No longer will a generic approach to development enable speculators to succeed in London’s increasingly competitive residential property market.
As a result of a greater number of parties entering the sector, often funds or high-net-worth individuals with limited experience of London, coupled with buyers becoming increasingly sophisticated in their expectations, a shift has occurred, altering the market’s dynamics.
In an increasingly information-transparent market, investors now have the necessary tools to openly compare and contrast the relative benefits of schemes across a broad range of geographies prior to committing. This in turn leaves very little room for error and substandard development.
Over the past five years, residential developers have been the beneficiaries of a very strong market and as a corollary they have been able to capitalise on a boom which has lulled many into a false sense of reality. Today, the market is more discerning and buyers are demanding best-in-class product – sensibly priced – before buying. Everything is about the perception of value.
Residential and mixed-use developments should be designed with the end user in mind, with an emphasis given to how individuals interact with the scheme as a whole. New build needs to be relevant to its given area, buyer demographic and price point – be it a boutique collection of 15 units in Mayfair, W1, or a landmark regeneration site in Elephant and Castle, SE1.
Demand drivers have also shifted. Gimmicks such as golf simulators and communal wine rooms are becoming less important to purchasers who are more focused on quality of product, design, specification, security, realm, layout and longevity of the architecture.
Efficient layouts, natural light and high ceilings are some of the simple, yet crucial building blocks for delivering a successful scheme that buyers want to commit to. For a project to be successful, it is the combination of numerous design parts that will drive value and not one element in isolation.
The value layer cake is complex; however, failure to address all issues may eventually be to the detriment of the scheme.
A particular example of this is King’s Cross, N1, where the developer has got the fundamentals right across the board.
One development manager overseeing the entire masterplan has helped to create a story which runs through the 67-acre scheme. An excellent use of existing buildings, such as incorporating the gasholder frames into residential, and the mix of entertainment and leisure amenities around Granary Square, set within the historic industrial buildings, gives the area its own identity – no doubt helping to draw people to King’s Cross for years to come.
Good product that is well designed and sensibly priced will continue to perform in all market conditions. The more thought developers give to a scheme, the more likely it is to perform. Replicating design principles that work in one location will not automatically work and be transferable to another.
The days of generic development are gone. Beware the developer who does not understand the market, and the funder who lends on a scheme where the management is not capable of implementing a business plan which has the vision and ambition to successfully deliver the right product, on time and on budget.
Nick Alderman is a partner at Knight Frank Residential Development
