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£38 billion of prime residential development planned for London, EC Harris finds

3 September 2012

- 70% increase in pipeline size since last year
- Total floor area of new development equivalent to size of Stratford Olympic Park
- Funding & delivery challenges moves potential peak delivery backwards to at least 2016/17

The volume of prime residential property being planned for London continues to surge, with over 15,000 units worth in excess of £38 billion currently earmarked for development over the next ten years according to EC Harris, the global built asset consultancy.

The annual EC Harris ‘London Prime Residential Development Pipeline’ report shows that 125 schemes are currently at various stages of site acquisition, planning and construction equating to a total floor area of nearly 20 million square feet, equivalent to the size of the Olympic Park in East London.  This is an increase of approximately 70% from last year’s report, fuelled by developers and landowners responding to continued strong demand from overseas cash purchasers for new residential property and rising property values across prime London residential markets.

The report indicates planned development is strongest in the Chelsea & Fulham areas with one in four (25%) of the units in the pipeline located there, this is followed by developments on the South Bank (17%), City and Fringe (12%), Midtown (11%) and Kensington (10%).

2016 appears to be the peak year for delivery, with schemes totalling circa 3,800 units in a race to progress and come to market in that year alone.  Two of the largest schemes on the pipeline are the major regeneration schemes planned for Earls Court and Battersea Power Station, each predicted to deliver several hundred prime residential units over the course of the next decade, reflecting that ‘prime’ is no longer confined to the likes of Mayfair or Chelsea.

Mark Farmer, Head of Residential at EC Harris said: “The size of the pipeline is a reflection of a massive vote of confidence in London and in UK plc and will have only been enhanced by this summer’s Olympics showcase.  London prime residential continues to act as a magnet for global investment, and offers clear opportunities for properly organised and funded developers and investors to generate healthy returns. However, this positivity is tempered by some notes of caution. There are significant risks to the realisation of the pipeline including the sustainability of the unprecedented levels of international investor and sales demand fuelling the lower end of the prime market, a lack of development funding and a scalability of specialist development skills needed to deliver these opportunities.”

The size of the challenge for London’s development industry is evident, with less than 500 new build prime units coming to market during 2012 including final sales on high profile schemes such as One Hyde Park, The Lancasters and the Shard. To achieve the potential peak pipeline rate of development in 2016, an eight to ten fold increase in development capacity would be required and, more importantly, a significant increase in development funding would also be needed.

Mark Farmer continues: “All these factors will effectively act as a funnel through which supply is likely to be controlled naturally and will, in all probability, smooth out the potential ‘bubble’ indicated in 2016 / 2017, pushing it downwards and further outwards. The timing of future schemes and rate of delivery will always involve an element of conjecture. What is undeniable though is the sheer size of the pipeline based on current sentiment which is staggering.”

The report goes on to cite a number of issues that prime London residential developers need to consider when progressing their schemes:
• Eurozone crisis: The financial volatility across Europe means that London is still being viewed as a safe haven for investment, but any devaluing of the euro could make London more expensive than in recent years.
• Stamp duty charges: Recent UK government changes to the prime residential property threshold mean that there is a new price point of £2million for prime London property which developers need to adapt their schemes towards.
• Sales & marketing strategy: As the pipeline shows, this is a crowded market, so the best product is important, even in prime residential – location, specification, interior space standards, amenities and even added value concierge type services are even more important.
• Planning system: The UK is undergoing changes to its planning regime which could impact the viability of London prime residential and the speed of the planning process.  For example, providing planning exemption for office to residential conversion projects could speed up the ability to convert period properties in the likes of Belgravia, Mayfair or Chelsea from their current office use back to residential. 

Mark Farmer summarises: “In reality it is the lower end of the prime London market that bears the greatest risk of demand slowdown in the future relative to potential oversupply.  Developers working in this market need to work hardest to define and differentiate their product, refine their sales and marketing strategies and have a cautious and controlled delivery strategy which can react to variable rates of sale and external circumstances.”

For a full copy of the report, click here

About the research
The EC Harris research is based on a ‘snapshot’ analysis of new private residential development projects currently being built or planned for delivery in central London through to 2022. It used an estimation of development programmes, total unit numbers, saleable area and sales values to assess the total number and value of units being delivered per annum in this market segment for the next ten years. It only includes projects with an average sales value of greater than circa £1,100/ft2, it excludes affordable housing unit numbers as well as one off personal residence projects. It is not meant to be an exhaustive analysis of all schemes in the public domain.

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Notes to editors
In this research the definition of London “prime residential” schemes are projects that have a minimum average sales value of circa £1,100 /ft2

For further press information please contact:
Andy Rowlands
EC Harris
+44 (0) 20 7833 6662  

About EC Harris
EC Harris is a leading global built asset consultancy. As an ARCADIS company, we have access to approximately 22,000 professionals worldwide operating in over 70 countries, 300 offices and generating in excess of €2.4 billion in revenue. Working across a wide range of market sectors, we help our clients make the most from the money they spend on their built assets.  For more information visit


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