Aside from the actual improvements to the transport network, Crossrail is also prompting a raft of wider investment and development above ground. There are extensive over-site plans for many of the stations, based around the concept of placemaking. Tottenham Court Road is a great example of an area that, despite its inherently good position, has been overlooked historically and its property market has under-performed as a result.
However, there are now substantial redevelopment plans underway that will see the creation of much more attractive and pedestrian-friendly public space at street level.
Since Crossrail got the go ahead, house prices around the affected stations have increased by 20%. This is on top of underlying capital appreciation in London and the South East. Although this partly pre-empts the actual transport benefits and value increases that will be felt from 2018, at this stage it mostly reflects the swell of confidence into these areas and the physical regeneration already underway.
These increases are likely to be even more pronounced in Central London, at 3.7% per annum, or around £100,000 per property, over the next five years. Overall, Crossrail could add around £14.7bn to the residential property sector across the 37 stations.
In the western stations, where the reduction in travel times are the greatest, we expect some of the largest impacts on residential values, outside of Central London. Our model suggests that Crossrail will trigger house price increases of around 2.9% per annum between Maidenhead and Acton, or around £50,000 per property over the five year period. This is roughly four times the average increase in East London, which is likely to be closer to 1.7% per annum, or £21,000 over the five years.
Overall, the biggest winners will be Ealing, Broadway, Farringdon, Paddington, Bond Street and Tottenham Court Road. Homes in these areas could see higher increases, of up to £100,000.
A 10% reduction in commuting times can cause house prices to increase by 6%. We anticipate total house price growth of 13% around Crossrail stations between now and 2018, with up to 20% in Central London. This is expected in addition to underlying capital growth.
There is no doubt that Crossrail will be a game changer in property terms. By increasing the volume of people travelling into Central London, Crossrail will unlock huge expansion potential. From an office perspective, areas like Farringdon and Canary Wharf are particularly exciting.
Infrastructure projects on the scale of Crossrail are essential to both the London economy and that of the wider UK, ensuring that we keep pace in an increasingly globalised marketplace. With a total cost envelope of £14.8bn and an overall estimated benefit of £42bn, there will surely be plenty of winners.
All in all diversity is key and Crossrail locations in my view seem like a sensible investment; however the type of property is a different topic all together. Complete RPI will after ascertaining our clients objectives advise of specific investment opportunity and how it fits with current exposure to the market.
Like all property investment one should look to invest over the medium to long term (6 – 10 years) and Crossrail locations are far from an exception to the rule. Phase one is scheduled for completion in 2018.
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