Commercial Finance
Land prices in central London drop as developers eye outer zones
Land prices for development in central London have fallen for the second quarter in a row, as developers look to build in boroughs outside of zone one.
After rising by 50% in the four years to September 2015, research from property consultancy Knight Frank found that prime central London development land prices are starting to ease, falling by 2.7% over the last six months. This takes annual decline to 2.5% and leaves prices 46% higher than in September 2011.
Grainne Gilmore, head of UK residential research at Knight Frank, said the drop was in line with the slowing pace of house price growth across prime central London, where prices grew just 1% annually, a much slower rate than in recent years.
The report said developers are increasingly seeking sites in London zones two to six, where development contracts attract a wider pool of demand in terms of affordability.
Urban land values for greenfield development also fell in the quarter to March, dropping 2.5% annually. However, urban brownfield land prices are rising strongly in value, though from a low base, up 15.4% in the year to the end of March.
The report said this is due to the “renewed economic vigour” of several of the country’s key cities and demand for affordable housing.
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