_London residential development: The importance of design

Developers active in the prime residential market are increasingly looking across the globe for ideas, inspiration, and opportunities. In our new Global Development Series we are assembling a number of focused insights which will shed light on the most important market trends. In this edition we look at residential development in London and highlight why it is no longer driven primarily by location. It requires thoughtful design, efficient layouts and the right mix of amenities, service and specification to maximise value.

May 15, 2017

Data from the DCLG suggests that there were 17,070 new residential starts in London 2016, down from 25,200 the previous year, suggesting a slowdown in housing delivery.

The most recent data also shows a fall in planning approvals – a good indicator of future supply – with 478 schemes with 10 or more units approved in the year to September 2016, down from 499 at the same point of 2015 and 524 in 2013.

The reduction in development activity is due to a range of factors, including rising construction costs – partly as a result of currency fluctuations, labour issues, planning processes and tax changes.

In this environment, the need to balance appropriate planning and design with the right provision of services and amenities within schemes, is paramount. This requires a detailed understanding of pricing potential, cost planning and control over occupational charges.

Working together with cost consultants Core Five and MSMR Architects, Knight Frank has analysed how design and specification can influence development cost, as well as the desirability of schemes.

In our experience design and specification is more important than extensive amenity in prime development.

Specification

Having the latest gadgets and technology may help to differentiate schemes, but as our survey suggests, buyers are more focused on quality.

One of the most significant changes we have witnessed over the past decade is buyers becoming less wedded to specific locations. As a result, the prime development market has increasingly spread outside the traditional ‘golden postcodes’.

As the market has become more product-led and less location-led, developers have focused increasingly on the quality of their building and the services and facilities on offer.

The message we convey to developers, and one which is reinforced by the results of our survey, is to focus on the qualitative rather than the quantitative. Do the simple things well before falling into the trap of needing to be different.

In our experience of selling prime and super-prime developments, buyers are more focussed on space, layout, architecture and views. These are the tangibles.

As a development consultancy team, we often debate where specification adds value, and where it amounts to an unnecessary cost.

Developments need to strike a careful balance between short-term trends, technology and pragmatism.

This means that schemes need to find a position within the market and be capable of delivering a flexible package which allows them to compete against peers.

One example is technology. The current thinking relating to technology is towards the simplification of systems which allow for the capacity to “layer up”, or to upgrade to more bespoke packages should the purchaser require.

Our message and advice to clients is to ensure that design delivers an evolution of proven standards and practices. Keep materials simple, be confident, focus on high standards and avoid gimmicks.

For more detailed insight read the London Development Design Study in full.