RESIDENTIAL RESEARCH

MIXED USE AREAREGENERATION TRANSPORT HUB

FOCUS ON: PARSONS GREEN 2016

FOCUS ON: VAUXHALL, NINE ELMS, BATTERSEA VNEB REPORT 2018

RESIDENTIAL RESEARCH

2

Transport infrastructure Regeneration and transport upgrades have created new demand and underpinned residential market performance in many locations in London in recent years.

Vauxhall and the surrounding VNEB opportunity area is one of London’s largest regeneration schemes and is located around a transport hub adjacent to some of the most affluent areas of prime central London.

Vauxhall station, where a £36 million revamp has recently been completed, is on the Victoria tube line, with direct trains running every two minutes to the West End and Kings Cross. The station also has mainland rail services, carrying passengers to the Home Counties and south coast. River buses run to Embankment, Blackfriars and Canary Wharf from piers at St George Wharf and Battersea Power Station.

The wider area is now primed to benefit from further transport upgrades, including the first extension to the Northern Line

in more than seventy years. Tunnelling work to two new stations at Battersea Power Station and Nine Elms completed in November, and from 2020 when the stations open, residents will be able to reach the City or West End in fewer than 15 minutes (Fig 2).

Public realm improvements The transport upgrades are taking place alongside sweeping improvements to the public realm. Vauxhall is to be dramatically remodelled, establishing a pedestrian-friendly town centre, with more public spaces and room for cafes, restaurants and shops. Plans to redesign the one-way traffic gyratory, opening the whole area up for pedestrians through to Albert Embankment, are to be completed by 2022. A new linear park will snake through the whole regeneration project, linking Vauxhall to Battersea Power Station and a new US Embassy.

Pedestrians can already reach Westminster via Vauxhall Bridge and the proposed Nine Elms Pimlico Bridge will add to the area’s cross-river connectivity.

Please refer to the important notice at the end of this report

VAUXHALL, NINE ELMS, BATTERSEAThe Vauxhall Nine Elms and Battersea (VNEB) Opportunity Area is a 227-hectare riverside district that includes a new cluster of residential towers, the Battersea Power Station redevelopment and a new US Embassy.

FIGURE 2

Transport connectivity

VAUXHALL TOCANARY WHARF

VAUXHALL TOBOND STREET

BATTERSEA POWERSTATION, NINE ELMS

TO BOND ST

BATTERSEA POWERSTATION, NINE ELMS

TO BANK

VICTORIALINE

JUBILEE

VAUXHALL TO BANK

VAUXHALL(ST GEORGE WHARF PIER)TO CANARY WHARF PIER

26MINS

14MINS

14MINS

15MINS

15MINS

37MINS

VNEBCONNECTIVITYCURRENT

VNEBCONNECTIVITYFROM 2020

VICTORIALINE

NORTHERNLINE

NORTHERNLINE

NORTHERNLINE

VICTORIALINE

JUBILEE THAMESCLIPPER

THAMESCLIPPER

VAUXHALL TOCANARY WHARF

VAUXHALL TOBOND STREET

BATTERSEA POWERSTATION, NINE ELMS

TO BOND ST

BATTERSEA POWERSTATION, NINE ELMS

TO BANK

VICTORIALINE

JUBILEE

VAUXHALL TO BANK

VAUXHALL(ST GEORGE WHARF PIER)TO CANARY WHARF PIER

26MINS

14MINS

14MINS

15MINS

15MINS

37MINS

VNEBCONNECTIVITYCURRENT

VNEBCONNECTIVITYFROM 2020

VICTORIALINE

NORTHERNLINE

NORTHERNLINE

NORTHERNLINE

VICTORIALINE

JUBILEE THAMESCLIPPER

THAMESCLIPPER

VAUXHALL TOCANARY WHARF

VAUXHALL TOBOND STREET

BATTERSEA POWERSTATION, NINE ELMS

TO BOND ST

BATTERSEA POWERSTATION, NINE ELMS

TO BANK

VICTORIALINE

JUBILEE

VAUXHALL TO BANK

VAUXHALL(ST GEORGE WHARF PIER)TO CANARY WHARF PIER

26MINS

14MINS

14MINS

15MINS

15MINS

37MINS

VNEB CONNECTIVITY VNEB CONNECTIVITYCURRENT TRAVEL TIMES FROM 2020

VICTORIALINE

NORTHERNLINE

NORTHERNLINE

NORTHERNLINE

VICTORIALINE

JUBILEE THAMESCLIPPER

THAMESCLIPPER

94%

Source: Knight Frank Research/Transport for London

Source: Knight Frank Research/Land Registry*Three month rolling average

FIGURE 1

Pricing growth compared Indexed 100 = Q1 2010

90

100

110

120

130

140

150

160

170

180

190

Wandsworth*Lambeth*Prime Central London

2016 2017201520142013201220112010

VNEB is no longer just a masterplan – there are

residents, workers, businesses and diplomats who now occupy this community.

CHARLES DUGDALE PARTNER, RESIDENTIAL DEVELOPMENT

43

Grosvenor Rd

Nine Elms Ln

Harleyford Road

S Lambeth Road

A3

Kennington Road

Albe

rt E

mba

nkm

ent

Black Prince Rd

Lansdowne Way

Sutherland St

Lupus Street

Ebur

y St

St George’s Dr

Drayco

tt Pl

Brixton Road

Caldwell Street

Chelsea Bridge Road

Vauxhall Bridge Road

Battersea Park

VauxhallPark

TheOval

BATTERSEAPOWER STATION

A3205

A3036

A3214

A3213

Vauxhall

Pimlico

Battersea Park

Battersea

Chelsea Bridge

Vauxhall Bridge

Queenstown Road

Nine Elms

2512

3

45 6

710

13

14

15

11

12

89

1617

18

19 2021

2223

24 26

27

2930

28

FIGURE 3

Development pipeline*

The improvements, part of a £1 billion

revamp of local infrastructure, are

enhancing the area’s attraction not just

to residents but to businesses whose

workers will have additional transport

options to travel to the area.

Commercial impact The £9 billion project to revamp the Grade II* listed Battersea Power Station, which has been empty since it was decommissioned in 1983, is taking shape. It will include more than 1.25 million square

feet of office space upon completion,

which is scheduled for 2026. The first

two residential phases, comprising 1,120

private homes, have all been sold. Phase

three, comprising more than 1,200 private

units, is currently under construction.

*Completion dates from 2018 onwards, excludes student housing ** Schemes include Build-to-Rent units

ViaductNorthern Line extension stations

THE RESIDENCE PH 1**

BATTERSEA POWER STATION PH 1

BATTERSEA POWER STATION PH 3

RIVERLIGHT

BATTERSEA POWER STATION PH 4+

NINE ELMS GARDENS

NINE ELMS PARKSIDE**

EMBASSY GARDENS PH 1

BATTERSEA POWER STATION PH 2

EMBASSY GARDENS PH 2

EMBASSY GARDENS PH 3

VISTA

PRINCE OF WALES DRIVE PH 111

PRINCE OF WALES DRIVE PH 2+11

13

14

THE RESIDENCE PH 215

10

9

8

7

6

5

4

3

2

1

BATTERSEA EXCHANGE PH112

BATTERSEA EXCHANGE PH2+12

VAUXHALL, NINE ELMS, BATTERSEA 2018 RESIDENTIAL RESEARCH

Apple has agreed a deal to move 1,400

staff from offices across several locations in

the capital to a new ‘campus’ at the power

station. In August the developer received

approval to add an extra 40,000 square feet

of office space in the former engine room.

Nine Elms has also been the subject

of diplomatic interest, and a new

American Embassy opened in January.

In Vauxhall, recent openings including

Damien Hirst’s Newport Street Gallery

and Soho House restaurant Dirty Burger

have contributed to an ongoing uplift in amenity and lifestyle.

Residential pipeline Around 5,650 private units are under construction in the VNEB opportunity

Under construction

Percentage Sold

Construction not started

Complete

THE CORNICHE

AYKON

NINE ELMS POINT**

THE DUMONT

VAUXHALL SKY GARDENS

THE TOWER

Not launched

VOX, 36-46 ALBERT EMBANKMENT

VAUXHALL CROSS

VAUXHALL SQUARE

BELMONT

KEYBRIDGE PH 2

NINE ELMS SQUARE

NINE ELMS STATION

NINE ELMS GROVE

ONE NINE ELMS

KEYBRIDGE PH 1**26

26

27

28

29

30

25

24

23

22

21

20

19

18

17

16

Source: Knight Frank Research/Molior

VAUXHALL, NINE ELMS, BATTERSEA 2018 RESIDENTIAL RESEARCH

funding for land and construction has

increasingly been led by investors from

North America, China, Russia and the

Middle East (Fig 5).

The type of housing under construction

in Vauxhall has become more diverse

as regeneration has progressed.

Larger sections of private rented sector

accommodation and a student housing

pipeline of 1,865 beds has emerged,

underpinned by rising numbers of

area, constituting about 9% of all private homes currently under construction in the capital. Almost 60% of units under construction, which are due to complete over the next two to three years, have been sold.

A further 6,800 homes have been granted planning (Fig 3).

The VNEB area has attracted development finance from around the world and investment in land has taken an increasingly international flavour, underlining the global appeal of London real estate. Over the last two years,

overseas students applying to London universities. The number of overseas applicants has climbed from 91,790 in 2009 to 137,745 in 2016, according to UCAS data (Fig 4).

Residential pricing

Average residential prices in Wandsworth and Lambeth, the borough in which Vauxhall sits, have climbed 68% and 81% respectively since the beginning

Source: UCAS

FIGURE 4

Number of overseas students applying to London universities

90

100

110

120

130

140

150

2016201520142013201220112010 80,000

100,000

120,000

140,000

160,000

20162015201420132012201120102009

EU(Excluding UK)Non EU

5

Apple will move

1,400

staff to a new headquarters at Battersea Power Station

Since 2010, in Lambeth, average residential prices have climbed

81%

5,650 private units are under construction in the VNEB opportunity area

Two

3.2km Northern Line tunnels to Battersea Power Station and Nine Elms are now complete.

£

Prices in Prime central London are forecast to climb by

12.6%between 2018 and 2022

2011 2012 2013 2014 2015 2016 2017 2018

FIGURE 5

Global attraction Table shows the year and origin of primary funding for each residential development in the VNEB opportunity area

Source: Knight Frank Research

and earlier

VNEB, with the arrival of Apple, is now a recognised office location for occupiers

to consider with all the infrastructure to support

global businesses. IAN MCCARTER

PARTNER, LONDON WEST END AGENCY

Important Notice

© Knight Frank LLP 2018 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.

RESIDENTIAL RESEARCH

Patrick Gower Associate +44 20 3640 7015 patrick.gower@knightfrank.com

Gráinne Gilmore Head of UK Residential Research +44 20 7861 5102 grainne.gilmore@knightfrank.com

RESIDENTIAL DEVELOPMENT

Charles Dugdale Partner +44 20 7861 5411 charles.dugdale@knightfrank.com

Emma Fletcher-Brewer Partner +44 20 7861 1705 emma.fletcher-brewer@knightfrank.com

Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs.

RESIDENTIAL RESEARCH

UK RESIDENTIAL MARKET FORECAST

“ The market is localised and we see slightly stronger growth in the Midlands, East of England and the North West, a continuation of the trend that has emerged this year.”

For the latest news, views and analysis on the world of prime property, visit our blog or @kfintelligence

UK HOUSE PRICE FORECASTUK house price growth has moderated from recent peaks, although markets remain highly localised.

Headlines Dec 2017UK house price growth has been slowing since the summer of 2014, although the annual change remains positive

Price growth across the UK is expected to be 1.0% in 2018, reaching 14.2% cumulatively between 2018 and 2022

In London, prices are forecast to fall by 0.5% in 2018, but cumulative price growth over the next five years is positive at 13.1%

2017-2022 Forecasts, December 2017

2017 2018 2019 2020 2021 2022 2018 - 2022Mainstream residential sales markets

UK 1.5% 1.0% 2.0% 3.0% 3.5% 4.0% 14.2%

London -1.0% -0.5% 2.5% 3.0% 3.5% 4.0% 13.1%

North East 2.0% 2.0% 2.0% 4.0% 3.0% 3.0% 14.8%

North West 2.0% 1.0% 2.0% 4.0% 4.0% 4.5% 16.4%

Yorks & Humber 0.5% 1.0% 2.0% 3.0% 3.0% 3.0% 12.6%

East Midlands 4.5% 2.0% 2.5% 2.5% 3.0% 3.5% 14.2%

West Midlands 4.5% 2.0% 2.0% 3.0% 3.0% 4.0% 14.8%

East 1.0% 2.0% 3.0% 3.0% 4.0% 3.0% 15.9%

South East 3.0% 0.0% 2.0% 3.0% 4.0% 4.5% 14.2%

South West 4.0% 1.0% 2.0% 2.5% 3.5% 4.5% 14.2%

Wales 1.5% 1.5% 1.5% 2.5% 3.0% 4.0% 13.1%

Scotland 1.5% 1.0% 1.0% 2.5% 3.5% 3.5% 12.0%

Prime residential sales markets

Prime central London east 0.0% 0.5% 1.5% 2.5% 3.0% 5.0% 13.1%

Prime central London west 0.0% 0.5% 1.5% 3.5% 3.0% 3.5% 12.6%

Prime outer London -1.0% 0.0% 1.0% 3.0% 3.5% 4.5% 12.5%

Prime England & Wales 0.7% 1.5% 2.0% 2.0% 2.0% 2.0% 9.9%

Residential rental markets

UK 1.2% 2.5% 2.5% 2.5% 3.0% 3.0% 14.0%

London 0.7% 3.0% 2.5% 3.0% 3.0% 3.0% 15.0%

Prime central London -1.5% 0.5% 1.5% 2.5% 3.0% 3.0% 11.0%

Prime outer London -3.5% -1.0% 1.0% 2.0% 2.5% 3.0% 8.0%

The momentum in house price growth is slowing in many parts of the country, and we expect price rises to remain muted overall next year amid increased economic and political uncertainty in the run-up to Brexit and amid more muted forecasts for wage growth. The market is localised and we see slightly stronger growth in the Midlands, East of England and the North West, a continuation of the trend that has emerged this year.

Once the Brexit deal is completed, we forecast rising momentum across the market, with price growth reflecting this in many locations. The variations currently

Source: Knight Frank Research NB. Price forecasts are for existing homes. Property values in the new-build market may perform differently.

observed in the prime housing markets in London and beyond are set to continue, and we explore this more fully in our blog.

The UK may now be entering a period of interest rate rises, but even so, we expect rates to be low compared to long-term norms by the end of the forecast period. While development levels are rising across the country, the shortage of new homes is unlikely to be fully reversed in the coming years, and that will underpin pricing.

On the other hand, factors such as deepening affordability pressures and property taxes, will continue to weigh on pricing.

Methodology Statement: House price forecasts are based upon time series regression analysis of relevant statistically significant macro-economic variables adjusted in-house to encompass externalities such as likely risk factors. The forecast uses the Nationwide House Price Index as a base. Our forecasts assume a Brexit deal, but with a two year transitional period.

LOOKING TO THE FUTURE: CROSSRAIL 2

DEVELOPMENT PIPELINE

HOW HAVE PRICES PERFORMED?

CROSSRAILANALYSING PROPERTY MARKET PERFORMANCE ALONG THE ELIZABETH LINE 2017

RESIDENTIAL RESEARCH

There was a record number of super-prime tenancies agreed in London in 2017 as price-sensitivity in the sales market continued to boost demand.

Some 137 properties were rented out at £5,000-plus per week last year, which represented a 34% increase on the figure of 102 in 2016. In the three-month period between July and September there were 49 transactions, which is a record for a single quarter in 12 years of LonRes data.

“The momentum of recent years is still gathering pace,” said Tom Smith, Knight Frank’s head of super-prime lettings. “Demand is resilient due to higher rates of stamp duty and the associated uncertainty over the short-term prospects for price growth in the sales market. A lack of clarity regarding Brexit has also been a factor.”

As well as more transactions, the deals agreed are now on a longer-term basis as renting becomes more accepted as a tenure model in the super-prime market, said Tom. The average length of a tenancy in 2017 was 589 days, which compared to 548 in 2016 and 528 in 2015, an analysis of Knight Frank data shows.

There was also a record number of £15,000-plus per week deals last year, with 20 recorded

compared to 11 in 2016. “There is increasingly the opportunity to rent the sort of high-quality stock that has come from the sales market that historically did not exist on the lettings market,” said Tom. “The clear message for landlords is that super-prime tenants will not compromise on quality in the same way as buyers will not.”

The prime central London sales market is now moving towards recovery mode as higher transaction costs are absorbed. Average prices above £10 million rose 0.2% in the year to January 2018, the first annual increase in almost two years.

In a sign that more tenants are anticipating this recovery, there has been an increase in the number who have requested a clause in the tenancy agreement giving them first refusal to buy at the end of the tenancy.

“This option was rarely mentioned a few years ago but is now a frequent topic of conversation on viewings. Many landlords have nothing to lose with this ‘try-before-you-buy’ route,” says Tom. “The worst case scenario is that you have an income stream that covers your costs and the best is that you also have a sale at the other end.”

Price sensitivity in the sales market meant there was a record number of super-prime tenancies in 2017. However, an anticipated recovery in sale prices means there are more ‘try-before-you-buy’ tenants, as Tom Smith tells Tom Bill

Super-Prime Lettings Team The Knight Frank Super-Prime Lettings team provides a bespoke service to clients with property interests of £5,000-plus per week in prime central London. Led by Tom Smith, the team consists of 12 local specialists with over 130 years of collective experience and has a dominant market share in London. It completed twice as many super-prime lettings deals in London as its nearest competitor in 2017, LonRes data shows. The team members are based in Belgravia, Belsize Park, Chelsea, Hampstead, Hyde Park, Kensington, Knightsbridge, Marylebone, Mayfair, Notting Hill, South Kensington and St John’s Wood. Knight Frank’s global real estate network gives the team access to London’s most exclusive properties on and off the market.

Tom Smith Head of Super-Prime Lettings tom.smith@knightfrank.com +44 20 7881 7730

Kensington Palace Gardens, let, guide price £15,950 p/w

Prince Albert Road, let, guide price £12,000 p/w

LONDON SUPER-PRIME LETTINGS INSIGHT SPRING 2018

FIGURE 1 London super-prime lettings volumes and rental values

0

10

20

30

40

50

Q1-

2015

Q2-

2015

Q3-

2015

Q4-

2015

Q1-

2016

Q2-

2016

Q3-

2016

Q4-

2016

Q1-

2017

Q2-

2017

Q3-

2017

Q4-

2017

£16,800 £15,000£18,500

£45,000

£30,000 £35,000£45,000

£13,500£20,000

£29,000 £25,000 £30,000

£6,000

£8,000

£10,000

Total Transactions Average weekly rent Maximum weekly rent

Source: Knight Frank Research / LonRes

LONDON DEVELOPMENT HOTSPOTSRESIDENTIAL DEVELOPMENT OPPORTUNITY AREAS 2018

RESIDENTIAL RESEARCH

AREAS TO WATCH PRICE FORECASTS MARKET UPDATE

London Development Hotspots 2018

UK Housing Market Forecast - Dec 2017

Crossrail 2017

London London Super Prime Lettings 2018

RECENT MARKET-LEADING RESEARCH PUBLICATIONS

UK Retirement Housing Market Update Q1 2018

London Development Design Study 2017

SUPPLY AND DEMAND FUNDING MODELS POLICY FOCUS

RESIDENTIAL RESEARCH

RETIREMENT HOUSING MARKET UPDATE Q1 2018

DEVELOPMENT CONSULTANCY

LONDON DEVELOPMENT DESIGN STUDYSPRING 2017

Knight Frank Research Reports are available at KnightFrank.com/Research

The UK Tenant Survey 2017

TENANT SURVEY 2017: RESULTS INVESTOR INTENTIONSSECTOR UPDATE

MULTIHOUSING 2017 PRS RESEARCH

For the latest news, views and analysison the world of prime property, visit

KnightFrank.com/blog

KNIGHT FRANKINTELLIGENCE

of 2010. This exceeds the 42% growth in prime central London over the same period (Fig 1).

In the wider Prime central London market, price rises are likely to be muted for the next year or two, with increased momentum from 2020, based on the assumption that a Brexit deal is agreed by then.

Prices in Prime central London west will climb by 12.6% between 2018 and 2022, according to the latest Knight Frank forecasts. Those in Prime Outer London, are likely to climb 12.5% over the same period. However, there is room for outperformance in areas that are undergoing large-scale changes through regeneration and development.

Picture credit: Mount Anvil

201812th Edition

TH

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EA

LTH

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2018

The global perspective on prime property and investment

The Wealth Report - 2018