London’s Regeneration Zones Boost Surrounding Property Values by Additional 2.2% Annually

Residential property surrounding London’s key regeneration zones benefit from an additional annual growth premium of 2.2% (on average), according to new research from CBRE.

The report, ‘The effect of regeneration on local property values’, analysed 11 regeneration areas across London and matched property transactions within a 10-minute walk of each of them to calculate the average compound annual growth rate (CAGR), from the year the regeneration commenced. This was compared to the growth rate of the respective borough that each regeneration zone was located in.

The research attributes several fundamentals which drive successful regeneration – transport links, integrating and enhancing the area’s heritage, retail, green space, education and social value. 

Since 2008, homes surrounding Paddington’s regeneration zone have seen the largest growth premium of 5.8% per year on average.

Unsurprisingly, Nine Elms boasts a 3.2% annual growth premium, aligning with the transformation of the Grade II listed Battersea Power Station, which was renovated into London’s newest shopping centre. The design of the shopping centre had an emphasis on maintaining the building’s historical significance. The area is also earmarked for a new 420-pupil capacity school and 4.5-hectare linear park.

Elephant and Castle is another area delivering a strong additional premium at 2.5% annually. Benefiting already from its Zone 1/2 location, in recent years investment into the area has included a £20m leisure centre, £350,000 in community grants and £1.3m of public health projects.

Shaun Macnamara, Executive Director, CBRE, said: “There are some tangible examples in London where the successful implementation of a regeneration project has helped achieve premium price growth and real uplift for property in the area. Buyers looking to enter the London market, or to relocate, would benefit from considering these key zones, or areas which are earmarked for future regeneration given the potential growth premium available.

“Since the pandemic, Londoners are now spending more time at home and in their local community. Therefore, getting regeneration right – creating high-quality areas to live, work and socialise - is now more important than ever.”

Another key example is the extension of the Jubilee line and the new Elizabeth line, which have been significant infrastructure projects and have subsequently unlocked regeneration areas across the capital.

Since the project was approved in 2008, more than 31,000 private homes have now been built within 800m of an Elizabeth line station. In Canary Wharf, over 100,000 square feet of retail and leisure space has been delivered directly above the station alone.

CBRE’s report found the average value of property in Canary Wharf’s respective borough, Tower Hamlets, increased by £296,000 since 2004. By comparison, property neighbouring the regeneration zone, and subsequently benefitting from the regeneration growth premium, increased by £454,000 in the same period.

London Regen Chart