Off The Rails
Identity Magazine, November 2008With property prices plunging and sales transactions evaporating. London’s estate agents are desperate for good news. They got some recently when government plans to build Crossrail, the UK capital’s biggest transport project for 50 years, were passed by an act of Parliament.
It ends several years of uncertainty which has “blighted” some property markets along this rail route, because developers had put regeneration schemes on hold until a decision was made. Now estate agents and homeowners around future Crossrail stations are smacking their lips at the prospect of prices being pushed up by an influx of buyers eager to enjoy faster commuter times.
The DHS110 billion line will connect London’s Heathrow Airport and Maidenhead in Berkshire to the west with Shenfield and Abbey Wood in Essex to the east via central London. Existing mainline railway and London underground stations Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street and Whitechapel will be rebuilt and a new station will be created to Canary Wharf.
The link will add 10 percent to London’s transport capacity when it comes into operation in 2017, bringing an extra 1.5 million people within 60 minutes commuting distance of London’s main business districts. Heathrow will be a mere 31 minute trip from the West End and Canary Wharf only 43 minutes away.
Liam Bailey, head of residential research at estate agency Knight Frank, believes Crossrail’s arrival will assist with the gentrification of districts along its route and says that areas within a quarter mile radius of each station will feel the benefit most. Farringdon, Whitechapel and the area north of Oxford Street (where Bond Street and Tottenham Court Road stations are located) will be especially hot.
“places like Farringdon and Tottenham Court Road have been blighted for quite a while, because they have been waiting for a decision to be made,” he says. “Developers have held back, but now will work on bringing projects forward.”
Crossrail is the icing on the cake for Marylebone, a smart shopping and residential district north of Oxford Street.
It has become hugely fashionable in recent years, so much so, that Knight Frank added to their Prime Central London Index in August. The district’s two largest landowners, the Portman and Howard de Walden estates, have encouraged trendy, independent shops, bars and restaurants to open, which have attracted affluent residents to the area, including Indian and Middle Eastern buyers.
Marylebone has become an affordable alternative to neighbouring Mayfair where prices are more than twice as high, regularly hitting DHS20,581 per sq ft following its own localised property boom. A rare new residential project in Marylebone is Groups Picton Place, where 14 luxury apartments are being built close to Selfridges department store.
East of Marylebone in Fitzrovia, Bloombury and Farringdon, the impact may be even greater. In addition to Crossrail, these areas will benefit from the regeneration of nearby Kings Cross – the biggest development site in Europe New Schemes around Euston station and other projects, including Noho Square, Candy & Candy’s 216 home redevelopment of the former Middlesex Hospital in Fitzrovia, also bode well for these districts.
Farringdon and neighbouring Kings Cross have been accumulating transport links in recent years. Farringdon will be at the centre of St Georges style cross of inter-connecting railway lines running north south and east west through it, Thameslink and Crossrail respectively.
Meanwhile, at Kings Cross St Pancras, the Eurostar link to Paris opened to a big fanfare last November. These two mainline stations, which stand either side of Pancras Road, serve eastern England and Scotland, and their inter connection London Underground station is the busiest in the British Capital. In short this corner of central London is at the heart of the city’s transport system, which provides sound foundations for its local property market.
However, Bailey says that in rural Berkshire and Essex the effect of Crossrail on property markets will be felt beyond a mere quarter mile radius of stations, because they serve larger areas, with the greatest impact being seen in areas east of the British capital and as far away as East Anglia.
“Places like Slough and Maidenhead have been commuter areas for years, but east of London, in Essex, they are newcomers to the commuter game,” he says. “This will stretch out to Norfolk and Suffolk from where we already have some people commuting to work in Canary Wharf.”
Contrary to Baileys view, Neale Hudson, research associate at property consultancy Savilles, considers property markets at the western end of the line will prosper most.
“The improvements in travel time from East London are less significant than West London, with travel times at each station between Manor Park and Brentwood to Tottenham Court Road forecast to improve by approximately 10 minutes,” he says. “This will raise house prices in the local area of the stations but the gains will be lower than those seen in West London,”
Hudson is particularly keen on Acton, a down-at-heel suburb sandwiched between the higher value markets of Ealing to the west and central London to the east.
“An estimated reduction in travel time to Liverpool Street station of 23 minutes will give Action the potential to attract more spill out demand from the surrounding markets and drive long term house price growth above that of London as a whole,” he says. The west of London, he singles out Burnham, and Hayes and Harlington as potentially strong markets due to faster travel times. Even so, whether they live east or west , homeowners along the Crossrail route who are eager to sell ought to rein in their excitement, because the link will not provide a miracle cure for the sales slump.
“It doesn’t offset the impact of the current downturn, but will improve intrinsic values in areas affected,” Bailey says. However, these areas could be at the forefront of a recovery in Britain’s property market when it does come though.
“I have spoken with investors and speculators, and they are absolutely desperate not to miss the floor of the market in these locations,” he reveals.
They may have to be patient as Bailey expects prices to fall another 10 per cent over the next 12 months. Robert Hadfield, managing director of London based investment property management company Pineflat, urges caution among prospective buyers.
“There is more or less perfect knowledge in the market and, if anything, sellers are more aware of the upside potential of these developments than buyers, so the chances of getting a bargain are slight,” he warns.
“The potential uplift is not as great as people anticipate or even as high as the market has already factored in to the price,” Homes rose in value by around an additional 10 per cent along the underground’s Jubilee Line extension in south and east London during the 1990s, and that was over a period of several years, Hadfield says.
“Having said all that, I think the sectors to benefit most will be flats for singles and couples in the inner eastern suburbs and family housing to the west,” he states, adding that owing to the size and complexity of the project there is a danger it will not be built on time. “There is a good chance of delayed completion, during which time investors are exposed to changes in the interest rates and market sentiment,” Hadfield adds. “Remember John Maynard Keyne’s dictum that markets can remain irrational longer than investors can remain solvent.”
You have been warned.
An image of Charterhouse thesq was featured in reference to being a development which will benefit from the Crossrail extension in Farringdon