Crossrail impact on north and northeast London
The impact of the Crossrail tunnel is surfacing as we move closer to seeing trains on the Elizabeth Line. Europe’s largest construction project is scheduled to become fully operational in December 2019, and it will have a transformative effect on London, but especially on the northeast and east London.
By early 2019, 40 Crossrail stations will exist across London with ten new stations being created at Abbey Wood, Canary Wharf, Bond Street, Farringdon, Custom House, Liverpool Street, Paddington, Tottenham Court Road, Whitechapel and Woolwich. This will deliver a 10% increase in capacity on London’s rail and underground network, support 55,000 new jobs, be instrumental in helping to deliver 57,000 new homes and bring an extra 1.5 million people to within a 45-minute commute of central London.
We have seen a significant change in north and north-east London over the last ten years, particularly around the 2012 Olympic games, but in our opinion, Crossrail has the potential to deliver the widest reaching change of recent times.
As we discussed in last month’s newsletter, this improved connectivity will bring regeneration to boroughs within the areas we cover, such as Redbridge, which until the advent of Crossrail have not seen the same level of regeneration benefits of other areas of London. The ‘Lizzie Line’ as it is being coined, will create jobs, retail and housing opportunities throughout the north-east London boroughs.
Rising House Prices
As expected, with increased connectivity comes higher house prices. House prices near stations along the Elizabeth Line have risen on average by 48% over ten years, compared with a 25% rise in England over the same period. Cuts in travelling time and regeneration have been the driving force behind the growth in property prices. Whilst the most dramatic increases are to be found in central London, such as Tottenham Court Road which boasts an increase of 65.99% over 10 years and average property prices of £1,705,486, there are boroughs on the Crossrail route where despite above average price hikes, property is still comparatively affordable because of its lower starting value. For example, in Goodmayes the average property price is £355,512, a rise of 39.64% in ten years when property values averaged £254,592. In Gidea Park an average property price is £460,131 a rise of 43.02% over ten years.
Over the years we have sold properties along most of the length of the Elizabeth Line but picking an example location such as Romford which is betwixt the City and Shenfield at the end of the line in April 2012 we sold a modernised 4-bed semi with garage in Mawney Road RM7 (Lot 53 O) for £250,000 where current prices for similar properties in the RM7 area are comfortable about the £425,000 level and so approaching 50% above 2015 prices.
In contrast, further down the line towards the City, in July 2012 we sold a 3-bed terraced house in Mortlake Road, Ilford (Lot 34) in need of modernisation for £198,000 and in March this year sold a similar house (Lot 3) also in need of modernisation for £278,500 - a 40% increase in less than five years.”
Mawney Road RM7 (Lot 53 O)
Mortlake Road, Ilford (Lot 34)
32 Oaklands Park Avenue (Lot 3)
The demand for accommodation close to the new line has already brought activity around new developments and will continue to do so as the need grows. These developments will play a critical role in helping to address London’s housing shortage, although for family purchasers and renters affordability will remain an issue. However, such developments and the investment in regeneration and infrastructures of the boroughs through which the line passes will attract new residents, and create a positive upturn in employment and services.
Just as Crossrail will bring a positive impact on housing, it will also encourage those office occupiers, particularly small businesses, in prime office locations to look for more affordable alternatives. It will create new business locations within the north and north-east London and increase the amount of choice available for occupiers.
The time savings that will be delivered by Crossrail will increase the ripple effect that we have been seeing in the office market, where increasingly companies are looking to move from established areas such as The City and City Fringe to less established areas such as Haringey as a result of high rents. While this is undoubtedly the case, rents and occupancy costs along the Elizabeth Line have remained stable. However, commercial office values around Crossrail stations in central London are expected to increase with an uplift of 10% in capital values above an already rising baseline. This price increase in central London will make businesses look at alternatives in less established areas.
For those being priced out of prime office markets, there will be plenty of opportunities to reduce costs and enjoy the benefits of Crossrail.
Areas set to offer popular alternatives to established office markets are:
Stratford: An area which has already seen significant investment, most notably as a result of the London 2012 Olympics, Stratford is set to benefit from further investment as companies relocate here. Stratford already enjoys excellent transport, connected to destinations across London and the UK with the Central Line, National Rail, the DLR and the London Overground. Crossrail will improve this connectivity further. Having Europe’s largest shopping centre on the doorstep and new residential developments will also attract businesses. Rents here will be significantly cheaper than in other locations along the ‘Lizzie Line’ at approximately £40 per sq.ft as compared to £65 per sq.ft in the City.
Romford: Connectivity at Romford will be greatly improved, with new trains introduced between Shenfield and Liverpool Street, and travellers will be able to travel through Central London without having to change trains. Journey times to established locations in Central London will be reduced, taking 27 minutes to reach Canary Wharf with Crossrail as opposed to 37 minutes currently. This will increase the ‘ripple effect’ and help boost Romford’s appeal as a business location. We expect rents in the town to increase to approximately £20 per sq.ft from their current average of £15 per sq.ft.
Brentwood: The next to last stop of the line, Brentwood will also offer an alternative business location for occupiers looking to reduce costs and has the potential to further improve as a thriving business location in Essex. Improvements in journey times will be similar to those from Romford, and we expect rents to increase by approximately 20%.
If you would like to discuss how you could benefit from the introduction of Crossrail, our team would be happy to speak with you.