RESIDENTIAL RESEARCH

FORECASTSCONNECTIVITY DEVELOPMENT PIPELINE

FOCUS ON: PARSONS GREEN 2016

RESIDENTIAL RESEARCH

LONDONMIDCITYBLOOMSBURY, CLERKENWELL, FARRINGDON, BARBICAN 2018

2

Significant improvements to local infrastructure, not least the opening of the Elizabeth Line, which will augment Farringdon’s credentials as one of the best connected areas in London, have been the catalyst for developers beginning new projects. The eight largest schemes under construction or in the pipeline will deliver more than 2,000 private units over the next three to five years (Figure 4).

These new developments will bring more residents to an area which, due to its central location, has always been economically diverse. The residential community includes homeowners and renters working in the nearby technology, media, legal and financial hubs as well as students from three of the UK’s top ten-ranked universities.

ConnectivityMidcity is one of a handful of locations in London where regeneration and transport upgrades have created new demand and underpinned residential market performance in recent years. The Elizabeth Line, also known as Crossrail, opens in late-2018, making Farringdon, at the heart of Midcity, one of the busiest train stations in the UK. The upgraded station will link Midcity with

outer London, the home counties, the City of London, Canary Wharf and three of London’s five airports.

The new links add to more than a decade of continuous improvement to transport infrastructure in Midcity, which began in 2007 with the opening of the Eurostar terminus at St Pancras International that ferries passengers to Paris and Brussels. The choice of destinations has since been expanded, and passengers can now catch direct trains from the terminus to locations including Avignon and Amsterdam.

For journeys further afield, London City, Heathrow, Gatwick and Luton airports can all be reached within 45 minutes on the train or underground from Farringdon station.

Local transport infrastructure also includes nine tube stations (see Figure 6), though Midcity’s central location means that workers, shoppers or those seeking entertainment in the West End can walk to their destination (Figure 8).

Prices and supplyAverage residential property values in Midcity have broadly followed the trend of prime central London, while outperforming

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

FOCUS ON: MIDCITYMidcity, the central residential location sitting between the West End, the City of London, the South Bank and Kings Cross, is now becoming a focal point for development.

FIGURE 3 Connectivity: London and beyond

ST PANCRAS TO FARRINGDON TO*TRAVEL TIMES

BRUSSELS

2 HRS1 MIN

EUROSTAR

BOND STREET

4MINS

ELIZABETH LINE

HEATHROW

39MINS

ELIZABETH LINE

AVIGNON

5 HRS39 MINS

EUROSTAR

AIME LAPLAGNE

8 HRS1 MIN

EUROSTAR

LIVERPOOLSTREET

2MINS

ELIZABETH LINE

CANARYWHARF

8MINS

ELIZABETH LINE

AMSTERDAM

4 HRS38 MINS

EUROSTAR

2 HRS16 MINS

PARIS

EUROSTAR

*from late 2018/2019

Source: Eurostar, TFL

Average outperformance of property prices within a ten minute walk of Farringdon station since the Elizabeth Line was approved in 2008.

Source: Knight Frank Research

FIGURE 2 Housing delivery in Camden, Westminster, Islington and City of London

Mean net addition dwellings delivered annually 2012-2017

2,580

Housing need per annum

5,766

FIGURE 1

34%

43

SHOREDITCH

TEMPLE CITY OFLONDON

CLERKENWELL

HOXTON

EUSTON SQUARE

HOLBORN

RUSSELL SQUARE

FARRINGDON

CHARING CROSS

ST PAUL’S

OLD STREET

KING’S CROSSST PANCRAS

KING’S CROSSST. PANCRAS

ST PAUL’S

BANK

BARBICAN

BLACKFRIARS

TEMPLE

EMBANKMENT

COVENT GARDEN

MANSION HOUSE

CANNON STREET

LIVERPOOL STREET

MONUMENT

LONDON EUSTON

MOORGATE

510

3

8

6

4

ST PAULS CATHEDRAL

SHOREDITCH

RUSSELL SQUARE

CAMPUS

LINCOLN'SINN FIELDS

THEATRE DISTRICT

HATTON GARDEN

SILICON ROUNDABOUTEXMOUTH MARKET

ROYAL COURTS OF JUSTICE

ONE NEW CHANGE SHOPPING CENTRE

ROYAL OPERA HOUSE

KING’S COLLEGELONDON

SOAS UNIVERSITY OF LONDON

CITY UNIVERSITYOF LONDON

LONDON SCHOOL OF ECONOMICS AND

POLITICAL SCIENCE

6

7

5

3

2

8

4

1

1

2

9

7

CASS BUSINESS SCHOOL

CENTRAL SAINT MARTINS

CITY OF LONDONSCHOOL FOR GIRLS

UNIVERSITY COLLEGE LONDON

HATTON GARDEN

EXMOUTH MARKET

CITY UNIVERSITYOF LONDON

6

7

5

3

2

8

4

1

1

2

9

7

LONDON MIDCITY 2018 RESIDENTIAL RESEARCH

Source: Knight Frank Research/Molior

in the past three years, with average resale prices climbing 121% since 2007 (Figure 5). Even so, average values in much of Midcity remain lower when compared to some neighbouring prime central London locations.

Despite the rise in development activity, data suggests Midcity may remain undersupplied when it comes to housing.

Midcity spans sections of the four boroughs of Islington, Camden, Westminster and the City of London. Housing delivery is failing to keep up with official estimated need in all four boroughs (Figure 2). Taken together, 3,231 additional dwellings were delivered during 2016-17, while estimated annual need is 5,766.

Commercial HubsFactors underpinning residential demand have also supported office and retail activity, and Midcity spans three commercial districts, each with their own distinct character.

The northern section of Midcity is particularly popular among businesses from the technology, media and telecommunications sectors, who have sought out alternatives to more established office locations due to a variety of factors, including the relative value and varying styles of architecture. Recent tenancy agreements have been signed by companies differing in size, from growing start-ups like Monzo Bank to global technology firms like Google, which is developing a £1 billion campus on Midcity’s northern fringe in King’s Cross (Figure 4).

Midcity is also a hotspot for coworking, and serviced office provider WeWork has leased six locations in Midcity totalling more than 500,000 square feet since 2015.

The southern quarter of Midcity is home to London’s legal industry, with the Royal Courts of Justice at the centre, surrounded by the Inns of Court – the associations for barristers that have been present in the area since 1320. The legal district, which contains many barristers’ chambers and solicitors’ offices, stretches from Lincoln’s Inn Fields, the largest public square in London, through to Temple on the north bank of the River Thames.

Heading east, the legal community begins to give way to financial services firms on the Eastern fringe of the City of London, where Goldman Sachs is establishing its new European headquarters.

DEUTSCHE BANK AG

DELOITTE LLP

DLA PIPER UK LLP

ITV PLC

EXPEDIA

WEWORK

CLEARY GOTTLIEB STEEN & HAMILTON LLP

MOONPIG.COM

MONZO BANK

ETSY

1

2

3

4

5

6

7

8

9

10

FIGURE 4

CHANGING MIDCITYRESIDENTIAL DEVELOPMENT PIPELINE Developments of more than 75 private units in progress.

SELECTED BUSINESSES THAT HAVE TAKEN NEW OFFICE SPACE IN MIDCITY SINCE 2015

LINCOLN SQUARE (NEW COURT)

221 UNITS

BARTS SQUARE 226 UNITS

THE DENIZEN 99 UNITS

POSTMARK 515 UNITS

250 CITY ROAD 616 UNITS

FORMER ST MATTHEW'S HOSPITAL

100 UNITS

CANALETTO 190 UNITS

KINGS CROSS QUARTER (GRIMALDI SQUARE)

98 UNITS

1

2

3

4

5

6

7

8

Size of dots relative to number of units

TECHNOLOGY MEDIA TELECOMMUNICATIONS DISTRICT

FINANCIAL DISTRICT

LEGAL DISTRICT

MIDCITY BOUNDARY

LONDON MIDCITY 2018 RESIDENTIAL RESEARCH

performing arts centre for music, theatre

and dance.

One New Change, a shopping centre,

with a roof terrace overlooking St Paul’s

Cathedral, sits on the eastern fringe of

Midcity, while Kings Cross is a brand new

retail destination on the northern fringe.

Amenities are likely to continue to

proliferate as local infrastructure

continues to improve, bringing increasing

numbers of visitors to the area. The

commencement of Elizabeth Line

services at Farringdon station, which is

itself surrounded by London’s primary

shopping and business districts, is

likely to underpin demand for further

development over the coming decade.

Demand for housing comes from a variety of sources that includes international students.

Education Kings College London, London School of Economics and Political Science and University College London are all in Midcity or on its fringe. They are rated 7th, 5th and 4th respectively in the Times Higher Education UK rankings.

The London School of Economics and Political Science has the highest proportion of international students in the UK, at 70%.

Amenity Midcity’s central location means amenities are within easy reach. Oxford Street, with approximately 300 shops and restaurants, is around a 20 minute walk from Russell Square tube station (Figure 8), or ten minutes on the underground. Once the Elizabeth Line opens, a trip from Farringdon to Bond Street will take four minutes.

Within Midcity itself, Exmouth Market, with 32 stalls and an array of bars and restaurants occupies the district, while to the east sits the Barbican Centre, a

5

FIGURE 6 London transport upgrades planned and in progress

Bromley

Barnet

Hillingdon

Bexley

Ealing

Brent

Harrow

Hounslow

Redbridge

Merton

Greenwich

Newham

Lewisham

Haringey

LambethSouthwarkWandsworth

Camden

Waltham Forest

Richmond Upon Thames

HackneyIslington

Barking & Dagenham

Kin

gsto

n U

pon

Tham

es

Tower Hamlets

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Bromley

Catford

Lewisham

New Cross Gate

Elephant & Castle

N ineElms

Battersea

EustonSt. PancrasOld Oak

Common

ActonM ainlineWest

Ealing

Tottenham Hale

NewSouthgate

AlexandraPalace

TurnpikeLane

SevenSisters

DalstonJunction

Angel

Victor ia

King's RoadChelsea

ClaphamJunction

TootingBroadway

W imbledon

MotspurPark

Teddington

TottenhamCour t Road

Paddington

HamptonCourt

Kingston

AbbeyWood

WestDrayton

HeathrowTerminal 4

Surbiton

Angel Road

Langley

ChadwellHeath

Kennington

HeathrowTerminal 5

HeathrowTerminals 2 & 3

WorcesterPark

Shepperton

Sunbury

Stratford

Orpington

ElmersEnd

FinsburyPark

TulseHill

LondonBridge

Charlton

Hendon

Cricklewood

M ill HillBroadway

London CityAirport

GatwickAirport

StansteadAirport

FARRINGDON

HS2 Proposed (2026 – subject to approval)

Crossrail 1 (Central – late 2018, Outer – 2019)

Crossrail 2 (2030 – subject to approval)

Crossrail 2 Proposals

Northern Line Extension (2020)

Bakerloo Line Existing

Bakerloo Line Proposed (2030 – subject to approval)Thameslink (£7bn upgrades complete 2019)

Source: Knight Frank Research

Source: Land Registry/ Knight Frank Research

FIGURE 5

Midcity resale prices have outperformed (Indexed 100 = 2006)

75

100

125

150

175

200

225

250

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

MidcityPrime Central LondonGreater LondonUnited Kingdom

Prime Central London prices in contextAverage prices in prime central London are 9% below their peak in 2015, amid pricing adjustments to new stamp duty rules introduced in 2014 and 2016. However, values are still 22% above the previous peak of the market in 2008. There are also pockets of outperformance.

Average values for homes within ten-minute walk of Farringdon station, for example, have outperformed the wider Prime Central London market by 34% since Crossrail was granted royal assent in 2008.

Prices in prime central London East are projected to climb by 0.5% during 2018, with cumulative growth of 13.1% by 2022, according to Knight Frank’s latest forecasts.

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.

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.

LOOKING TO THE FUTURE: CROSSRAIL 2

DEVELOPMENT PIPELINE

HOW HAVE PRICES PERFORMED?

CROSSRAILANALYSING PROPERTY MARKET PERFORMANCE ALONG THE ELIZABETH LINE 2017

RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH

PRIME LONDON SALES INDEX

JULY 2018

FIGURE 1

New prospective buyers rise in June Year-on-year % change

FIGURE 3

Downwards trend for withdrawn properties Rebased to 100 at June 2017, rolling quarterly average

FIGURE 2

High-value deals hit three-and-a-half year high Monthly value of £10 million-plus deals in London

FIGURE 4

Viewings per office on the rise Rebased to 100 at January 2017

-20%-15%-10%

-5%0%5%

10%15%20%25%30%35%

Jun-

17

Jul-1

7

Aug-

17

Sep-

17

Oct

-17

Nov-

17

Dec-

17

Jan-

18

Feb-

18

Mar

-18

Apr-1

8

May

-18

Jun-

18

0

20

40

60

80

100

Jun-

17Ju

l-17

Aug-

17Se

p-17

Oct

-17

Nov-

17De

c-17

Jan-

18Fe

b-18

Mar

-18

Apr-1

8M

ay-1

8Ju

n-18

Inde

x

0

30

60

90

120

150

Jan-

17Fe

b-17

Mar

-17

Apr-1

7M

ay-1

7Ju

n-17

Jul-1

7Au

g-17

Sep-

17O

ct-1

7No

v-17

Dec-

17Ja

n-18

Feb-

18M

ar-1

8Ap

r-18

May

-18

Inde

x

Source: Knight Frank Research

Source: Knight Frank Research

Source: Knight Frank Research

Source: Knight Frank Research / LonRes / Land Registry

PRIME CENTRAL LONDON

PRIME OUTER LONDON

Prime central London index | 5,884.2

Prime outer London index | 277.8 Annual change | -4.0%

Annual change | -1.9%

Monthly change | -0.5%

Monthly change | -0.2%Quarterly change | -0.8%

Quarterly change | -1.2%

Figure 1 The number of new prospective buyers in prime central London was 31% higher in June than the same month last year. Despite a period of political uncertainty, the upwards trend highlights the strength of underlying demand as asking prices rebase.

Figure 2 The total value of £10 million-plus sales in June 2018 was £407 million, the highest monthly total since December 2014. It highlights the strength of underlying demand for prime central London property despite a period marked by political uncertainty.

Figure 3 The number of properties withdrawn from sale declined 31% year-on-year in June. Properties are often withdrawn because buyers will not meet the asking price. The trend suggests asking prices now more fully reflect buyer expectations as higher rates of stamp duty are priced in.

Figure 4 The number of viewings per office in prime outer London was 18% higher in June than the same month last year. This reflects the resilience of underlying demand and also the fact that price-sensitive buyers are carrying out more viewings before making an offer.

The prime London sales indices are based on repeat valuations of second-hand stock and do not include new-build property, although units from completed developments are included over time.

£0

£100m

£200m

£300m

£400m

£500m

Feb-

16Ap

r-16

Jun-

16Au

g-16

Oct

-16

Dec-

16Fe

b-17

Apr-1

7Ju

n-17

Aug-

17O

ct-1

7De

c-17

Feb-

18Ap

r-18

Jun-

18

LONDON DEVELOPMENT HOTSPOTSRESIDENTIAL DEVELOPMENT OPPORTUNITY AREAS 2018

RESIDENTIAL RESEARCH

AREAS TO WATCH PRICE FORECASTS MARKET UPDATE

London Development Hotspots 2018

Crossrail - 2017 Prime London Sales Index - July 2018

RECENT MARKET-LEADING RESEARCH PUBLICATIONS

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

201812th Edition

TH

E W

EA

LTH

RE

PO

RT

2018

The global perspective on prime property and investment

The Wealth Report - 2018

FIGURE 8

Walk Times Twenty minute walk-times from selected stations in Midcity

SHOREDITCH

HOLBORN

TEMPLE

GOLDEN LANE ESTATE

HOXTON

RUSSELL SQUARE

FARINGDON

BARBICAN

CLERKENWELL

CITY OFLONDON

PENTONVILLE

EUSTON SQUARE

HOLBORN

TOTTENHAM COURT ROAD

CHARING CROSS

OLD STREET

KING’S CROSSST PANCRAS

KING’S CROSSST. PANCRAS

ST PAUL’S

BANK

BLACKFRIARS

TEMPLE

EMBANKMENT

COVENT GARDEN

MANSION HOUSE

CANNON STREET

LIVERPOOL STREET

MONUMENT

LONDON EUSTON

MOORGATE

ST PAULS CATHEDRAL

SHOREDITCH

RUSSELL SQUARE

CAMPUS

LINCOLN’SINN FIELDS

THEATRE DISTRICT

HATTON GARDEN

SILICON ROUNDABOUT

EXMOUTH MARKET

ROYAL COURTS OF JUSTICE

ONE NEW CHANGE SHOPPING CENTRE

COVENT GARDEN

OXFORD STREET

BARBICAN

RUSSELL SQUARE

FARRINGDON

Source: Knight Frank Research

If you’re thinking of buying or selling, or would just like some property advice, please do get in touch.

Get in touch

Edward Robinson +44 20 7718 5211 edward.robinson@knightfrank.com

20213.0%

20180.5%

20191.5%

20202.5%

20225.0%

2018 - 202213.1%

* Price forecasts are for existing homes as of May 2018. Property values in the new-build market may perform differently.Source: Knight Frank Research

FIGURE 7

Prime central London East, price forecasts*“ THE OPENING OF THE ELIZABETH LINE WILL ENHANCE FARRINGDON’S POSITION AS A KEY TRANSPORT HUB IN CENTRAL LONDON. GIVEN THAT FARRINGDON IS ALSO SURROUNDED BY LONDON’S BUSINESS AND SHOPPING DISTRICTS, IT’S APPEAL IS ONLY SET TO INCREASE.”

Patrick Gower, Residential Researchpatrick.gower@knightfrank.com

If you would like further insight into residential markets please get in touch.