London's Waterfront

London's Waterfront
 
Waterfront Living

26 January 2016, by Sophie Chick

Living on the Thames appeals to people from all walks and stages of life.

 

The Thames runs right through the heart of London and has historically been at the centre of the capital’s economic success. As the commercial importance of the river has waned, it is waterfront living and leisure that have come to define the modern Thames.

The residential property on offer along the river varies significantly. In the east, new schemes are interwoven with repurposed and renovated industrial buildings.

In central London most period properties were built set back from the embankment allowing new development schemes to be built right on the water’s edge on both the north and south banks.

This differs from the south west waterfront where there is a high proportion of period stock, and a high number of properties fronting the river are large houses with gardens stretching to the water’s edge.

 

 
Strand on the Green, Chiswick

Premium living

All over the world people will pay a premium for living next to water and London is no exception. Analysis of the 27-mile stretch of river between Teddington Lock and the Royal Docks shows an average premium of 13.5% is commanded by second hand waterfront flats within 100m of the river compared to those that sold in the surrounding area, up to 1km away. Although it should be noted that there is significant variation across the different areas.

The central London riverside stretch, between Wandsworth Bridge and the London Eye, is both the most expensive stretch of waterfront and also has the highest premium as a result of ongoing regeneration. The average waterfront premium in 2015 for a second hand flat was 26.5% to the north of the river and 36.3% to the south.

The two stretches of river to the east and west of the central area command a similar but slightly lower premium, albeit average values are somewhat lower. In the south west, between Teddington and Wandsworth Bridge, flats within 100m of the river had an average premium of 21.8%. In the east the premium was slightly lower at 17.1%.

While these figures give average premiums for proximity to the riverfront, there are a number of other factors that can have a significant impact on price. River views, private jetties, luxury facilities, penthouses and large outside space all enable properties to command higher but more variable premiums that can be very location specific.

FIGURE 1

The premium and second hand buyer profile for each area of the river in 2014

 
Figure 1

Source: Savills Research

New development

Although the analysis of the river premium excludes new build properties for consistency, development and regeneration has had a significant impact on the appeal of riverside living and will continue to do so.

Along this 27-mile stretch between Richmond and Canary Wharf, there are an estimated 270 schemes within 1km of the Thames that are expected to deliver units to market over the next five years in order to meet demand for this lifestyle.

The vast majority of developments are concentrated in the central and east areas with the south west stretch of river accounting for just 11% of schemes.

Across the central stretch of river the development activity is concentrated at the higher price points, with 98% of schemes expected to achieve over £1,000 per square foot. These high specification schemes have helped push the boundaries of London’s prime markets into new locations.

The eastern stretch of the Thames has changed considerably over the past 25 years as development activity led to significant regeneration and gentrification and this looks set to continue.

Over the next five years there are a similar number of schemes being developed in the central waterfront stretch but on average they are larger and the price points are significantly lower with just one third of schemes expected to achieve over £1,000 per square foot.

Wide appeal

Living on the waterfront in London appeals to a wide number of buyers and tenants from all over the world. Along the Thames, 42% of buyers and 61% of tenants of prime property are from overseas.

In central London, traditionally an international market, there have been an increasing number of buyers coming from the UK, now accounting for 58% of the prime market compared to 25% in 2012/13, as domestic buyers become more attracted to buying new developments.

Reasons for buying on the waterfront varies significantly. In the prime market, an average of 38% of buyers are purchasing their main residence, taking advantage of the benefits of waterfront living.

Second home buyers account for 32% of the market with the Thames proving a popular location for secure and low maintenance pieds-à-terre. Investors make up the final 30% of buyers as demand for rental property remains strong.

Just over half (51%) of waterfront tenants are renting due to employment relocation, increasing to 56% on the eastern stretch, due to its close proximity to the key employment areas of the City and Canary Wharf.

A further 20% are lifestyle relocators, evidence of the strong appeal of the river and a large tenant group ready to pay premium rents for the right property.

 

 
Chelsea Harbour
placeholder

Subscribe to Savills research

 

Would you like to be notified via email about new research?