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Nine Elms London’s newest destination

Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

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Page 1: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

Nine Elms London’s newest destination

Page 2: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

The transformation of Vauxhall, Nine Elms Battersea (VNEB) is now firmly underwa . The additional 20,000 new homes will join the 10,000 existing households to create a sizeable new community which will benefit from the area’s riverside locatio and proximity to central London. Future improvements to the area’s transport infrastructure, along with new public space and improvement to the Thames River Path is making VNEB an increasingly desirable place to live, work and play. One significan addition to the area’s amenities is Circus West Village at Battersea Power Station which opened in summer 2017. This will bring a new range of independent and authentic cafes, restaurants and shops for existing and future residents to enjoy.

The dramatically improved public realm will provide easy access to an enlivened riverside, a new 11 acre park, neighbourhood squares and green spaces. This is in addition to the existing green space in the area which includes the Vauxhall Pleasure Gardens and the 200 acre Battersea Park.

Access to the rest of central London will also be significantly improved throug several infrastructure improvements which include the extension of the Northern Line and a new pedestrian and cycle bridge. This is in addition to improvements to the existing stations at Vauxhall, Battersea Park and Queenstown Road.

Cultural elements are already well established in the area, but this will be further improved with new attractions at Battersea Power Station, Brand New Covent Garden Market’s Food Exchange and new public art throughout the area. The areas railway arches are also being transformed into new food, leisure and retail spaces which will further enhance the vibrancy and desirability of VNEB.

The area will eventually become home to 30,000 new residents and 25,000 workers. With several new developments now complete, and a range of new amenities on offer, the pioneering new residents of VNEB have already moved to the area. And now big business is also moving in; last year Apple announced it will be moving its UK headquarters to Battersea Power Station. The company will take 500,000 sqft of offic space across six floors at the iconi development. The new office will be th company’s largest outside of the US and will host 1,400 employees.

VNEB is at the start of its regeneration, but it’s already clear that it is becoming one of London’s most sought after locations, and is set to become one of the city’s most desirable neighbourhoods.

The regeneration of Nine Elms is arguably one of the most important transformations this generation will witness. Developing this previously underused area of London will create a whole new vibrant destination.

Nine Elms Living

Nine ElmsLondon’s newest destination

1

Page 3: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

Nine Elms Point sits within the Vauxhall, Nine Elms, Battersea (VNEB) opportunity area which is London’s largest and most high profile regeneration zone. It spans 561 acres of central London on the south bank of the River Thames. Over the next decade and beyond, it will become a new destination in London and fulfil its potential as a thriving residential and business district.

VNEB key stats 561 Area (acres)

25,000 Indicative employment capacity

20,000 Minimum new homes

2.8m sqft New retail and leisure space

3m sqft New office spac

6.5m sqft Total new commercial space

2 Major new town centres

2–3Nine ElmsLondon’s newest destination

Page 4: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

Whatever form it takes regeneration works to greatly improve the quality of life for its residents and transforms it into a more desirable place to live. Our research shows this can have a marked impact on local property markets, with house prices around regeneration zones increasing by 4.7% per annum over and above wider house price growth.

Placemaking is also hugely important in ensuring the maximum benefit occurs fro regeneration. This multi-faceted approach to design brings all elements of a development together in a cohesive and diverse environment. Placemaking ensures an area has the appropriate amount and type of residential, retail, education, leisure, work space, restaurants, open space, transport, exhibition and community space. Effective placemaking clearly benefits an area and thi impacts property prices. Our research shows that effective placemaking can add 10% to property prices compared with the wider area.

From the famous transformations of Covent Garden, Southbank and Kings Cross, regeneration has always been an important part of the ever-evolving London landscape. Regeneration can take many forms; from the simple rejuvenation of a rundown area, through to an effective remodel of the underlying fabric by addressing the deeper social and economic environment.

Regeneration and placemaking premium

House price uplift from regeneration

4.7% paPrice premium for a scheme with effective placemaking

10%

4–5Nine ElmsLondon’s newest destination

Page 5: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

Infrastructure is an extremely important aspect of regeneration and generates the desire and demand to live in an area. At VNEB more than £1 billion is being spent on new infrastructure and upgrades with several key projects, including:

– The Northern Line extension which will provide new stations at Battersea Power Station and Nine Elms.

– Improvements to the Vauxhall bus, tube and rail interchange to increase capacity and enhance passenger flo .

– Redesign of the Vauxhall gyratory to ease congestion, make the area more pedestrian and cycle friendly and improve links to the riverside.

– A new pedestrian and cycle bridge to provide another direct link to Westminster on the opposite side of the river.

– Nine Elms Park – a linear park which will intersect the district from east to west to make the whole area easily accessible. It will provide 11 acres of new open parkland running from Vauxhall to Battersea Power Station.

– A new extension of the Thames River Path stretching the full length of the area with a network of cycle ways and footpaths.

– Two new passenger piers to connect the area to London Riverbus services.

– New bus routes through Nine Elms and improvements made to existing services.

– Expansion of the Santander Cycles network across the regeneration area.

The Northern Line extensionThe extension of the Northern Line is perhaps the most important infrastructure development in the VNEB area. The new underground link will significantly reducejourney times to and from the City, West End and other major employment hubs across London. It is also forecast to generate up to £7.9bn in wider economic benefits and morethan treble the number of new jobs created in the area. This will make VNEB, and specifically Nine Elms, one of the mostaccessible parts of London.

The connectivity of an area is measured by its Public Transport Accessibility Level (PTAL) which is calculated by Transport for London. CBRE have found that, on average, a 10% increase in an areas PTAL score will increase house prices by 4.2% (above standard house price inflation)

We estimate that the Nine Elms area could see a 30% increase in its PTAL score when the extended Northern Line becomes operational by 2020. This could therefore translate into an uplift of approximately 13% in the areas house prices over and above standard inflation

Nine Elms Point is located in an already well-connected area and it will further benefitfrom the new Nine Elms station, which sits within the development.

Improving infrastructure and connectivity

6–7Nine ElmsLondon’s newest destination

Page 6: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

Chelsea Embankment

r

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East Stre

et

Terrace Walk

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Chelsea Bridge Road

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treet

Pimlico Road

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Lambeth Road

Millbank

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Walw

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King's

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Lam

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Pal

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Battersea

Chelsea Embankment

r

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et

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Eaton

Mew

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East Road

Portslade Ro

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Battersea

Current PTAL in Battersea and Nine Elms

Future PTAL in Battersea and Nine Elms

VNEB straddles the London boroughs of Wandsworth and Lambeth, both of which have recorded strong growth since the recovery. Growth has closely tracked that of London overall, but ultimately outperformed. Since the beginning of 2009 average house prices in these boroughs have risen by 94% compared with 88% across London.

More recently growth has also remained robust. Over the last three years average house prices across the boroughs have increased by 23%.

In line with this, new build developments in the VNEB area have also seen strong growth. Between 2012 and 2016 average asking prices for new build schemes in the area have increased by almost 44%, or. 11% per year

House prices in VNEB

Average house price index

Jan

09

May

09

Sep

09

Jan

10

May

10

Sep

10

May

11

Sep

11

Jan

11

May

12

Sep

12

Jan

12

May

13

May

14

Sep

13

Jan

13

Sep

14

Jan

14

May

15

Sep

15

Jan

15

May

16

Sep

16

Jan

16

May

17

Jan

17

Lambeth & Wandsworth London

210

190

130

150

170

110

90

Ave

rage

hou

se p

rice

inde

x

CBRE house price forecastsWe are currently forecasting robust but moderating house price inflation acros London as the market returns to a more ‘normal’ operating environment. However, we stress that these forecasts are for the market as a whole. New build schemes and regeneration areas have the potential to outperform.

2017 2018 2019 2020 20215 year compound growth 2017 – 21

3.6 2.0 5.5 4.9 3.4 21.0

Average asking values in VNEB for new build developments

£1,025 psf2012 £1,480 psf2016

3. Moderate

4. Good

5. Very Good

6a. Excellent

6b. Excellent

Nine Elms Point

3. Moderate

4. Good

5. Very Good

6a. Excellent

6b. Excellent

Nine Elms Point

8–9Nine ElmsLondon’s newest destination

Page 7: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

For investors in VNEB, there is a large and growing rental market which will translate into strong demand for new build homes to rent in the area.

Across London the number of privately rented households has increased by 75% with the sector now accounting for a quarter of homes in the city. Specificall , the sector in Wandsworth and Lambeth has increased by more than 50% and accounts for almost a third of households. And across the river in Westminster the sector now accounts for 40% of households having risen by 43%. Overall this growth has translated into an additional 40,000 privately rented households across these three boroughs alone.

A significant number of renters in the areaare also high earners. The three boroughs accommodate a high proportion of London’s high earning tenants, with more than 40,000 earning over £70,000 per year. However VNEB and Nine Elms Point has the potential to draw renters from a much wider area than the immediate surroundings, especially once the Northern Line extension is completed. Overall London hosts more than 140,000 high earning tenants.

A strong rental market

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r

Maple Leaf Walk

East Street

Terrace Walk

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Eato

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Way

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Har

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Street

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Ken

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Emba

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King's

Road

Lam

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Pal

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Battersea

Keybridge House 150 units

Nine Elms Point 118 units

The Residence 165 units

Vauxhall Exchange 213 units

According to Rightmove, the rental market in Lambeth and Wandsworth has performed strongly, with average asking rents for 2 bed apartments increasing by 2.9% and 2.1% per year respectively over the last five years.

Rental values and growth

Average asking rents (2 bed apartments)

Jul 1

7 A

pr 1

7 Ja

n 17

O

ct 1

6 Ju

l 16

Apr

16

Jan

16

Oct

15

Jul 1

5 A

pr 1

5 Ja

n 15

O

ct 1

4 Ju

l 14

Apr

14

Jan

14

Oct

13

Jul 1

3 A

pr 1

3 Ja

n 13

O

ct 1

2 Ju

l 12

Apr

12

Jan

12

Oct

11

Jul 1

1 A

pr 1

1 Ja

n 11

O

ct 1

0 Ju

l 10

Apr

10

Jan

10

Oct

09

Jul 0

9 A

pr 0

9 Ja

n 09

Lambeth & Wandsworth London

220

188

155

123

90

Ave

rage

hou

se p

rice

inde

x

Increase in number of privately rented households surrounding VNEB

+40,000

Volume of high earning tenants

Rental developments in VNEB

London

Mayfair

Hyde Park

Chelsea

Fullham

Hammersmith

Battersea Clapham Brixton

Camberwell Peckham

Isle of Dogs

Canary Wharf

Poplar

Victoria Park

Stoke NewingtonHolloway

Chalk Farm

Camden Town

Regent’s Park

Shepherd’s Bush

White City

Kensal Green

Paddington

Kensington

Pimlico Vauxhall

Soho

Clerkenwell

City of LondonWhitechapel

Southwark

Westminster

Another pool of tenants is provided by the student market, and specifically internationa students. In 2015/16 there almost 100,000 international students studying in London, 40% of which lived in the private rented sector.

The strength of the rental market in VNEB is also highlighted by a number of schemes where large numbers of units are being delivered for rent. Four developments in the area are now delivering a total of 650 new rental units.

Below 500

500 – 1000

1000 – 1500

1500 – 2000

2000 – 2500

Above 2500

Nine Elms Point

10–11Nine ElmsLondon’s newest destination

Page 8: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

London lifestyle

London is the only city in the world to

have hosted the Summer Olympics

three times

4 World-heritage sites, more than any other city

in western Europe

3 of the top10 most visited museums in the world

are in London

Kew Gardens

Royal Observatory Greenwich

Tower of London

Palace of Westminster

22mTheatre visits per year

66Michelin star restaurants

520Hotels

761Gyms

241Professional theatres

200Museums and galleries

5,000Hair salons

9,224Cafes and restaurants

One of the world’s ‘greenest’ cities for its size

8Large royal parks

40%Total open green space.

More than NYC, Berlin, Paris and Amsterdam

Robust economy

Population increase

Low interest rates

World class education

Strong legal structure, asset protection and multi-cultural society

London as a ‘safe haven’

Reasons to buy in London

Favourable exchange

rates

Crossrail is forecasted to drive growth by 3.3% per annum over and above underlying

house price growth during its build

Ease of access to four main airports in close proximity

Centrally located between Asia and

North America

Undersupply of quality new homes

Favourable timezone

London is a leading technology and research centre

London population set to increaseto 10 million by 2031, that’s 1.4 million

more people in the next 15 years

More than

400,000 employees work in the The

City of London. The world’s leading financial district

52,000homes are required per

annum in London. Only 24,800 were built in 2016

1.5 billion English speakers in the world

12–13Nine ElmsLondon’s newest destination

Page 9: Nine Elms London’s newest destination - CBRE Residential UK · The transformation of Vauxhall, Nine Elms Battersea ... Over the next decade and beyond, ... ge's R a d ad Q ue e

Jennet Siebrits Head of Residential Research +44 20 7182 2066 [email protected]

Scott Cabot Associate Director +44 20 7182 2362 [email protected]

Luke Mills Executive Director +44 20 7182 2949 [email protected]

James Thornett Lettings Director +44 20 7182 2515 [email protected]

Shaun Macnamara Sales Director +44 20 7420 3087 [email protected]

Roshan Wial Negotiator +44 20 7182 8060 [email protected]

James Hughes Lettings Manager +44 20 7182 2856 [email protected]

CBRE Limited confirms that information contained herein, including projections, has been obtained fromsources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make noguarantee, warranty or representation about them. It is your responsibility to confirm independently theiraccuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. Images provided are computer generated. All travel times taken from TFL. © 2017 CBRE Ltd.

Pages 6–7: veesaw / Shutterstock.com

CBRE, Experian, Molior, ONS, TFL, Land Registry

Disclaimer 2017 CBRE

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Sources:

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