A succinct weekly take on the London property market and a roundup of headlines from market observer John Lim. Subscribe to the Friday Roundup here: http://pbra.in/pb-signup
* Greenland Group, Shanghai’s largest property developer, recently gave the go-ahead for the launch of the Spire, their 67-storey tower development in Canary Wharf, despite ongoing market uncertainty from the Brexit vote.
* Poised to be the tallest residential skyscraper in Western Europe at 231m high, prices at the development will start from £595,000 for studio apartments, representing ten times the average salary in the area.
* In total, there are 233 high-rises approved and waiting to start construction in London. This is despite public opposition towards tower developments, notably the Skyline Campaign, whose aim is to “stop the devastation of London by badly designed tall buildings”.
* The increased number of approvals reflects a growing acceptance from the planners that part of the solution to the housing crisis comes from expanding upwards, however unpopular it may be.
* While developers may find it easier to get permission to add more storeys to their buildings, the commercial numbers are getting harder to stack.
* Construction costs are at an all-time high due to supply constraints in labour and materials, plus they rise exponentially for taller buildings.
* At the same time, the housing market has slowed and prices are softening at the top-end, where high-rise developments usually sit.
* As a result, planning approval does not always lead to delivery: only a small percentage of the approved skyscrapers actually get built, with 16 completed in 2015 and six in 2014. There are currently 89 tall buildings under construction, with delivery spread over the next five years (assuming no delays).
* We may see more delivery plans being shelved and developers holding off launching units for sale. The developer for the Battersea Power Station development recently reported it was currently holding back about 150 properties from the market.
* All eyes will be on the launch of the Spire in October, with a focus on the rate of absorption of the units. It is not all doom and gloom – one bright spot for Greenland Group is its access to the Chinese market.
* Goldman Sachs recently estimated that $1.4 trillion of capital will leave China over the next five years, due to aging demographic profiles and high savings rates.
Here’s a roundup of on what we think are the big news stories this week:
* Tech giant Apple has agreed to make the Battersea Power Station its new London headquarters: its 1,400 staff will be spread over six floors within the station, taking up 40% of the available office space.
* The fall in the pound has prompted a Hong Kong-listed healthcare and mining group to buy its first London acquisition, a high-end residential development next to Buckingham Palace for £112m, earlier this week.
* London has ceded its top position at the Global Real Estate Bubble Index published by UBS to Vancouver. Despite the recent slowdown, UBS stated that inflated house prices were likely to continue in London due to a supply-demand imbalance and record-low mortgage rates.
* Bloomberg reports that home sales in the capital in the first seven months of 2016 were at their lowest level since 2012, as owners delayed offering properties for sale or chose to lease them.
* Planning to remove the U.K. from the EU could cost the government £65 million pounds a year and require it to hire 500 new civil servants, according to the Institute for Government.
* Job-search engine Adzuna found vacancies for business consultants rose 5 percent in August and were up 10 percent from a year earlier, as companies look for advice post-Brexit vote.
* The latest wellbeing research from the Office of National Statistics shows that the overall happiness level in London has increased from last year, with Redbridge topping the list and Greenwich coming in last.
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