London's Transport Investment Unlocks New Property Hot-Spots
London, 21st December 2009 – Over the next 15 years, London will see a level of investment in its transport network, unprecedented in modern times. The resulting changes to accessibility will unlock development potential in key hubs across the Capital, including existing areas such as the Isle of Dogs, King’s Cross, Stratford and Paddington and up-coming hot spots such as Farringdon and Tottenham Court Road.
These transport changes will improve accessibility, support increasing levels and density of employment and raise the demand for commercial space as well as boost the value of existing properties and create development opportunities.
Two schemes stand as having the most dramatic impact on London’s property markets:
• £16 billion Crossrail scheme, which will create and east-west rail link between Stratford and the Isle of Dogs in the east to Heathrow and Maidenhead in the west via the City and West End. This is the single most important transport infrastructure scheme for London in decades and will increase the capacity of the public transport system by 10%.
• London Underground’s £30 billion improvement programme – to deliver a 31% increase in network capacity and deliver significant improvements to reliability and journey times by 2022.
Kevin McCauley, Head of London Research at CB Richard Ellis said: “By 2026 there will be one million more people in London and 600,000 more jobs, mainly concentrated in central London. Investment in infrastructure is crucial to ensure the Capital remains one of the world’s leading business locations. This investment will create extraordinary opportunities for investors, developers and occupiers alike.
“We already know what can happen when you provide transport links integrated with quality office, retail and residential development, schemes such as Paddington and Canary Wharf demonstrate what can be achieved.”
George Iacobescu, Chief Executive of Canary Wharf Group plc said: "History shows that London's development has been inextricably linked with the growth of transport infrastructure. The experience has been that public sector investment in transport is followed by private sector development and additional jobs."
"When the Jubilee line was extended just 10 years ago it drove a wave of new development along the South Bank. Without the Jubilee line we would have had no More London, no Shard of Glass, no O2 Arena and no 2012 Olympic Games at Stratford - yet these significant projects were not even part of the business case for the line back in the mid 1990s."
"Projects like Crossrail are vital - we already know that this one line will add 10% to the public transport capacity of the capital and support at least an additional 30,000 jobs at a time when investment and jobs are badly needed in London. But the long term economic benefits will be much, much greater, supporting many of the expected additional 900,000 jobs in London by 2025."
"Today's publication adds weight to the argument that we can't afford not to make these transport investments in the future of London."
In terms of London’s development pipeline, there is potential for 45 – 47 million sq ft of development in locations across London by 2020, however, a number of locations will see the largest changes to accessibility and therefore the greatest impact on their property markets.
• The Isle of Dogs will be of the greatest beneficiaries of the transport improvements, with Crossrail increasing transport capacity by 50%. In addition, enhancements to the Jubilee line and Docklands Light Railway will deliver other significant accessibility changes. Combined these investments would enable the development of 19 million sq ft of commercial space and up to 17,000 residential units, and according to the London Plan, support up to 100,000 additional jobs in the Isle of Dogs.
• Stratford will be another key beneficiary of transport improvements. Already well-connected, the completion of Crossrail, capacity improvements to the Jubilee line and Docklands Light Railway, and the introduction of international services via High Speed 1 will totally transform accessibility. Additionally, Stratford will benefit from the Olympic Games, which will help to address the poor image of the area. Transport improvements and the momentum from the Olympics will be the catalyst for the transformation of Stratford, and enable the delivery of 5.6 million sq ft of office space in its development pipeline, 3.2 million sq ft of retail space, including Westfield’s 1.6 million sq ft Stratford City development, due to complete in 2011, as well as the potential to accommodate a large amount of residential development on the Olympic site.
• Transport improvements could produce the dramatic transformation of Farringdon as a property market. Farringdon is relatively well-connected, but not well developed commercially; however, Farringdon is set to become one of the most important transport interchanges in Central London. With the completion of Crossrail, Farringdon will find itself at the intersection of London’s key north-south and east-west train lines. In spite of this, limited development is planned for Farringdon over the next 5-10 years. However, it offers a unique opportunity within Central London that will become a substantial location in its own right once in the next twenty years.
• Tottenham Court Road – with the opening of Crossrail, a completely rebuilt station with new tickets halls and platforms, a new link to Heathrow and Canary Wharf will be created the retail market at the eastern end of Oxford Street should enjoy a major boost. There is also potential for significant office development, on a scale broadly comparable to what has already been delivered at Paddington.
• Generally, improvements to the public transport do not create benefits for retail property. However, Crossrail is the exception. The largest impacts will be in Oxford Street and Bond Street, with the potential for most significant redevelopment in Tottenham Court Road.
• King’s Cross, Euston, Southbank, Paddington, The Royal Docks, Battersea and Whitechapel are all centres that will evolve with increased investment.
Kevin McCauley added: “Good connectivity is a crucial factor driving the success of a location; however, well-connected locations, such as King’s Cross, have failed to make the most of their connectivity, illustrating that transport improvements alone are not enough to transform a location, other factors such as masterplanning, scheme viability, fragmented land ownership and image need to be addressed before the full benefits can be realised.”
Aside from Crossrail and the Underground improvements, the other key transport projects for London are:
• Docklands Light Railway extension - £599 million to increase from two to three carriages on the busiest routes providing a 50% increase in capacity.
• High Speed One (Channel Tunnel Rail Link) - £5.2 billion for the international link from King’s Cross to the European Mainland. Domestic services are already running with the international service to Stratford to start in 2010.
• Thameslink Programme - £5.5 billion phased programme for new stations to allow 50% more peak flow at redeveloped stations and a 50% increase in capacity by 2012 via new carriages. Bottlenecks at London Bridge and Blackfriars will be removed by 2015.
• East London Line extension - £1billion construction to extend the line north from Whitechapel to Highbury and south from New Cross Gate to Crystal Palace and West Croydon and then from Surrey Quays to Clapham Junction.