Residential development in the City of London appears to be enjoying a resurgence. Is the Square Mile set to become home to more people than pigeons, or is this just a blip, asks Ross Clark
Hip to be Square
Residential development in the City of London appears to be enjoying a resurgence. Is the Square Mile set to become home to more people than pigeons, or is this just a blip, asks Ross Clark
IT MAY BE at the heart of one of the world’s busiest cities, the metropolis of the financial world and the daily workplace of 300,000 people, but when it comes to living there the City of London has in modern times come to rival the interior of Antarctica as one of the most deserted places on Earth. At its nadir in 1991, just 4,000 counted the Square Mile as home, and almost all of them lived in one development on the northern edge, the Barbican. There was more bustle in Bognor Regis.
Would you want to live in a district dominated by corporate glass towers, where a morning lie-in could be disrupted by the footsteps of tens of thousands of people passing within a few hundred yards of your bed on their way to work? There are an increasing number of developers who are counting on people saying ‘yes’. The City is being marketed once again as a place to live, and 2013 sees the completion of several schemes that will attempt to establish it as a residential district.
The Heron is a 36-storey tower which wouldn’t seem out of place in the Docklands or along the Thames in Chelsea or Battersea. But standing on Moor Lane, opposite the Barbican, it is something of a pioneering project: a big, bulky residential development of 285 apartments in a location that a few years ago would almost certainly have been ear-marked for commercial development.
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Then there’s 10 Trinity Square, the old Port of London building on Tower Hill, which is being turned into 41 apartments, as well as a hotel. Developers are creeping down the City Road from the more established residential district of Shoreditch, with a couple of developments now on the fringes of the City.
It would be easy to attach the word ‘boom’ to all this activity, but the reality is that it is a consequence of the opposite: the sharp fall in commercial values which followed the credit crunch. What is happening in the City is a repeat of the brief period of residential expansion a dozen years ago, when the price of homes climbed ahead of commercial values, making it more profitable for developers to contemplate the former.
Then, however, it was mostly limited to back alleyways, to awkward sites unsuitable for large-scale commercial redevelopment. While little changed on the main streets, 1,000 residential properties were added to the Square Mile in the early 2000s, swelling the population to 7,400, roughly what it was in the 1950s, but still a long way short of the 20,000 who lived there in the 1920s.
ALTHOUGH THERE IS a sharp difference between residential and commercial values, there is a barrier to the wholesale conversion of office space into residential: the Corporation of London. The City is unique in having a planning authority elected by businesses as well as residents, and naturally it tends to think differently as a result.
‘The City has traditionally been very careful to protect office floorspace and continues to take a cautious line,’ says Nick de Lotbiniere, a planning consultant with Savills. ‘There are only six areas around the edge of the Square Mile where it will allow residential development.’
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Compared with Mayfair, Belgravia or Kensington, the City is still a relatively cheap place to buy a home. There are no £20 million, let alone £100 million, flats in the City. At £4.3 million, a three-bedroom flat in the Heron is about as expensive as it gets.
Developers are looking carefully, however, at Sugar Quay, the former HQ of Tate & Lyle, which in February was bought by Christian Candy’s CPC Group — a tooth-rotting combination of buyer and address if ever there was one.
The site has planning permission for redevelopment as an office block, but Mr Candy has since suggested that he might be seeking a new design which would involve some residential units along the Thames front. Presumably he doesn’t have in mind budget-priced crash-pads; his brand is now well-known to represent the most expensive and luxurious — or, depending on your point of view, vulgar and excessive — flats that money can buy.
Lower Thames Street, the unlovely dual carriageway on which Sugar Quay is situated, doesn’t exactly have the aura of Sloane Street and other prime West London addresses. The City doesn’t do boulevards, pavement cafes, garden squares full of plane trees and all the other stuff associated with West London.
But that perhaps misunderstands the market. The prime London market at the moment is not so much about people buying somewhere to live as about investors sinking cash into what they see as a safe store of wealth. And if it’s a tradable commodity you are after, the cleaner and more corporate the better.
For the international market, the City of London should be an easy sell. Get your camera angles right and you can shoot your apartment block against a backdrop of some of the world’s best-known landmarks, St Paul’s Cathedral, Tower Bridge and the Tower of London — invaluable marketing material when you take it out to a property roadshow in Hong Kong, where the Heron was launched in 2010.
A similar trend has been seen in New York, where residential developments are increasingly being added to redevelopments on and around Wall Street, which like the City of London used to be a domestic desert. There could be few things more symbolic that the conversion of JP Morgan’s old headquarters at 23 Wall Street into a condominium development.
The old Port of London building at 10 Trinity Square is being transformed into 41 apartments and a hotel as part of the City’s rebirth as a residential area.
WHETHER FINANCIAL DISTRICTS will continue to sprout residential developments depends ultimately not on residential demand in isolation, but on the relative price of a square metre of office space compared with a square metre of apartment space. If the former once again creeps above the latter, you can probably say goodbye to brochures of fancy bathrooms and sumptuous bedrooms.
In fact, the office-builders have already come back this year: according to Knight Frank, the amount of money invested in commercial property in the City of London in the second quarter of 2012 was 62 per cent up on the same quarter a year earlier, reaching its highest level since 2007.
In other words, the City isn’t about to become Chelsea. But maybe that is a good thing.
Photograph by Jorge Luis Dieguez
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