View the slides as the EGi London Residential Breakfast Briefing as the research team launched their annual market analysis, analysing 15 years of researched data. The presentation looks at: > Construction > Sales > Pricing Download the full report, visit www.estatesgazette.com/london-residential-market-analysis/

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The full EGi London Residential Market Analysis can be downloaded for free, visit
http://www.estatesgazette.com/london-residential-market-analysis

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In last year’s report we stated that the
residential market in the capital
was heating up…
…this year

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0
500
1000
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2500
ets
rth
ark
ter
eth
am
ey
ton
en
ea
on
ich
net
ent
on
am
ley
ing
am
am
ing
ley
ow
on
ton
eld
est
ow
ey
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ton
ton
nd
Series1 Series2 Series3 Series4 Series5 Series6

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London’s burning?
What are you basing that assumption on?

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Construction starts…because

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Starts don’t
lie…Not the only measure, but one of the best
Remember all those site visits

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Year Applications Permissions Under construction Completions Starts
2004 84,533 91,270 36,736 21,423 25,233
2005 92,683 105,182 32,985 25,283 21,403
2006 61,928 128,653 35,842 24,394 26,041
2007 40,830 132,490 40,476 21,722 27,056
2008 53,138 157,052 30,473 25,938 16,345
2009 47,970 176,498 20,255 21,209 11,327
2010 41,659 181,383 24,771 15,195 19,064
2011 59,851 176,374 29,541 17,916 23,483
2012 43,768 216,685 26,865 23,719 20,322
2013 28,943 233,398 36,769 21,972 28,798
%change since 2012 -34% 8% 37% -7% 42%
%change since 2011 -52% 32% 24% 23% 23%
%change since 2010 -31% 29% 48% 45% 51%
%change since 2009 -40% 32% 82% 4% 154%
%change since 2008 -46% 49% 21% -15% 76%
%change since 2007 -29% 76% -9% 1% 6%
%change since 2006 -53% 81% 3% -10% 11%
%change since 2005 -69% 122% 11% -13% 35%
%change since 2004 -66% 156% 0% 3% 14%
Table 1: London development pipeline, unit numbers and percentage change 2004-2013 - private and social units combined
Developments of 10 units or more

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Year Applications Permissions Under construction Completions Starts
2004 84,533 91,270 36,736 21,423 25,233
2005 92,683 105,182 32,985 25,283 21,403
2006 61,928 128,653 35,842 24,394 26,041
2007 40,830 132,490 40,476 21,722 27,056
2008 53,138 157,052 30,473 25,938 16,345
2009 47,970 176,498 20,255 21,209 11,327
2010 41,659 181,383 24,771 15,195 19,064
2011 59,851 176,374 29,541 17,916 23,483
2012 43,768 216,685 26,865 23,719 20,322
2013 28,943 233,398 36,769 21,972 28,798
%change since 2012 -34% 8% 37% -7% 42%
%change since 2011 -52% 32% 24% 23% 23%
%change since 2010 -31% 29% 48% 45% 51%
%change since 2009 -40% 32% 82% 4% 154%
%change since 2008 -46% 49% 21% -15% 76%
%change since 2007 -29% 76% -9% 1% 6%
%change since 2006 -53% 81% 3% -10% 11%
%change since 2005 -69% 122% 11% -13% 35%
%change since 2004 -66% 156% 0% 3% 14%
Table 1: London development pipeline, unit numbers and percentage change 2004-2013 - private and social units combined
Developments of 10 units or more

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Year Applications Permissions Under construction Completions Starts
2004 84,533 91,270 36,736 21,423 25,233
2005 92,683 105,182 32,985 25,283 21,403
2006 61,928 128,653 35,842 24,394 26,041
2007 40,830 132,490 40,476 21,722 27,056
2008 53,138 157,052 30,473 25,938 16,345
2009 47,970 176,498 20,255 21,209 11,327
2010 41,659 181,383 24,771 15,195 19,064
2011 59,851 176,374 29,541 17,916 23,483
2012 43,768 216,685 26,865 23,719 20,322
2013 28,943 233,398 36,769 21,972 28,798
%change since 2012 -34% 8% 37% -7% 42%
%change since 2011 -52% 32% 24% 23% 23%
%change since 2010 -31% 29% 48% 45% 51%
%change since 2009 -40% 32% 82% 4% 154%
%change since 2008 -46% 49% 21% -15% 76%
%change since 2007 -29% 76% -9% 1% 6%
%change since 2006 -53% 81% 3% -10% 11%
%change since 2005 -69% 122% 11% -13% 35%
%change since 2004 -66% 156% 0% 3% 14%
Table 1: London development pipeline, unit numbers and percentage change 2004-2013 - private and social units combined
Developments of 10 units or more

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But it doesn’t tell us much….

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The real story starts to emerge when we look at the
Inner and outer
borough split of
construction starts

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
The situation at the
end of
2013…but let’s
rewind and go back to
see how it
came to
this
INNER BOROUGHS
OUTER BOROUGHS
*All slides available in the report so you can read them!

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4Post Lehman and this is
what a
nosedive
looks like…
INNER BOROUGHS
OUTER BOROUGHS

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4
both sectors
(inner &
outer) were hit
equally, both at
their lowest ebb
producing a near
identical number of
starts, around
3,000 units each.
INNER BOROUGHS
OUTER BOROUGHS

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4
In the capital,as
far as
construction
starts were
concerned, the
effect of the
recession
was total.
INNER BOROUGHS
OUTER BOROUGHS

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4However, whilst the effect
of the recession was
identical in both sectors
on the way down,
on the way
up things
were very
different.
INNER BOROUGHS
OUTER BOROUGHS

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4 years to recovery?
From 2009 to 2013
The funding shift

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4
YEAR 1:
Funding comes primarily
from the public purse
notably in the form of the
HCA’s Kick–Start
programme.
Construction starts bounce
back both in the inner and
outer boroughs.
INNER BOROUGHS
OUTER BOROUGHS

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2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4
YEAR 2:
Construction starts in the
outer boroughs are up
53% …starts in the inner
boroughs remain almost
flat. Partly effect of
HCA
funding,partly
due to owner occupier
activity in the outer boroughs
INNER BOROUGHS
OUTER BOROUGHS

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But then a step
changefrom
public funding to….

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
1 2 3 4
YEAR 3:
The effect of the RSL
funding cut of 2010
results in a 22% drop
in starts in the outer
boroughs.
PRIVATE
FINANCE
INNER BOROUGHS
OUTER BOROUGHS
*All slides available in the report so you can read them!

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
1 2 3 4
YEAR 3:
Converselythe
worsening economic
situation abroad sees
cash rich
buyers enter the prime
market, starts in inner
London increase by
42%.
PRIVATE
FINANCE
INNER BOROUGHS
OUTER BOROUGHS

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0
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4
YEAR 4:
The shock wave
created by that cash
injection in the prime
central locations
expands into the
outer
boroughs…result
INNER BOROUGHS
OUTER BOROUGHS
All slides available in the report so you can read them!

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2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4 The highest number of
residential startsin
allof the 18 years
that
London
Residential
Research has been
monitoring the market.
INNER BOROUGHS
OUTER BOROUGHS

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2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4 Inner boroughs up
24% at 9,014 units
outer boroughs
66% to just over
10,000 units.
INNER BOROUGHS
OUTER BOROUGHS

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2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4
Significant as these
boosts in construction
activity were, perhaps
more significant
still is the
comparison
with preceding
years.
INNER BOROUGHS
OUTER BOROUGHS

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2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
NO
FINANCE
PUBLIC
FINANCE
PRIVATE
FINANCE
1 2 3 4
Both in the inner and outer
boroughs, starts
exceeded their previous
peaks (2007 and 2004
respectively) suggesting
that construction is
running at a rate that is
beyond the
norm and that we are
now sailing into
uncharted territory.
INNER BOROUGHS
OUTER BOROUGHS

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So is this a collective effect or are some boroughs
hotter than others?

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0
500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6
Construction startsin all the inner and outer London
boroughs from
2008 2013
All slides available in the report so you can read them!

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0
500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6
Inner

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0
500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6
Outer

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500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6
ordered by the most
productive borough
in each sector for 2013

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0
500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6
2
spikes
one in Tower
Hamlets

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500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6one in
Greenwich

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0
500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6
Starts in both sectors were fairly
similar, an assumption further
reinforced by the overall figures for
starts in each sector, both around the
10,000 unit mark.

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0
500
1000
1500
2000
2500
TowerHamlets
Wandsworth
Southwark
Westminster
Lambeth
HammersmithandFulham
Hackney
Islington
Camden
KensingtonandChelsea
CityofLondon
Greenwich
Barnet
Brent
Croydon
Lewisham
Bexley
Havering
Newham
Barking&Dagenham
Ealing
Bromley
Hounslow
Hillingdon
Kingston
Enfield
WalthamForest
Harrow
Haringey
Redbridge
Sutton
Merton
Richmond
AxisTitle
Series1 Series2 Series3 Series4 Series5 Series6
What it doesn’t show us is how
productive the boroughs
were in comparison with the previous year…
the next graph does

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-600
-400
-200
0
200
400
600
800
1000
1200
Greenwich
Brent
Westminster
Croydon
Lambeth
Barnet
HammersmithandFulham
Newham
Hounslow
Southwark
Ealing
Wandsworth
Bexley
Barking&Dagenham
Enfield
Camden
Bromley
Hackney
Hillingdon
Kingston
Lewisham
Havering
Haringey
WalthamForest
Islington
CityofLondon
Richmond
Redbridge
Sutton
Merton
Harrow
KensingtonandChelsea
TowerHamlets
Looks at change in construction
startsfrom end 2012
end 2013 i.e. how much more was
started in each borough by the
end of 2013 compared to the end of
2012.
All slides available in the report so you can read them!

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-600
-400
-200
0
200
400
600
800
1000
1200
Greenwich
Brent
Westminster
Croydon
Lambeth
Barnet
HammersmithandFulham
Newham
Hounslow
Southwark
Ealing
Wandsworth
Bexley
Barking&Dagenham
Enfield
Camden
Bromley
Hackney
Hillingdon
Kingston
Lewisham
Havering
Haringey
WalthamForest
Islington
CityofLondon
Richmond
Redbridge
Sutton
Merton
Harrow
KensingtonandChelsea
TowerHamlets
Overall the outer boroughs
produced 4,302 more units at
the end of 2013 than they did at the end
of 2012 the inner boroughs
produced 1,760 units.

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-600
-400
-200
0
200
400
600
800
1000
1200
Greenwich
Brent
Westminster
Croydon
Lambeth
Barnet
HammersmithandFulham
Newham
Hounslow
Southwark
Ealing
Wandsworth
Bexley
Barking&Dagenham
Enfield
Camden
Bromley
Hackney
Hillingdon
Kingston
Lewisham
Havering
Haringey
WalthamForest
Islington
CityofLondon
Richmond
Redbridge
Sutton
Merton
Harrow
KensingtonandChelsea
TowerHamlets
And whilst Greenwich and Tower
Hamlets may have occupied a similar
number of construction starts the
change in the number of starts
delivered compared with the previous
year could not be more different.

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-600
-400
-200
0
200
400
600
800
1000
1200
Greenwich
Brent
Westminster
Croydon
Lambeth
Barnet
HammersmithandFulham
Newham
Hounslow
Southwark
Ealing
Wandsworth
Bexley
Barking&Dagenham
Enfield
Camden
Bromley
Hackney
Hillingdon
Kingston
Lewisham
Havering
Haringey
WalthamForest
Islington
CityofLondon
Richmond
Redbridge
Sutton
Merton
Harrow
KensingtonandChelsea
TowerHamlets
And whilst Greenwich and Tower
Hamlets may have occupied a similar
number of construction starts the
change in the number of starts
delivered compared with the previous
year could not be more different.

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-600
-400
-200
0
200
400
600
800
1000
1200
Greenwich
Brent
Westminster
Croydon
Lambeth
Barnet
HammersmithandFulham
Newham
Hounslow
Southwark
Ealing
Wandsworth
Bexley
Barking&Dagenham
Enfield
Camden
Bromley
Hackney
Hillingdon
Kingston
Lewisham
Havering
Haringey
WalthamForest
Islington
CityofLondon
Richmond
Redbridge
Sutton
Merton
Harrow
KensingtonandChelsea
TowerHamlets
And whilst Greenwich and Tower
Hamlets may have occupied a similar
number of construction starts the
change in the number of starts
delivered compared with the previous
year could not be more different.

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-600
-400
-200
0
200
400
600
800
1000
1200
Greenwich
Brent
Westminster
Croydon
Lambeth
Barnet
HammersmithandFulham
Newham
Hounslow
Southwark
Ealing
Wandsworth
Bexley
Barking&Dagenham
Enfield
Camden
Bromley
Hackney
Hillingdon
Kingston
Lewisham
Havering
Haringey
WalthamForest
Islington
CityofLondon
Richmond
Redbridge
Sutton
Merton
Harrow
KensingtonandChelsea
TowerHamlets
Both on a borough and sector level
the increasein the number of
construction starts has been most
pronounced in the outerboroughs,
so let’s look at them first.

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In order to gain some insight into the nature of the surge
in construction starts in the outer boroughs we
could do a lot worse than look at the
biggest…

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Greenwich

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Consider that at the end of 2012 there were
only schemes delivering in excess of 100unit
starts in the borough, at the end of
2013 that had more than doubled to

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Among the top 10 developments, in terms of
construction starts, in the borough there are
large phased developments such as…

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Greenwich construction starts - up by 120%
•Kidbrooke, SE3 – Berkeley
Homes
•Royal Arsenal, SE18 –
Berkeley Homes

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This is a feature of all the top delivering
boroughs…

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Top delivering boroughs – Brent, Croydon
Pulse developments,
NW9 – Fairview
Beaufort Park, NW9 –
St George
Saffron Square, CR0 –
Berkeley Homes
New South Quarter, CR0 –
Barratt

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although welcome one could argue that these starts would
have taken place anyway. The real sign
of recovery, just as it was in the case of the inner
boroughs last year…

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are construction starts on long fallow
sites

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Long fallow sites
243 Ealing Road, HA0 – Hill
Residential / Network
Stadium Housing Association
The Northern Quarter,
NW9 – Kitewood Estates /
Royal London Asset
Management
Church End
Estate, NW10 – Catalyst
Housing Group
All in Brent

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These sites had the potential to start at any
point in (at least) the last 5 years the fact that they
didn’t then and are now
speaks volumes…

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In Greenwich, however, we are not looking at a
number of dislocated sites. In
Greenwichthe game changer is
xxxxxxxmega site

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it’s large
it’s central
it’s riverside

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Any suggestions?

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until 20xx that is.
Visual clue…?

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Greenwich Peninsula

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It has had the potential to deliver well over
10,000 units …so far only a
fraction of those units have been built

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and that potential has been there for a long time.
So long fallowindeed then

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until 2013 that is.

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Henry Cheng’s Knight Dragon in bought
the entire site from Quintain and at the end of 2013 works had
started on some 500 units.

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These starts, however, are only a very
early indicator of what is to come, only a
fraction of what this mega-site could supply

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Spread of the towers

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We stated in last year’s LOREMA report that investor activity,
was radiating outwards from the
central prime core to the fringes of
the prime in the inner boroughs. This was manifesting
itself in the built
environment with the appearance of
residential towersprimarily in riverside
locations.

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We further speculated that if investor demand persisted then the
shock-wave could push out beyond the prime fringe
and into traditional owner-occupier territory. If our
assumptions were correct we would expect to see precisely the
same kind of prestige developments either
starting or being planned in the outer boroughs in 2013 as
we did in the inner boroughs a year before.

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We further speculated that if investor demand persisted then the
shock-wave could push out beyond the prime fringe
and into traditional owner-occupier territory. If our
assumptions were correct we would expect to see precisely the
same kind of prestige developments either
starting or being planned in the outer boroughs in 2013 as
we did in the inner boroughs a year before.

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We further speculated that if investor demand persisted then the
shock-wave could push out beyond the prime fringe
and into traditional owner-occupier territory. If our
assumptions were correct we would expect to see precisely the
same kind of prestige developments either
starting or being planned in the outer boroughs in 2013 as
we did in the inner boroughs a year before.

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We further speculated that if investor demand persisted then the
shock-wave could push out beyond the prime fringe
and into traditional owner-occupier territory. If our
assumptions were correct we would expect to see precisely the
same kind of prestige
developments either starting or being planned in the outer
boroughs in 2013 as we did in the inner boroughs a year
before.

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High, Prime &
Riverside…

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We don’t have to go very far…

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until 20xx that is.

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until 20xx that is.
Peninsula Quays
Knight Dragon gained consent
for 1,683 units there in June
2013 all of which are to be for
private sale. 8 buildings up to
24 storeys.

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until 20xx that is.
Peninsula Quays
Knight Dragon gained consent
for 1,683 units there in June
2013 all of which are to be for
private sale. 8 buildings up to
24 storeys.

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until 20xx that is.
Peninsula Quays
Knight Dragon gained consent
for 1,683 units there in June
2013 all of which are to be for
private sale. 8 buildings up to
24 storeys.

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until 20xx that is.
Peninsula Quays
Knight Dragon gained consent
for 1,683 units there in June
2013 all of which are to be for
private sale. 8 buildings up to
24 storeys.

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• Height up to 24 storeys
• All for private sale
• Fronting the Thames

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•High
•Prime
•Riverside

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One could argue that this is an isolated case, that we are
merely cherry picking. However, even if that was the
case the question still remains why develop now after over
a decade of near non activity and why develop high,
prime and riverside.

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Why the fixation with towers?
Easy to spot
And if they’re by the river
they’re going to be prime
But let’s not get fixated by towers…not just yet
…

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…because we have a database…of over
20,000 schemes….dating back to
1996…so we can see the unseen, the less
obvious which is sometimes a better
indicator of what is to
come.

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So let’s go back to the beginning of this bubble,
this boom…let’s
go

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Back to the
core

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In this year’s report we note that we are now witnessing
increased development on the
fringes of the fringe primeas
prime stock targeted at the foreign
investor moves ever outwards and into the outer
boroughs.

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Embedded within that assumption is that
available sites in the inner boroughs are becoming
ever scarcer

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So is supply becoming exhaustedin the
inner boroughs?
Let’s look at one of the prime boroughs…

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Westminsterdelivered more
construction starts at the end of 2013 than it did in all
the years since 2009 combined, it
was on a par with the historic big deliverers such as
Southwarkboth in scheme numbers and
units.

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It would not be unreasonable to assume that the
second wave of development would be
on the periphery of the first. However, this was not the
case.

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What we witnessed in
2013 was a second
wave of construction
starts (red dots)
largely within the
same
geographical
area.
PERMISSIONS
STARTS
APPLICATIONS *explain
All slides available in the report so you can read them!

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And a 3rd wave of
future construction
starts (blue dots) will
come from a 84
scheme, 4,000
unit strong
permission pipeline
(the largest for
well over a decade), it
too predominantly
within the
same central
area.
PERMISSIONS
STARTS
APPLICATIONS All slides available in the report so you can read them!

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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Consider also that
76%of all the
consents in the pipeline
were granted between
2012
and
2013
PERMISSIONS
STARTS
APPLICATIONS All slides available in the report so you can read them!

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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
This is not a
historic
pipeline
accumulated over the
years, this is
current
and a clear
statement
of intent.
PERMISSIONS
STARTS
APPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
To build
and to
build
again. The
second
wave of
2013 will
not be
the last.PERMISSIONS
STARTS
APPLICATIONS

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However…let’s compare Westminsterwith that
other prime borough, K&C

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0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Westminster pipeline 2004-2013
All slides available in the report so you can read them!

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts Starts,
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts Starts, permissions
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts Starts, permissions and apps
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

101. Download the full EGi London Residential Market Analysis for FREE:
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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts Starts, permissions and apps all…
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts Starts, permissions and apps all…
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts Starts, permissions and apps all…
Up
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts Starts, permissions and apps all…
Up
Up
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013
PERMISSIONS STARTSAPPLICATIONS

105. Download the full EGi London Residential Market Analysis for FREE:
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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Starts, permissions and apps all…
Up
Up
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013 Starts, permissions and apps all…
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Starts, permissions and apps all…
Up
Up
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013 Starts, permissions and apps all…
Down
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Starts, permissions and apps all…
Up
Up
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013 Starts, permissions and apps all…
Down
Down
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Starts, permissions and apps all…
Up
Up
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013 Starts, permissions and apps all…
Down
Down
Down
PERMISSIONS STARTSAPPLICATIONS

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0
500
1,000
1,500
2,000
2,500
3,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Applications Permissions Starts
Starts, permissions and apps all…
Up
Up
Up
Westminster pipeline 2004-2013
K&C pipeline 2004-2013 Starts, permissions and apps all…
Down
Down
Down
And that final down the
application pipeline is
down by 57% to a mere
66 units from 5
schemes (the lowest for
over a decade), all
submitted in 2013
PERMISSIONS STARTSAPPLICATIONS

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Perhaps more tellingly still is that this development pipeline
comes a year after the borough experienced it’s
highest number of
construction starts for as long as we
have been monitoring it.

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So perhaps in the prime core supply is becoming constrained…but away on the
fringes of the prime…THE PIPELINE IS BEING EVER MORE
PUNCTUATED by TOWERS

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Our definition OVER 10 STOREYS

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OVER 10 STOREYS

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OVER 20 STOREYS

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OVER 30 STOREYS

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and the common denominator…

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Just as we saw last year we’re getting clusters of
towers along the river
And just as we’ve seen in the case of Westminster we’re getting
further intensification within the same
geographical areas
More in Docklands
More in Blackfriars
More in VNEBOA

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More in Docklands
More in Blackfriars
More in VNEBOA

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Nigel Evans - team leader
Sales

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Sales
Year Units completed or under
construction (% change)
Sold by year end
(% change)
Unsold by year end
(% change)
Sold during the year
(% change)
2010 22,995 (-5%) 7,480 (-1%) 15,515 (-7%) 4,259 (12%)
2011 27,203 (18%) 8,581 (15%) 18,622 (20%) 6,315 (48%)
2012 31,676 (16%) 12,408 (45%) 19,268 (3%) 8,874 (41%)
2013 40,148 (27%) 18,361 (48%) 21,787 (13%) 12,738 (44%)

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Sales
Year Units completed or under
construction (% change)
Sold by year end
(% change)
Unsold by year end
(% change)
Sold during the year
(% change)
2010 22,995 (-5%) 7,480 (-1%) 15,515 (-7%) 4,259 (12%)
2011 27,203 (18%) 8,581 (15%) 18,622 (20%) 6,315 (48%)
2012 31,676 (16%) 12,408 (45%) 19,268 (3%) 8,874 (41%)
2013 40,148 (27%) 18,361 (48%) 21,787 (13%) 12,738 (44%)

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Sales
Year Units completed or under
construction (% change)
Sold by year end
(% change)
Unsold by year end
(% change)
Sold during the year
(% change)
2010 22,995 (-5%) 7,480 (-1%) 15,515 (-7%) 4,259 (12%)
2011 27,203 (18%) 8,581 (15%) 18,622 (20%) 6,315 (48%)
2012 31,676 (16%) 12,408 (45%) 19,268 (3%) 8,874 (41%)
2013 40,148 (27%) 18,361 (48%) 21,787 (13%) 12,738 (44%)
increase

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For the whole of the capital the number of
sales in 2013 was 12,738 units, a
44% increase on the previous year and the
highest it has been
post-Lehman.

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the highest it has
been post-
Lehman.

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Inner and outer split

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Consider these opening salvos from the past three years in
sales section:
• 2011 - The inner boroughs saw a modest 20% increase in
the number of sales but in the outer boroughs sales shot up
by 76%.
• 2012 - The outer boroughs saw a modest 19% increase in
the number of sales but in the inner boroughs sales shot up
by 71%
• 2013 - Both inner and outer boroughs saw near identical
number of sales in 2013, up by 46% and 41% respectively.
Equilibrium

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Just as the inner and outer boroughs reached parityas
far as construction starts were concerned at
the end of 2013 so too did the
number of units sold in each
sector during 2013.

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But what of the buyer profile has that remained the same?
In the outer boroughs there has been little change in the
buyer profile a slight drop of 3% in investor activity coupled with
a corresponding increase in owner occupier activity. The real
change, as in the previous year, has been in the inner
boroughs with a 7% increase in investor activity coupled with
a corresponding drop in owner occupier activity
Investor
Owner-
occupier Investor Owner-occupier
Units sold % Units sold % Units sold % Units sold %
Inner completions total 1472 44 1856 56 Outer completions total 941 24 2956 76
Inner under construction 1431 48 1572 52 Outer under construction 767 28 1931 72
Inner total 2013 2903 46 3428 54 Outer total 2013 1708 26 4887 74
Inner total 2012 1750 39 2759 61 Outer total 2012 998 23 3428 77

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And in the super prime market and increase of almost 10% in
the number of units sold.
And interestingly within those active schemes we encountered
bulk sales in a number of schemes whereas in the
previous year we recorded precisely
none

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And we also noted an increase in flipping…yes it’s
back…
This from Garton Jones at
Nine Elms

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Ballymore has attracted foreign and UK based investors alike
and those that have made the decision to sell their
apartments before completion have seen fantastic
returns on their initial deposits. On average
the returns from the re-sales completed by Garton
Jones have been 133% with the highest
return for one client
being …

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OVER 300%

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And just like last year if it’s prime it sells and it will
sell in bulk.

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Nigel Evans - team leader
Pricing

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Usually in every LOREMA report we have done (18
including this one) there is one graph or table that
encapsulates the whole situation, every year it’s a different
one, this year it’s Table 10, and not even all of Table 10,
just the £/sq ft changes.
Average price (£/sq ft) Average price (£’000) Average size (sq ft)
2012 2013 % change 2012 2013 % change 2012 2013 % change
Inner London 838 1,043 24.4% 687 921 34.0% 820 883 7.6%
Prime London 1,696 1,987 17.1% 1,823 2,445 34.1% 1,075 1,230 14.4%
Outer London 435 481 10.5% 337 391 16.0% 776 813 4.7%
All London 628 767 22.1% 500 650 30.0% 796 847 6.4%
Table 10: key averages (1,2 & 3 beds combined with both latest price & size only) Developments of 10 units or more

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Usually in every LOREMA report we have done (18
including this one) there is one graph or table that
encapsulates the whole situation, every year it’s a different
one, this year it’s Table 10, and not even all of Table 10,
just the £/sq ft changes.
Table 10: key averages (1,2 & 3 beds combined with both latest price & size only) Developments of 10 units or more
Average price (£/sq ft) Average price (£’000) Average size (sq ft)
2012 2013 % change 2012 2013 % change 2012 2013 % change
Prime London 1,696 1,987 17.1% 1,823 2,445 34.1% 1,075 1,230 14.4%
Inner London 838 1,043 24.4% 687 921 34.0% 820 883 7.6%
Outer London 435 481 10.5% 337 391 16.0% 776 813 4.7%

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% increase in £psf values
greatest in inner London and although up in the
prime it’s up less.
0%
5%
10%
15%
20%
25%
30%
Prime Inner Outer
17%
24%
10%

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Consider also that the average
£psf value in inner London at the
end of 2013 was ….

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over £1,000…

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over
£1,000…

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over
£1,000…

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over
£1,000…

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For the first
time…

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ever

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We think that this may point to a cooling
off of the price increases in the super
prime, but the shockwave started there a few
years ago seems to have a life of it’s
own – increasing prices at the greatest
rate on it’s edges

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Not getting more expensive but prices are accelerating at a greater rate

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£/sq ft up by
22%

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Cap Valup
by
30%
More details on this map in the report

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And interestingly the “dead zone” we
spoke of last year. An area not cheap
enough to appeal to the owner occupier
but not prime enough for the investor is
beginning to disappear. As the ripple
moves outwards

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Nigel Evans - team leader
Conclusion

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The spread of development activity that we predicted
in last year’s LOREMA report has indeed materialisedwith
record starts in the outer boroughs many on long
fallow sites…

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the
very pattern we
saw in the inner
boroughs a year
previously.

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Coupledwith the number of schemeswe saw starting was
the rateat which they were being built. We have visited many large
developments over the years but even for us this rate of
construction seems exceptional.
Take the train from Waterloo to Wandsworth, and you’ll
see what we mean …the journey’s about the same duration as this
presentation but you’ll have to buy your own croissant

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Priceshave followed a similar pattern to construction
startswith the rates of increase in £psf values greater
now in inner London than the core as the
rippleof investor influence spreads
ever outwards.

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The increase incidence of bulk purchasing we have witnessed in
2013 in the inner boroughs may well point to the increased
involvement of a different kind of investor on the market.
No longer the exclusive domain of the cash-rich
individual the market now seems more fragmentedmore
driven by speculators than those looking for a
safe haven.

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And the lower percentage rate increase in the £psf valuesin the
super prime may hint that the market is
nearing it’s peak.

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And the lower percentage rate increase in the £psf valuesin the
super prime may hint that the market is
nearing it’s peak.

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But still the heat
JUST gets turned up, again and
again…

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Marketing departments have jettisoned the
brochurefor an Excel
spread sheet, such is the demand..

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Earl’s Court has been bought forward
due to exceptional
sales.

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The Shell Building while at judicial
review but the developers are confident enough to stick a
applicationin for a marketing
suite.

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This has all the hallmarks of a bubble.

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A market underpinnedby the
potentially volatile and
unpredictablegrowth driver of
foreign investment is one which could
burst very quickly.

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One based on increasing levels
of speculation could go
down even quicker...

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LONDON RESIDENTIAL MARKET ANALASYS
NIGEL EVANS
HEAD OF LONDON RESIDENTIAL RESEARCH

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LONDON RESIDENTIAL MARKET ANALASYS
2014

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LONDON RESIDENTIAL RESEARCH
Free trial
WWW.ESTATESGAZETTE.COM/LONDON-RESIDENTIAL