Across London, the number of schemes with planning permission increased by 36% in prime central London and by 125% in its surrounding boroughs. The number of stalled sites has reduced by a third and nine schemes that were on hold at CBRE’s last assessment have begun construction.
The largest national developers have driven the upswing with the top 10 national house builders increasing their share of starts in the capital from 15% in the fourth quarter of 2008 to 60% in the first quarter of 2011.
The impending Mayoral Community Infrastructure Levy has contributed to the rise in starts, as developers get schemes underway before it is implemented. The front loaded tax is likely to add in the region of £50 per square metre to developments in central London, £35 in fringe boroughs and £20 towards the periphery.
‘Big developers are better able to react to improving market conditions, than the smaller players. At a time when debt finance is scarce for residential development, national house builders can fund schemes through balance sheets and can advance projects on their books that already have full planning permission,’ said Jennet Siebrits, head of residential research, CB Richard Ellis.
‘Larger sites are not only easier to come by in outer London boroughs, but are also likely to be hardest hit by the Community Infrastructure Levy payments which could encourage developers to start on site now. Developers are expecting the price rises in central London to ripple outwards into the surrounding boroughs, as buyers look for more affordable property further afield,’ she added.
