15 Mar 2019
New-build: ready for prime time?
In sought-after locations, developers are aggressively marketing prime new-builds as both desirable living and top-notch investment. Buying off-plan might be riskier for some – and with the changing profile of international buyers, the market is hard to predict. So what is it about new developments that tell us the trend has stamina?
Until a few years ago ‘prime property hotspots’ referred strictly to postcodes in Kensington & Chelsea, Mayfair, Belgravia and Knightsbridge. Now, affordability and demand – coupled with high-profile new developments – have created ‘outer prime’ areas in some previously unfashionable locations.
True, the big money in London is still highly concentrated in the traditional areas. Westminster and Kensington & Chelsea together saw £8.2 billion in prime sales last year – the other 31 boroughs combined sat at £13.4 billion.
Interestingly though, if we only look at locations in London with more than one hundred £1 million- plus sales (our lower limit to classify a property as ‘prime’ in the capital), the biggest sales growth was Lewisham, where values soared nearly 50%. In prime-lite locations the figures get much bigger. Waltham Forest, for example, saw prime sales rocket 165% in 2017; Newham was up 143% and Havering 61%. These aren’t locations you might think of as ‘prime’ – and five years ago, high-value sales in these locations were negligible.
Read the full Prime Property report
New-build supply and demand
But it’s in these less traditional boroughs that upmarket new-build is having its biggest influence. The areas where new-build represents more than half of prime sales include Tower Hamlets (see box) and Newham – areas with older, higher-density real estate, where modern buildings really stand out.
One reason investors and home-buyers are looking outside the more well-heeled areas is that many prime new-builds in the traditional hot-spots are struggling to sell – and have been for some time as the Brexit uncertainties mean international buyers dry up. That’s pushing many developers into aggressive sales – with as many as 40% of London new-build sales going to ‘bulk buyers’, according to a Financial Times investigation.
The volume of new-build luxury apartments going up in parts of the capital remains much-discussed. There is a chance that in some developments, prices will come down as developers look to crystallise cash. That said, buyers on the sidelines looking for developers to slash prices ahead of Brexit might be in for a long wait.
The hunt for prime value
Make no mistake: our forecasts suggest the prestige postcodes will continue to lead the prime property rankings. But the best value new-build could well be found in those up-and-coming areas. That’s also why the new-build story is so interesting outside London, where emerging prime hot-spots combine with more readily available land and evolving infrastructure to offer real value.
In Cambridge for example (see box), high demand and low supply, combined with a fast- growing high-tech workforce, are transforming prime property offerings.
North of London, developers are getting creative to accommodate Green Belt restrictions. In South Bucks, for example, new-builds made up 20% of prime property sales, rising to 41% in Broxbourne, Hertfordshire, as buyers eye its Crossrail 2 terminus due to open in 2033.
Greater Manchester prime sales were up 22% in 2017, to nearly £230 million, driven in part by the Northern Powerhouse initiative. In that city, many developments – like those around St John’s Deansgate and Salford Quays – are already designated ‘prime’.
Overall, new-build in 2017 represented £5 billion-worth of prime sales in England and Wales – 16% of the total market. But these developments delivered a third of the year-on-year growth in the prime market – an extra £602 million.
Our research shows that outside the South East, HNWIs see Bath, Cambridge, Oxford, Manchester and Cheltenham as property hot spots – and prime new-build opportunities in these cities remain highly sought after. When it comes to the properties themselves, size, unique features and great transport links are considered the key attributes for ‘prime’.
In other words, the old rules still apply. Location is key, as ever. But today, marrying that to larger spaces – designed with an eye to contemporary living habits, with the energy-efficient attributes of new-build that are springing up in go-getter cities – is starting to look like a smart move.