The expensive skyscrapers represent “the wrong properties Londoners don’t need.” Is Portland headed down the same path?
More cautionary news is on offer for Portland’s “irrationally exuberant” fans of new tall buildings in the core. Simply adding units is not an effective strategy for affordability: it matters where the units are, how much they cost to build, and what are the dynamics of global real estate markets. Word to the wise?
The Guardian newspaper reports this week that “half of new-build luxury London flats fail to sell” and “developers have 420 towers in pipeline despite up to 15,000 high-end flats still on the market.”
The article continues,
The swanky flats, complete with private gyms, swimming pools and cinema rooms, are lying empty as hundreds of thousands of would-be first-time buyers struggle to find an affordable home.
The total number of unsold luxury new-build homes, which are rarely advertised at less than £1m, has now hit a record high of 3,000 units…
Builders started work last year on 1,900 apartments priced at more than £1,500 per sq ft, but only 900 have sold, according to property data experts Molior London. A typical high-end three-bedroom apartment consists of around 2,000 sq ft, which works out at a sale price of £3m.
There are an extra 14,000 unsold apartments on the market for between £1,000-£1,500 per sq ft. The average price per sq ft across the UK is £211.
Molior says it would take at least three years to sell the glut of ultra-luxury flats if sales continue at their current rate and if no further new-builds are started.
However, ambitious property developers have a further 420 residential towers (each at least 20 storeys high) in the pipeline, says New London Architecture and GL Hearn.
Henry Pryor, a property buying agent, says the London luxury new-build market is “already overstuffed but we’re just building more of them”…
Some developers have delayed construction of projects, while others have taken properties off the market. All 10 of the apartments at the top of the Shard – priced at up to £50m each – remain unsold more than five years after the Duke of York and the former prime minister of Qatar officially opened “Europe’s first vertical city”.
“We’re going to have loads of empty and part-built posh ghost towers,” he says. “They were built as gambling chips for rich overseas investors, but they are no longer interested in the London casino and have moved on.”
Steven Herd, founder and chief executive of MyLondonHome, an agency that specialises in new-build homes for investment, says his firm is struggling under the weight of overseas investors who bought in the last couple of years and are desperate to sell.
He says hundreds of Asian investors who had bought London developments off-plan in 2015-16 in the hope of making a quick profit by selling apartments on closer to completion have instead lost hundreds of thousands of pounds. “They intended to flip [buy and sell on] the apartments and make big profits, but it hasn’t worked out like that, and now they are trying to get out at the smallest possible loss.”
He adds that in one case a Russian investor bought an off-plan property in 2014 for £3.1m, but couldn’t afford to complete and sold it for £2.55m.
Herd says the [developments are] “the wrong properties that Londoners don’t need”.
“We’d be much better off with decent quality but lower-spec homes built for actual Londoners. What’s the point in having private cinema rooms that sit empty and resident’s swimming pools with no one swimming in them; it just seems wrong.”
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