FOCUS ON: BRENTFORD - NAEF Prestige Knight Frank › ... › 2019 › 09 › focus-on-brentford-201… · Syon Park and the Royal Botanic Gardens, Kew. Almost 2,500 hectares are accessible

FOCUS ON: BRENTFORD2019

RESEARCH

Source: Land Registry

FIGURE 1 Average homes in Brentford sell at lower capital values to neighbouring locations Year to end Apr 2019

2 RESEARCH KNIGHT FRANK

The district occupies a key strategic position for businesses and residents due to its historic connectivity via water, road and rail.

Brentford, TW8, was a key interchange joining the Grand Junction Canal to the River Thames during the late 1700s and early 1800s, and its connectivity expanded during the following two centuries,

culminating in the opening of the train line linking Brentford to Heathrow Airport and London’s West End, and the 1965 opening of the elevated section of the M4 motorway.

As a result, company headquarters in TW8 and the surrounding postcodes proliferated over subsequent years. Now, Brentford is designated in the draft London Plan, the mayor’s strategic document, as a key centre with high growth-potential in both commercial and residential property sectors.

ECONOMIC GROWTHBrentford sits in the borough of Hounslow, where gross value added, a measure of economic growth, is forecast to grow more than 20% in the coming decade, while employment is forecast to rise 8%.

TW8 and its neighbouring postcodes are home to a variety of large company headquarters due to ease of access into central London and Heathrow. They are mostly positioned close to the M4, and at nearby Chiswick Business Park, which is home to a plethora of oil and gas, media and technology companies. The largest employers include pharmaceutical company GSK, oil and gas firms Tullow Oil and Worley Parsons, and Qatari media company Fadaat (fig 2). Other major local employers include telecommunications giant Sky and computer game developer Sega.

Hounslow, already a hub for the creative industries, has been named as one of London’s first Creative Enterprise Zones. This entitles the borough to receive Mayoral funding in order to foster growth across the creative sectors.

Significant levels of new office construction are underway across Chiswick, Hammersmith and Ealing to accommodate new businesses moving to the area. Now, more than one million square feet of new

Brentford, a riverside former industrial area situated among London’s expansive green spaces, is set to become one of the capital’s largest waterside regeneration hubs.

FOCUS ON: BRENTFORD

Acton

Chiswick

Barnes

Brentford

Isleworth

Richmond upon Thames

Higher

Lower

FOCUS ON: BRENTFORD 2019

3KNIGHT FRANK RESEARCH

office space is due to complete between 2019 and 2022, as developers anticipate growth in local employment, according to Knight Frank Research.

RESIDENTIAL DEVELOPMENTWith a large number of global office tenants nearby and high levels of connectivity with central London and Heathrow, TW8 is becoming a focal point for residential development.

Homes in Brentford typically sell at relatively lower capital values to the

Source: EGi *Includes W4, TW9, TW7, W7, W13, W5, W3, not exhaustive

FIGURE 2 Largest employers in TW8 and surrounding postcodes* Number of employees working on site

InfinityMediaGroup

Advertising

Bus & Coach Operators& Stations

Computer Games

Consulates andEmbassies

Education

FacilitiesManagement

Finance

Food

Media

Oil & Gas

Mail Order & Shipping

Pharmaceutical

Retail

Transportation

neighbouring towns of Chiswick, Barnes

and Richmond upon Thames (fig 1) and

average sales prices in TW8 during the

past 12 months were the lowest of any

riverside postcode in west London.

Total housing stock in Hounslow

expanded by 991 units in 2017-

18, according to official figures.

Housebuilding in the borough needs to

more than double if it is to meet the needs

of the growing population, according

to the draft London Plan. By 2029, the

local population is forecast to grow by

more than 25,000 to 307,000, a 9% rise,

according to Experian.

The draft London Plan suggests 2,182

homes must be built in Hounslow every

year over the coming decade in order to

meet new demand and clear a backlog of

undersupply (fig 3). Hounslow Borough

Council’s local plan suggests the current

pipeline will result in the delivery of

approximately 2,400 homes in 2019/20

and 2020/21, hitting its minimum target,

before dropping back to 1,700 the

following year and plateauing in that

region until 2026/27, settling at around

80% of its target.

Much of the growth in future housing in

the borough will take place within 1.5km

4

FOCUS ON: BRENTFORD 2019

KNIGHT FRANK RESEARCH

of Brentford Station, where approximately 3,350 homes are either under construction, or have consent, and are likely to be delivered over the next five years or more. Average upper quartile asking rents for a two-bedroom flat in the prime market – defined as the top 25% by value – stood at £2,450 per calendar month during Q1 2019.

AMENITYWith new development often comes new amenity. Brentford high street is set to be overhauled, with 140,000 square feet of new retail and leisure space. This will include shops, bars and restaurants split across approximately 40 units. The new high street will add to the choice for shoppers that already includes nearby Richmond, Hounslow and Chiswick, which are respectively ranked 9th, 11th and 33rd in retail consultancy CACI’s rankings of the nation’s Metropolitan retail centres.

Brentford is also positioned among swathes of green space. Almost 150 hectares (370 acres) of open green space, including parks,

Source: Knight Frank Research

Green space accessible within 20 minutes of Brentford Station

150 Hectares

2,500 Hectares

750 Hectares

FIGURE 3 Housing supply, Hounslow Historic delivery and projections

0

500

1,000

1,500

2,000

2,500

3,000

2026

-27

2025

-26

2024

-25

2023

-24

2022

-23

2021

-22

2020

-21

2019

-20

2018

-19

2017-

18

2016

-17

2015

-16

2014

-15

2013

-14

2012

-13

2011-

12

2010

-11

2009

-10

Annual housing supply target 2018-19 to 2028-29Source: Draft London Plan

Annual housing supply target,2014-15 to 2017-18Source: Current London Plan

No. o

f dwe

llings

PROJECTIONS FROM HOUNSLOW LOCAL PLAN AUTHORITY MONITORING REPORT, 2016/17

NET ADDITIONAL DWELLINGS

Source: MHCLG, London Borough of Hounslow

gardens and woodland lie within 20 minutes’ walk of Brentford Station, and more than 750 hectares are accessible via 20 minutes on public transport, which takes in the historic Syon Park and the Royal Botanic Gardens, Kew. Almost 2,500 hectares are accessible in 20 minutes by car, which takes in London’s Richmond Park – the largest of London’s Royal Parks. The TW8 postcode also boasts 1.9 miles of river frontage.

London’s top universities are all within an hour’s journey of Brentford Station (fig 4 overleaf) and TW8 and its bordering postcodes have 13 primary schools and four secondary schools rated ‘outstanding’ by the education watchdog Ofsted.

The Greater London Authority and Hounslow Council are also funding an overhaul of former barge sheds straddling the Grand Union Canal to celebrate the area’s industrial heritage. Other areas of interest include the soon-to-be-completed Brentford Community Stadium, the 17,250 capacity home of Championship team Brentford Football Club.

5 RESEARCH KNIGHT FRANK

A315A316

A310

A310A314 A3004

A3003

A3002

A4020

A4000

A3005

THE WEST END

A4

A4

A4 A205

A406

A406

A307

A316

A316

M4

M4

West MiddlesexGolf Course

Royal Mid-SurreyGolf Club

Royal Botanic Gardens

GunnersburyPark

Brentford

Boston Manor

Northfields

South Ealing

OsterleyChiswick

Kew Bridge

Kew Gardens

Gunnersbury

Acton Town

Ealing Broadway

South Acton

Chiswick Park

North Sheen

St Margarets

Syon Lane

Hounslow

ACTON

BRENTFORD

ISLEWORTH

HOUNSLOW MORTLAKE

RICHMOND

Osterley Park

Source: TFL, Google

FIGURE 4 Travel times, Brentford Station to places of interest

Heathrow Airport

London Waterloo

Bond Street

City of London

Imperial College

Canary Wharf

UCL

London School of Economics and Political Science

King’s College London

Gatwick Airport

Oxford

Car

Journey time in minutes by:

Public transport

24 30

70

42

50

60

54

52

45

15MINS

32MINS

MINS MINS

MINS

MINS

MINS

MINS

MINS

MINS

60MINS

60MINS

MINS

FIGURE 5 Connectivity: Brentford and surrounds

CONNECTIVITYBrentford has a mainline station with direct trains to London Waterloo in 30 minutes. Piccadilly Line station Boston Manor sits on the fringe of TW8, with trains running direct to Knightsbridge, King’s Cross St. Pancras and Heathrow. The M4 motorway runs through Brentford, and easily connects to the M40, a motorway linking London to Oxford and Birmingham, and the A40, a major trunk road connecting London to Wales and the West Country (fig 5).

The Mayor’s transport strategy also includes proposals for a new passenger service between Hounslow Station and Old Oak Common, a key transport interchange on both the east to west Elizabeth Line and proposed High Speed 2 line to Birmingham, the East Midlands, Leeds and Manchester.

FOCUS ON: BRENTFORD 2019

“ WITH A LARGE NUMBER OF GLOBAL OFFICE TENANTS NEARBY AND HIGH LEVELS OF CONNECTIVITY WITH CENTRAL LONDON AND HEATHROW, TW8 IS BECOMING A FOCAL POINT FOR RESIDENTIAL DEVELOPMENT.”

Important Notice

© Knight Frank LLP 2019 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.

Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs.

Knight Frank Research Reports are available at KnightFrank.com/ResearchIf you’re thinking of buying or selling, or would just like some property advice, please do get in touch.

Get in touch

Priya Black +44 20 7861 5489 [email protected]

Patrick Gower, Residential [email protected]

If you would like further insight into residential markets please get in touch.

Sources: Knight Frank Research, Rightmove, Ofsted *Prime is defined as the top 25% of homes by market value **Postcodes TW8, W4, TW9, TW7, W7, W13, W5, W3

KNIGHT FRANK HOUSE PRICE GROWTH FORECAST, GREATER LONDON, 2019-2023

SALES RENTS9% 16%

MILES OF RIVER FRONTAGE, TW8

1.9

BRENTFORD AVERAGE PRIME* ASKING RENT, TWO BED FLAT, Q1 2019

£2,450NUMBER OF OFSTED RATED ‘OUTSTANDING’

PRIMARY AND SECONDARY SCHOOLS IN TW8 AND NEIGHBOURING POSTCODES**

17

LONDON RESIDENTIAL DEVELOPMENT H1 2019

RESEARCH

London Residential Development H1 2019

UK Res Dev Land Index Q1 2019

RESIDENTIAL RESEARCH

RESIDENTIAL DEVELOPMENT LAND INDEX

Housebuilders sought to protect their margins to account for future risks during Q1 2019, particularly in the South East. Consequently, average greenfield development land prices declined 0.3%, taking the annual change to -0.6% - the first annual decline in two years.

Construction costs, including materials, plant and labour, have climbed 14% over the past three years, according to the ONS. Any further weakening of the pound could make importing building materials more costly, which could be compounded by reported Brexit-related stockpiling. However, the most significant factor weighing on greenfield land values is housebuilders’ caution over possible conditions in the sales market in three to five years’ time due to the acute political uncertainty in Westminster.

As a result, competition has been particularly strong for well-connected sites with strong demographics, often on the edge of market towns. Volumes dipped during the 18 months following the 2016 referendum and housebuilders are now seeking to replenish their land supply.

This trend is being mirrored in prime central London, where values dipped 2% during Q1 and declined 7.5% during the year to March.

Demand has been robust for competitively-priced sites in the best locations with rental income already in place, though in the wider prime central London land market investors are grappling with how to accurately price sites amid so much political uncertainty.

In addition, the risk of planning delays in central London has grown in the past two years. Councils and the Greater London Authority at times have differing priorities regarding the proportion and mix of tenures required when negotiating section 106 agreements, which adds another layer of complexity in an already challenging prime central London market.

Urban brownfield land values climbed 0.8% in Q1, taking the annual change to -0.2%. The lack of clarity caused by events in Westminster is being offset by the certainty provided by the Help to Buy Equity Loan scheme, which the government announced in November will be extended to 2023, albeit with regional price caps.

POLITICAL UNCERTAINTY WEIGHS ON LAND VALUESEconomic uncertainty coupled with the complexities of the planning system and rising build costs exerted pressure on land values at the turn of the year. However, developers seeking to maintain a healthy supply of land and take advantage of value prompted ultra-competitive bidding for a handful of the best sites on the market.

Key Facts Q1 2019 Average greenfield development land prices declined 0.6% in the year to Q1 2019, the first annual decline in two years

Urban Brownfield land values climbed 0.8% during Q1 2019, moderating the annual decline to 0.2%

Prime Central London development land values declined 2%, taking the annual decline to 7.5%

-12.5%

-10.0%

-7.5%

-5.0%

-2.5%

0.0%

2.5%

5.0%

7.5%

10.0%

Q1Q4Q3Q2Q1Q4Q3Q2Q120192017 2018

Prime Central London English Greenfield

Urban Brownfield

Source: Knight Frank Research

FIGURE 2

Annual change in average land values

Source: Knight Frank Research

FIGURE 1

Residential development land prices Rebased 100 = Sep 2011 (Urban Brownfield = Dec 2014)

90

100

110

120

130

140

150

201920182017201620152014201320122011

Ind

ex

Prime Central London English Greenfield

Urban Brownfield

PATRICK GOWER Associate, UK Residential Research

“ Developers seeking to maintain a healthy supply of land... prompted ultra-competitive bidding for a handful of the best sites on the market during Q1.”

@patrickgower

[email protected]

Prime London Sales Index - June 2019

RESIDENTIAL RESEARCH

PRIME LONDON SALES INDEX

JUNE 2019

PRIME CENTRAL LONDON

PRIME OUTER LONDON

Prime central London index | 5,571.2

Prime outer London index | 267.8 Annual change | -4.1%

Annual change | -4.9%

Monthly change | -0.2%

Monthly change | -0.3%Quarterly change | -0.7%

Quarterly change | -0.2%

Figure 1 Between March 2009 and the last market peak in August 2015, average price growth above £10m in PCL was half of that recorded for properties worth less than £2m. As prices adjust to political uncertainty and tax changes, this relative difference in performance has helped underpin demand in higher price brackets.

Figure 2 The number of transactions above £10m fell 3.6% in PCL in the year to May compared to the previous 12 months. This compared to a decline of 11.5% between £1m and £2m, underlining the relatively stronger performance of the higher-value market.

Figure 3 Average prices above £10m declined 2.5% in the year to June and it has been 46 months since prices last peaked in this price bracket. The decrease was 4.8% between £1m and £2m and it has been 39 months since the last peak, highlighting the longer adjustment period for higher-value properties.

Figure 4 Supply is shrinking in all price brackets as some vendors hesitate due to political uncertainty. Meanwhile the number of new prospective buyers rose by 21% in the year to May, showing how active vendors currently benefit from an imbalance between supply and demand.

The prime London sales indices are based on repeat valuations of second-hand stock and do not include new-build property, although units from completed developments are included over time.

FIGURE 4

Stock declines as demand rises Annualised % change

Source: Knight Frank Research / Rightmove

FIGURE 2

Sales volumes decline by less above £10 million Year to May 2019 vs year to May 2018, % change

Source: Knight Frank Research / LonRes

FIGURE 1

Lower pricing volatility in higher price brackets Average price change by price bracket

Source: Knight Frank Research

FIGURE 3

Price declines lower in higher price brackets Average annual % change by price bracket

Source: Knight Frank Research

Up to £1m £1m to £2m £2m to £5m

£5m to £10m £10m +

PCL POL New prospective buyers

March 2009 to August 2015

August 2015 to March 2019

-20%

0%

20%

40%

60%

80%

100%

120%

Up to £1m

£1m to£2m

£2m to£5m

£5m to£10m

£10m+-12%

-10%

-8%

-6%

-4%

-2%

0%

£1m to£2m

£2m to£5m

£5m to£10m

£10m+

-20-15-10

-505

10152025

Jan-

18Fe

b-18

Mar

-18

Apr-1

8M

ay-1

8Ju

n-18

Jul-1

8Au

g-18

Sep-

18O

ct-1

8No

v-18

Dec-

18Ja

n-19

Feb-

19M

ar-1

9Ap

r-19

May

-19

Jun-

19

-8%

-6%

-4%

-2%

0%

2%

Jun-

17Au

g-17

Oct

-17

Dec-

17Fe

b-18

Apr-1

8Ju

n-18

Aug-

18O

ct-1

8De

c-18

Feb-

19Ap

r-19

Jun-

19

46

47 3948

37

Months since last peak

Eastern Opportunities 2019

EASTERN OPPORTUNITIES 2019

Knight Frank forecasts house prices in Greater London will climb 9.2% between 2019 and 2023. Brentford, with its connectivity to central London and beyond, ample river frontage and green space,

FORECASTSis well placed to gain from the uplift in high-quality new residential and retail development slated for the next five years, which in turn is likely to attract further new amenity.

Cover image is a CGI of The Brentford Project, courtesy of Ballymore