While much has been said about the rising prices found in London’s ultra-luxurious central district, a new report looks at what is actually driving these prices upwards.
A lack of supply coupled with sky-high demand as the population of London increases is said to be a key driving factor in both price appreciation and rates of development. As a lack of space and protected Royal Parks often hinder the breaking of new ground, developers are looking for other ways to transform spaces into accommodation to house the influx of people migrating to London.
“Increasingly we’re seeing a number of developers turn to car parks in the search for viable residential land in prime central London,” says David Lee, Head of Sales at Pastor Real Estate. “Whilst fully operational car parks can offer a good return, the high demand for new homes in London makes these sites increasingly more attractive as a luxury residential development. London is evolving and the urban population is getting younger and their dependency on cars is decreasing as transport connections continue to improve. This has seen the need for parking in central London decline, whilst the new housing will be a pressing concern in the capital for the foreseeable future.”
Converting car parks into luxury accommodation
Developers that convert car parks into luxurious residential developments can increase land values by up to 300%, according to Pastor Real Estate.
One such development is the Audley Square Car Park, set for re-gentrification at the hands of Phones4U founder John Caudwell. The space is set to be transformed into luxury residential apartments, and there are plenty of other sites throughout Mayfair and Marylebone that could meet the same fate. There are 18 multi-storey car parks across these regions, totaling more than 4,500 spaces. Should this land be repurposed for prime development, the value could total £1.3billion, according to the report Parking to Penthouses: Mayfair & Marylebone Hidden Value, from Pastor Real Estate.
But while these car parks remain undeveloped at present, the prices of existing properties have also risen substantially as a result of the current lack of supply. Property values in Mayfair have increased by 69 per cent over the last five years, and buyers can now expect to part with an average of £2,400 per square foot. Prices in Marylebone have appreciated by 54 per cent over the same period, while rental rates have increased 11 per cent over the past 12 months.
London’s changing demographic
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One of the key growth drivers in terms of property prices throughout the capital has been the sheer number of people that have moved into it over the past 40 years.
Greater London is now home to the largest number of inhabitants in its history, and the numbers are only set to climb further. Currently sitting at 8.5 million, London’s population is set to rise to 10 million by 2030. A rising birth rate, longer life expectancy, and job opportunities resulting in high levels of migration are all thought to be factors leading to London’s population boom.
In order to keep pace with this rapid rate of growth, developers may begin looking at utilising car parks and other spaces in prime locations for development sooner rather than later.
Article Submitted By Community Writer
