Copyright: David Lawson - Docklands Property Guide 1997
'This is the one remaining gap in the perception of outsiders,' says David Pretty, chairman of housebuilder Barratt South. 'Thank goodness it is now being filled.'
That filling comes in the shape of an 11-mile Tube line snaking along the South Bank, onto the Isle of Dogs and Greenwich Peninsula and northwards to Stratford. It might not seem much compared with the 255 mile London-wide network, but the Jubilee Line extension could have a spectacular impact on the whole of east London.
Property prices are already booming as buyers anticipate the unaccustomed ease this will bring for moving in and out of the heart of London. And they could go up a lot more. 'There is a lot of twaddle reported about how people have anticipated the increase in demand and already factored in future increases,' says one agent. 'As President Reagan said, you ain't seen nuthin' yet.'
Pretty, who has been a fervent supporter of Docklands through thick and thin, building homes when other had fled, points out that no matter how much people anticipate an event like this, the impact is always muted until it actually happens. 'There will be plenty of visitors zipping down the new line, gawping at the shiny new stations when it is finished and wondering why they didn't get in earlier,' he says.
But when will it be finished? The target date was March 1998 but this has been set this back between six and 12 months. A furious row exploded earlier this year between ministers and London Transport about the exact date and who is responsible for the over-run. The government faced huge criticism from other parts of London back in 1992 when it allocated almost œ2bn for the line, so it was looking for good news before the election.
LT had to point out that costs had soared to œ2.5bn and estimated the opening would be six months late. It blamed unforeseen problems such as building the giant station under Canary Wharf and the Houses of Parliament - which for a short time brought fears about disturbing the balance of Big Ben. The collapse of a tunnel at Heathrow also meant work had to stop on similar Jubilee Line boring until the method was proven safe. Government consultants were more pessimistic, predicting delays until early 1999.
Whatever the final outcome, such delays have had a muted effect. The publicity may even have spurred more outsiders to make a move after believing they missed the boat.
'You could consider it like a pop star delaying an entrance to the stage,' says Peter Sloane, of agents Knight Frank. 'The extra waiting raises everyone's expectations even further.'
IMPACT SO FAR ON BUSINESS
The best indicator of the impact the promised Tube extension has had so far is the fate of its most potent symbol - Canary Wharf. The scheme was virtually bankrupt five years ago, awash with millions of square feet of empty offices.
Then in the depths of recession, Parliament gave the go-ahead for the line and and potential tenants began to show more interest. It is impossible to separate effects of the general economic recovery and a shortage of alternative office space in the City and West End from the positive impact of the Tube line, but it is generally accepted that few of the big firms would be moving in without it.
Citibank certainly saw it as a crucial factor in deciding to move 2,500 jobs to a new building which should be ready in time for the line's opening. BZW is already in place, working towards a total of 4,000 staff. The kind of high-powered, high-paid workers required by these financial factories would never be attracted without easy access in and out of central London. Letting has accelerated, with Trade Indemnity and Coutts bank reserving space in a surge which saw more than 1.3m sq ft taken up in Docklands last year - the highest level for a decade.
This has spilled outwards, pushing up rents in other areas. Rod Parker of Knight Frank predicts they should be high enough to stimulate new building outside the elite acres of Canary Wharf by the end of the decade, as the impact of the new line accelerates.
Areas like South Quay, devastated by the IRA bombing, might have been abandoned a couple of years ago. While progress is slow, there are hard plans for a multi-million pound redevelopment into new shopping, housing and offices this year.
This economic revival has a double impact. First, it brings thousands of highly-paid people into the area - many of whom will be looking for local homes rather than trekking from the other side of London each day. But just as important is the more general uplift.
As one major tenant says: 'The Jubilee Line is rather like a blood transfusion. It does not just revive an arm where the blood flows in. It infuses the whole body.'
'People will no longer associate the area with failure. It will be a accessible, vibrant and expanding - just as it was planned all those years ago before the recession rolled in.'
IMPACT ON HOUSING
Docklands house prices have soared by as much as 30% in the last couple of years, a fact attributed by some to the expected impact of the Jubilee Line extension. They are often the same people who suggest investors looking for a bargain have missed the boat.
Reality is not that simple. London prices as a whole have bounced back in that time, so Docklands would have floated up even without the new line. Other influences have also come into play. The millennium site in Greenwich and approval of the extended Docklands Light Railway have 'It is all a fortunate collision of events,' says Peter Sloane of agents Knight Frank. 'Look at Wapping and Limehouse, where the line will have little influence. Prices have soared there as well.'
But he admits there is certainly a major boost coming from the extra confidence easier accessibility will bring to the area. Builders started betting on this almost as soon as the Tube extension was announced. The LDDC was unable to sell a square foot of housing land between 1990 and 1993. Once they saw the Jubilee work starting, bidding began again. Land prices are estimated to have risen 35% since then to reach around œ1.25m an acre.
David Pretty, chairman of Barratt South, insists that he would have created schemes like Sovereign Quay, on the South Bank at Rotherhithe, even if there had been no new Jubilee Line. The reward for early buyers has been a 10% rise in values over the last year, and Pretty admits that if he had been starting today, starting prices would be 20 to 30% higher.
This spreads right around the South Bank, which will be the prime beneficiary from the new line. Over the years, areas like Surrey Quays and Rotherhithe have been considered as remote as the other side of the Moon to many potential buyers, merely because of the lack of Tube access. Suddenly there will be stations at Bermondsey and Canada Water, only a few stops from the West End or City.
'A good 90% of the people coming in say they are influenced by the opening of the Jubilee Line,' says Simon Harris of agents Oliver Jaques. 'It was steady up until the start of the year but now things have gone insane.'
Buyers are clamouring to get close to new Tube stations, with better property around Bermondsey Wall East and Cherry Garden Pier jumping as 30% in value over the last year - and 10% since the start of this year. A two-bed flat in Sovereign View which went for œ145,000 in December is now worth œ160,000. A two-bed apartment over the dock at Greenland Passage was œ115,000 six months ago and now rated at œ130,000. Further inland, a three-bed detached house in Alexis Street off Southwark Park Road sold recently for œ110,000 compared with œ85,000 a year ago.
As in the rest of London, much has to do with shortage of supply, with few owners selling. 'There are 20 buyers for every property and developers are putting up prices every day,' says Harris.
He switched from the West End a couple of years ago in anticipation of the 'discovery' of this part of London and is now seeing that happen. 'While 50% of our buyers are still locals trading up, the rest are being attracted from fashionable areas like Fulham and Battersea,' he says.
That is even more obvious in Shad Thames, where the full panoply of restaurants and little shops has emerged to create the same ambiance. 'We are effectively part of the West End set now,' says Tom Marshall of Cluttons. 'Most of our inquiries come from other parts of London.'
He sees the area as more of a continuation of the gentrification stretching along the South Bank from Waterloo Bridge than part of the Docklands market. While Shad is already served by rail and Tube, the glossy new station at London Bridge will provide the first direct link to the shopping and leisure attractions of Bond Street and Oxford Street rather than the cranky Northern Line link into the City.
Prices are rising as much as 3% a month here, so that buyers of shell flats who paid œ500,000 in the boom are finally recording a profit. At Vogan's Mill, a two-bed apartment which sold for £190,000 last year would now fetch £230,000, says Marshall's colleague Matthew Kirwin.
But this pales beside the interest in property further eastwards which has suffered more from perceived isolation in the past. Two-bed flats in King & Queen Wharf, for instance, have risen from £130,000 to as much as £200,000 in nine months and penthouses from œ240,000 to œ290,000.
'The new line is a long way off, so this is not the sole influence,' says Kirwin. 'But it is certainly a major one.'
FUTURE
Is there more to come? After the huge price rises registered in Docklands over the last year, buyers must be wondering whether they have missed the boat - or should that be the Tube?
Barratt South chairman David Pretty is reassuring. 'The main impact of the Jubilee Line is yet to come,' he says. 'It will open up areas people may not have even considered.'
One future hot spot will be in the neck of the Isle of Dogs, according to Peter Sloane of Knight Frank. Poplar Dock drew a scrum of builders when the LDDC put it on the market, all convinced of the same impact when the Canary Wharf Station opens. Currently, it is shadowed by the stiff walk to the nearest DLR station. Batson & Regents Wharf on the other side of the island will see a similar boost.
But he also believes some existing locations are undervalued and will benefit from the general uplift. A four-bed house in Jamestown harbour, for instance, currently sells at œ155,000 compared with œ260,000 in Wapping. The pioneering Cascades block is also due for a boost, when 2-bed flats sell at œ145,000 compared with œ220,000 at nearby Dundee Wharf.
Simon Harris of Oliver Jaques believes the comparison with Wapping is valid south of the river as well. 'We have always been the poor relation but prices will begin to match Wapping when the line is in,' he says.
But there is no guarantee for growth. Harris points out that property in the œ50,000 to £80,000 bracket is 'going nowhere' even in the hot market around the new Bermondsey Tube station. 'Quality will always be an important factor,' he says.
Position is also vital. 'The new Tube will not automatically make bad locations into good ones,' says Pretty. But it will open up new ones like Greenwich, Blackheath and Lewisham, he adds. This area is a weird anomaly which has held back property values for decades. Despite a fast and frequent rail connection of less than 30mins to Charing Cross, large swathes of greenery and the historic river front, it has always been seen as remote.
The Jubilee Line will hardly affect that, stopping only on the North Greenwich peninsula, which is still an industrial wasteland. But another rail link will be crucial. The DLR is being extended under the river and by the time the Tube line is in full swing, Greenwich and Lewisham will be a couple of stops from the Canary Wharf interchange. Add that to the growing awareness of the Millennium Exhibition at around the same time and it would be amazing if the area does not go ballistic.
Doug Norris of agents John Payne points out that rumbles are already being felt. A two-bed terrace house in the prime Ashburnham Triangle area of Greenwich is under offer at œ240,000 compared with an asking price of œ205,000 last November. A one-bed flat on South Street is worth œ70,000 when sales at œ60,000 were hard a year ago and at the other end of the scale a five-bed home on Hyde Vale sold for œ281,000 last march is now worth œ400,000.
Even more ripe for growth are the previously neglected terraced rows of East Greenwich, where the motorway sweeps into the Blackwall Tunnel. A three-bed house which struggled to reach £100,000 last year now goes for œ130,000.
This growth rate has much to do with the desperation of buyers when so few homes are being brought to the market. It will not continue once sellers come out of the woodwork - but that does not mean values will then fall. The combined affect of the DLR, the Jubilee Line and the Millennium are all dispersing the antipathy to this part of London. Like parts of Docklands, it will finally be accepted as an accessible location, and adopt price levels seen for many years in similar parts of west and north London.
VICTORIA LINE
One clue to the potential impact of the Jubilee Line can be found in the effect the last Tube had on its surroundings. Between 1968 and 1972 the Victoria Line was driven south through Highbury, Islington, Pimlico and Kennington to Brixton. Simon Coan of agents Winkworth says the changes this sparked are still obvious.
'Prices went up by 10% fairly quickly,' he says. 'Pimlico had been a fringe area full of cheap hotels but the new ease of access sparked a clearance and a lot of upmarket building you can still see today.'
The importance of the line has continued over the decades since then. 'It has insulated some areas from the problems around them,' says Coan. Kennington, for instance, is crammed with council estates - an unlikely attraction for home buyers. Yet it is the home to many MPs, doctors, lawyers and City workers. 'That would never have happened without the Victoria Line,' says Coan.
A simple indication of the importance of easy access comes from comparing property prices. In Camberwell, for instance, which has no Tube line, a four-storey house would cost around £140,000. A similar property in Kennington would be more like £195,000, says Coan.