Mon, 03 Sep 07
The Thames Gateway presents a unique opportunity to ease the housing shortages in London and the South East whilst regenerating large areas of derelict land, according to the latest research from Savills. However the area is already falling short of targets...
Jim Ward Director Savills Research comments, The question is, can developers up the rates of delivery to meet Government targets against a backdrop of intensifying planning negotiations, higher construction costs and the well documented flood risk to the Gateway, which combined threaten the viability of the development, unless a realistic view is taken on land value.
Latest targets for the Thames Gateway are for an additional 160,000 new homes between 2001 and 2016. Between 2001 and 2006 just 24% of the housing requirement for the Thames Gateway had been built, leaving three quarters of the target to be built in the next decade. Of this future supply, 75% will be located in London.
Heavily reliant on investor purchases
What impact will the increased volumes of supply have on pricing? Historically house prices across the Thames Gateway have been lower than the surrounding regions, however as investment has flowed into the area and transport improvements start to kick in, prices have risen quickly, albeit from a low base.
However, the current trend of building high density flatted developments is heavily reliant on investor purchasers and building larger family housing would provide a cushion if investor demand was to wane, particularly in markets further from central London.
The challenge for investors will be to pull in sufficient demand for new homes as volumes rise, otherwise rates of sale and completions will fall short of target.
Good amenities ‘essential’
Their success in achieving this will depend upon levels of investment, not only on transport improvements but also in the provision of high quality schools, shops, leisure facilities and open spaces.
As always, the correct provision and mix of high quality and affordably priced housing is pivotal. This is particularly important taking into account that employment growth within the region will outperform national projections of 5% over the next 10 years.
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