,499,000

A

B

C

George Osborne’s Autumn Statement introduced Capital Gains Tax for non-resident buyers from April next year, while a consortium of UK housebuilders has pledged to stop “foreign first” sales tactics in an effort to tackle the housing supply shortage.

Some of Britain’s biggest developers have signed up to The House Builders Federation’s voluntary pledge, promising to market new schemes “before or at least at the same time as abroad”. The standard route – until now – for high-end developers has been to launch new schemes at exhibitions in Singapore, Hong Kong, Dubai and other international HNW hotspots, before targeting domestic UK buyers once a good portion of units have been sold.

The plan comes after an HBF survey found that 11% of the new homes – and a higher proportion of high-end homes – sold last year had been marketed abroad in advance of being actively promoted in the UK.

29%

71%

Overseas buyers lose favour

A consortium of UK housebuilders has pledged

to stop “foreign first” sales tactics.

Despite reports last year that 85% of prime central London’s homes were bought by overseas buyers, home-grown money is now driving much of the prime SW market, and that’s just as well given the recent question marks over the amount of foreign ownership in London. The plan comes after a report that in 2013 71% of new build properties were sold to overseas buyers.

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The abandoned Brompton Road tube station in Knightsbridge is to be converted into luxury apartments after being sold for around £53m to a “wealthy Ukrainian investor”.

The 28,000 sq ft building had been the subject of speculative bids of up to £25m in early 2012, before being put on the market by the MOD back in September. It immediately attracted a lot of international interest; Ajit Chambers, a rival bidder who runs the Old London Underground Company, revealed that a senior member of the Qatari Royal Family was in the running

but that a “mysterious Ukrainian billionaire” ended up with the winning bid. The station opened in 1906 as a stop on the Piccadilly line, but was closed in 1934 after not attracting enough traffic. It was then bought by the War Office in 1938 and used by anti-aircraft units right into the 1950s, when it became home to the London University Air Squadron, the London University Royal Naval Unit, and 46F Squadron Air Training Corp.

Tube lines themselves aren’t included in the sale; those are still owned by TFL and the building’s new owner will not have any access to them.

Brompton Road ghost tube sold for luxury resi conversion

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Champions Property Sales Review 2013

2013 was characterised by short stock and high demand throughout the capital, with prices being pushed up as a result. The last quarter of the year, however, saw an influx of enquiries from potential vendors, which promises a strong and active market in early 2014.

The received wisdom from many agents and statisticians is that Chelsea’s property prices bucked a decade-long trend by under-performing the central London average, with prices rising just 3% in SW3 over the year, compared to a prime London average of over 7%. This has been attributed to prices being already so high in the Royal Borough that surrounding, less valued areas have been playing catch up.

At Champions our experience of 2013 was markedly different with prices asking and achieved being significantly greater than the previous year.

We have recently had a studio under offer in Chelsea Manor Street at £575,000 which was struggling to achieve £430,000 eighteen months ago and an Eaton Square apartment with a fourteen year lease was subject to a bidding war which resulted in an over-the-asking-price sale at £2 million, showing how there was healthy selling all across the market in 2013.

In fact not only have we seen asking prices rising by well above the figures cited we achieved 96% of asking prices over the year on the properties we have sold.

We achieved 96% of asking price over the year on the properties we have sold.

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It was not a vintage year for Chelsea rents in 2013, with rental values dropping very slightly, especially in the latter months of the year when the market was quiet and many landlords were taking lower offers than they might have expected to avoid void periods.

Why do these blips happen and why last year? It may well have been because owners, seeing their properties continue to rise in value, would rather rent them out than sell, becoming “accidental landlords” and this has resulted in an increase in rental stock relative to demand. And on the demand side, there was a noticeable drop in the numbers of affluent students coming from the Far East and, more specifically, China. The contribution these students who come in September to Kensington and Chelsea make should not be underestimated. Any correction in market rents was however minor in comparison with the rental slump of 2008-2009 which saw precipitous drops in rents achieved and 2014 has started in a reassuringly buoyant manner. This bodes well for the rest of the year, especially if more properties go onto the sales market and reduce the supply of rental properties.

Champions Property Lettings Review 2013

2014 has started in a reassuringly buoyant

manner. This bodes well for the rest of the year.

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