Opportunities for buyers, and obstacles to address
Canary Wharf is one of London’s regeneration success stories. Once a thriving dock, it fell into disuse from the 1960s onwards, and became one of the city’s less desirable regions. However, since its redevelopment, which began in the 1990s, its fortunes have changed. It’s now a major business hub, and growing numbers of residents are moving in.
This transition (from commercial, to a blend of commercial and residential) should be of interest to investors. More employees seek to live near their workplaces in Canary Wharf, which in turn, is driving up the rate of residential development, and property prices too.
However, like most of London, Canary Wharf has been impacted by the political climate, and more recently, the COVID-19 pandemic. For example, Tower Hamlets prices fell by 4.6% from August 2018 to August 2019. Numbers of transactions are also down, and prime properties have decreased in value by 5.6% in the last five years.
Buy-to-let prices have been affected by the 3% extra stamp duty and reduced tax relief, and the buyer demographic has also changed. In 2016, 42% of buyers in Canary Wharf were purchasing property for investment purposes. Just two years later, this decreased by 32%.
Canary Wharf’s demographic
The biggest residential demographic in Canary Wharf is affluent professionals. Experian’s data shows that 53% of households in this area are 40 or younger; a percentage that’s significantly higher than the capital’s average. They’re also high earners, with over a third on salaries that are more than £100,000 per annum.
This is unsurprising, given the nature of the region. Canary Wharf is one of London’s most significant business areas, and as such, employment is booming. The ‘Brexit effect’ on the economy means that international take-up has also increased, with foreign investors making the most of the favourable exchange rates.
Why Canary Wharf is popular with buyers
The key factor driving the residential market is employment. Canary Wharf is home to several successful enterprises, and workers are attracted to the area, due to the wealth of jobs on offer.
Experts believe that the local population will experience an upsurge of 15% over the next ten years. This is double the predicted rise of London as a whole (which is anticipated to be 8%). The further diversification of businesses in Canary Wharf will have an impact too.
Another factor to consider is average office rental rates, which are still competitive when compared to other parts of London. This continues to bring companies to the area, and with them, their employees. At the time of writing, the average office rent per square foot in Canary Wharf is just £47.50, which is around £30 per square foot less than in the City.
What does the future hold?
Canary Wharf’s rapid growth has been partly fuelled by affordability, but this may limit its future growth, particularly as the London market is somewhat volatile at present. This volatility is likely to continue for the next few years during the Brexit transition period.
Afterwards, it’s anticipated that the market will pick up once again, and when this happens, Canary Wharf is anticipated to be an investment hotspot, for homebuyers and landlords alike.