Jan 04, 2016
As anybody that has visited London will know, the sheer amount and size of car parks in the capital is incredible. What is perhaps even more eye-opening are the findings of a recent report, Parking to Penthouses, which revealed that more than £1 billion of land value is tied up in these spaces.
As the demand for quality housing in London increases, the study notes that 18 operational multi-storey car parks in Mayfair and Marylebone – which provide spaces for more than 4,000 vehicles – offer a combined land value of £1.3 billion.
David Lee, the Head of Sales at Pastor Real Estate, observed: “Increasingly we’re seeing a number of developers turn to car parks in the search for viable residential land in prime central London. Whilst fully operational car parks can offer a good return, the high demand for new homes in London makes these sites increasingly more attractive as a luxury residential development.”
One trend that looks set to continue in Central London is demand outstripping supply. There is almost a 10% growth in demand for properties in the capital each year, and yet the availability of large-scale development sites remains scarce. The belief, then, is that new property stock would find a market bustling with potential buyers....as Lee attests.
“As the demand for prime London property continues to out-strip supply, identifying development opportunities that add value to the neighbourhood, provide high-quality residences and essentially prove commercially viable will become a pressing concern for central London developers,” he said. “Throughout the report we have identified a number of strategic car park sites that could now be more viable and better suited as a residential or mixed-use development.”
The Parking to Penthouses findings also identify opportunities in the youthful end of the market, with young people taking up residence in the city for educational or employment reasons far less likely to require parking. The study noted that 64% of residents in Mayfair don’t own a car compared to the London average of 42%, while the number of 17-20 year olds owning a driving licence has fallen by 16% in the last five years. This will largely be for financial reasons of course, although a cultural shift in car usage as well as congestion charges and improvements to public transport have also been critical factors.
As a consequence, the demand for car parking space has never been less urgent.
“London is evolving and the urban population is getting younger and their dependency on cars is decreasing as transport connections continue to improve,” Lee confirmed. “This has seen the need for parking in Central London decline, whilst the new housing will be a pressing concern in the capital for the foreseeable future.”
The 18 car parks in Mayfair and Marylebone that were identified earlier in this article occupy a combined land value in excess of £1 billion, and yet if these were converted into residential developments an additional 300% of value would be created. As if major developers needed any further convincing, the property market in Mayfair in particular offers lucrative conditions for investment. House prices in the area have ballooned by 69% in just five years, and at an average of £2,400 per sq ft – with a high of £5,000 per sq ft – it is no surprise to learn that Mayfair is one of London’s best performing areas for residential properties.
Plans are already afoot to turn Audley Square, a multi-storey car park in prime Mayfair territory, into a £2 billion development should planning permission be granted. The plot would include five townhouses, three mews properties and 21 apartments, as well as luxury penthouses to appeal to the area’s well-heeled dwellers.
So the future looks bright for Central London’s property market; and it could be set to get a whole lot more profitable should car park redevelopment become a prevailing trend.