City Road: A street of towers, but how many will live there?
Thousands of luxury apartments are being built along City Road, yet suspicions remain that many will lie empty at a time of lengthy housing queues
17 February, 2017 — By Koos Couvée
Left: City Road looking south with, on the left, the Lexicon, Canaletto and Eagle towers. On the right, work is underway on 250 City Road. Right: Artist’s impression of 250 City Road
ALONG City Road, 1960s council blocks are being dwarfed by shiny new luxury towers. Six major new developments have been completed or are under construction, totalling thousands of apartments, some selling for more than £3million.
The road is part of the “City Fringe”, identified as a prime central London location by luxury estate agents Knight Frank. The area is increasingly synonymous with the trendy Old Street tech-hub dubbed “Silicon Roundabout”, and its accompanying booming property market.
The Tribune learned this week that 85 per cent of the first phase of the 250 City Road development – where three-bedroom apartments in the under-construction, 42-storey Carrara tower are selling for £3million – have been sold off-plan.
The question is: how many of the luxury apartments will actually be lived in?
Islington’s former housing chief James Murray warned four years ago that the Canaletto building at 257 City Road, and the Carrara could end up in the hands of “absentee” foreign owners.
The claims were strongly disputed by developers, who insisted under-occupation was “greatly exaggerated”. They said international investors made up only a tiny fraction of all purchases across Greater London as a whole.
This week, Berkeley Homes, the developer behind 250 City Road, declined requests by the Tribune to provide a breakdown of the number of properties sold to overseas investors.
A spokeswoman for the developer said: “Since the launch in 2015, Berkeley Homes has sold 85 per cent of the homes in the first phase at 250 City Road to a mixture of home-owners and investors.
“These forward sales have helped us get on-site and deliver early on the public amenities as well as the private homes.”
Councillor Diarmaid Ward
Islington housing chief Councillor Diarmaid Ward said it was “unfortunate” the developer was “less than forthcoming” with details, adding that “buy-to-leave”, where investors leave a property empty and use it solely as an asset for capital appreciation, worried him, particularly in the south of the borough.
Town Hall chiefs, who preside over a housing waiting list of 19,000, tried to clamp down on “buy to leave” in 2015, when new planning measures required developers to draw up leases forcing owners to ensure the new flats were occupied for most of the year.
But they will effectively be powerless to stop investors at City Road developments leave the homes empty because planning permission was given before the new measures were introduced.
The Carrara tower, designed by leading architects Fosters and Partners, will be half the height of the Shard and higher than London Eye. A 36-storey skyscraper will be built right next to it.
The 250 City Road site was at the centre of a controversial planning row three years ago, when former London Mayor Boris Johnson overruled Islington Council, which had blocked the 993-home development because of a lack of affordable housing.
Only 144 of the new homes will be at social rent and 170 will be for shared ownership. The scheme also includes a 190-room hotel, shops, cafés and three floors of office space and studios “for use by start-up companies”, the developer said.
The Lexicon tower opposite, currently Islington’s highest building at 36 storeys, was completed last year. All 306 apartments in it have been sold, of which 35 per cent are classed as “affordable”.
A spokeswoman for Mount Anvil and Clarion Housing Group, the developer behind the Lexicon tower, said: “Strong forward sales in the investor market provided the funding catalyst for this tenure-blind development to be built. It is now fully occupied by predominantly London-based tenants and owner-occupiers.”
Across City Road basin, the 31-storey Canaletto tower will open in April. Around 90 per cent of the 190 homes, priced from £700,000 for a one-bedroom flat to £3.5m for a three-bedroom apartment on the 30th floor, were sold off-plan.
Much like a luxury hotel, the development includes a club lounge on the 24th floor, cinema, swimming pool, spa and gymnasium with sauna, jacuzzi and “treatment rooms”. Squeezed in between the tower and a huge electricity substation are the homes classed as “affordable”, 50 are social housing properties and 50 are for shared ownership.
Nearer Old Street roundabout, the 39-storey Atlas building is due for completion next year. It was given planning permission by Hackney Council in 2014.
Research has shown that around 70 per cent luxury homes in big developments are sold to investors, with some overseas buyers effectively using them as permanently available ‘hotel’ suites.
The council’s own research found that at the Bezier Apartments on Old Street roundabout – dubbed the “Silicon Implants” in reference to the building’s shape – 59 per cent of private households were not registered on the electoral register, compared to just five per cent on average across the borough, suggesting many were left empty.
Cllr Ward said: “We’re very keen to tackle ‘buy to leave’ and that’s why we have a strict policy through our planning system. It’s a very strict policy but it only applies to new developments.”
Owners who leave properties empty could face court action, with a High Court injunction being the toughest penalty.
Will investors be able to sell homes that are like hotels?
James Holroyd: ‘New-builds market untested’
PROPERTY agent James Holroyd, of prime real estate specialists Property Vision, said he had seen evidence that investors in new luxury homes at similar developments across London are struggling to sell them on.
The problem is that so many developments of the same kind are coming on steam, he believes.
“From a resale perspective we have concerns about resales and long-term future of these buildings,” he said.
“What we’re seeing is that if the pricing is sensible, in line with the established trading range for the local market, they tend to trade.
“But some of these [developments] come up and they are two, three times the price in a market that has built up a well-established pricing over many years.
“The numbers seem to be plucked out of thin air.”
He added: “Our problem with the new builds is that it [the market] is untested.
“Most of our clients are people who buy flats for their children, but most are buying as a home, but these [new flats] generally don’t make for great homes.
“What [our clients] don’t want is a box, low ceiling heights and the only comfort they have is that the guy below them has a poorer view.
“I get it for some people that’s what they want, they want all of that on tap. A lot of these buildings are like hotels.”