‘We’re building slums of the future’

save earl's court

Throughout the filming of the Drift Reports/Trews Reports I have done on housing in London one of the features that has stood out has been the role of foreign investment driving property development in London.

Property Week have published an excellent article examining the boom in overseas buyers purchasing London property off-plan and the resultant feedback loop of developments aimed squarely at that market.

I recently heard Boris Johnson claim that less than 10% of property in London was sold to overseas investors – which is patently false according to Hannah Brenton’s article, placing the figure at 70% some sectors of the London property market.
Here are some selected extracts from the article:


“The surge of overseas money flooding into the market is supported by figures from Savills, which show that 70% of all new-build properties in the £1,000-£2,000/sq ft bracket were sold to foreign investors in 2013/14, with Chinese and Pacific Asian buyers accounting for more than 30%. However, the number of foreign buyers drops to 50% in the more affordable £450-£1,000/sq ft section of the capital’s new-build housing market. And across all sales and resales in prime London it stands at 39%.”

70% of all new-build properties in the £1,000-£2,000/sq ft bracket were sold to foreign investors in 2013/14

“This pipeline of new stock comes at a point where price growth in the prime market is cooling, with most forecasts predicting minimal growth or even a decline. Nina Skero of the Centre for Economics Business Research, is predicting a 3.35% drop in London prices this year, which she says will be partly due to the knock-on effect of prime residential on the rest of the market.”

“It’s all about a moment in time,” Farmer argues. “What was perceived as good for Vauxhall and Battersea four or five years ago has now got to a point where it’s so much driven by speculation that it’s created a lack of affordability – and there’s always a risk that you’ll get that feeding frenzy spreading out across London.”

“But on top of the risks of speculation, Farmer argues there is a “perfect storm” looming for developers as construction prices spiral upwards, which could see schemes stall in the next year.”

St. George Wharf, Vauxhall

St. George Wharf, Vauxhall

“Peter Rees, former City planning chief and now professor of places and city planning at UCL Bartlett, is despondent about the wave of foreign capital buying London housing, but does not think there is a risk of a bubble or a slowdown in sales because of the almost infinite amount of demand.
“The amount of money trying to escape from Russia, the Far East and the Middle East is just so great and there are so few top-notch targets like London that unless we do something to stem the flow it won’t stop of its own accord,” says Rees.

We’re building the slums of the future

He argues that there is a need for more high-density low-rise buildings in place of the glitzy towers springing up along the South Bank. “We’re building a product that is unsuitable for our market and suitable only for investment. We’re building the slums of the future. Derelict land is better than what’s happening at Battersea because derelict land has potential. Those developments have no potential because they’re locked in for 100-year leases to multiple owners.”

“Back at the Earls Court protest, Liberal Democrat councillor Linda Wade, who has been fighting against the scheme, says developers are now playing havoc with the planning system and that the huge number of high-end schemes risk creating “theme-park London”.
“The problem is we’ve got to a point where development has got out of hand, where urban planning is being dictated by developers rather than by local need.”
Gary Yardley, investment director at Capital & Counties, disagrees: “Schemes such as the Earls Court Masterplan deliver much-needed investment which provides more homes for our growing population and supports London’s continued success as a global city. We have also signed up to the Mayor’s concordat to prioritise offering homes to Londoners first.”
Capital & Counties has already announced that 95% of the flats in Lillie Square at Earls Court have been sold off-plan, with prices hitting up to £1,885/sq ft. This may be excellent for the developer’s cash flow, but it will do little to dispel protestor fears that the new flats will stand apart from the local community and from London itself.”

Read the whole article here

1 Comment

  1. Gerry King   •  

    Nothing surprises me – I love my (housing association) flat and where I live but I would not be surprised at anything anymore – it is like the rule book has been torn up.

    Is it the last days of the Roman Empire?
    What are these investors buying into?

    It is almost a perverse reversal of: “the meek shall inherit the earth…yeah when then is nothing left”. All that makes London so attractive will be rinsed out through wealth – almost incestuously the rich will only have each other to play with. I will support anything that promotes a fair and just society especially where affordable housing is championed. We can only do what is right and with that know you have done your best.

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