The rise of Canary Wharf

There was a time when pundits were predicting the fall of London as an international finance centre and were pointing to places like Frankfurt, Zurich and even Madrid as viable alternatives. Although the critics didn’t seem to realise that banking conglomerates aren’t football teams, it still took the spectacular rise of the Canary Wharf regeneration juggernaut to end all speculation.

A decline of maritime infrastructure and the digitalisation of the financial sector were the twin catalysts that helped fuel the Docklands boom. Suddenly investment banks needed the floor space and computer cabling that only ultra-modern new buildings could provide. Where FX dealers and fund managers went, IT expertise and modern transportation followed and the result is a current property landscape that has witnessed 20% growth in terms of transactions in 2014 and a 12.5% increase in sale prices.

Senior traders within London’s major financial district are nicknamed “Masters of the Universe” for good reason. They routinely process billion pound deals at the click of a mouse and are significantly helping prop up the UK economy.

Such individuals want to live in properties that reflect this lucrative, fast-paced, yet tightly controlled atmosphere. The pristine new-build property developments such as Pan Peninsula, The Landmark, Baltimore Wharf, Discovery Dock and newcomer South Quay Plaza are designed to fit the bill; complete with cutting-edge facilities, well-connected transport links and stunning views of London. Interconnected by the futuristic driverless DLR trains, any one of these high-rise property developments is an attractive alternative for corporate tenants who historically used to rent a converted period apartment in central London. In fact, tenants now specify Canary Wharf, due to its proximity to their places of work, over and above traditional hotspots such as Kensington and Chelsea.

Free from planning restrictions, the various Canary Wharf developers have been quick to install state-of-the art leisure facilities, underground parking and the latest home entertainment systems, giving properties the definite wow factor. As a result, rental apartments in Canary Wharf compare favourably with those in some of the more traditional parts of prime Central London as an investment option. The average two bedroom apartment in Canary Wharf now costs £491,000 and lets for £575 per week, producing a very attractive yield of just over 6%. In Docklands, a similar-sized apartment costs £455,000 and lets for £550 per week, which again delivers a 6%-plus yield.

Compared with a typical two-bedroom apartment in Kensington, where a property of this type will attract a £1.47m price tag (an increase of 200% on purchase price) and a yield of 2% based on a weekly rental of £675, it is clear that investment in Canary Wharf makes for an excellent proposition.

Throughout the economic challenges that affected a large part of the world economy since 2007, Canary Wharf and Docklands have continued to forge ahead with a keen eye to future growth. Funds have poured in from Qatar, China and Canada as the development of the Crossrail initiative reaches completion. The next phase of new-builds will see a stunning 45 floor purpose-built residential development right in the heart of Docklands on the old London Arena site. Baltimore Tower, which is due to be completed in the coming months, has picked up the creative gauntlet thrown down by The Shard and others. A twisting, flowing tubular design gives each apartment a unique balcony design and enhances the already magnificent view. Apartments are being snapped up at pre-opening prices.

The Docklands area has also benefited from its own airport, which specialises in short-haul flights to the UK and Europe, as well as the dedicated business-class flights to New York. City Airport is now on course for a £220 million pound upgrade and this boost will increase peak capacity by 50% as the number of flights increase from 80,000 to 120,000 per year, creating 1,500 jobs in the process.

The afore-mentioned Crossrail rail link will also put Heathrow Airport within easy reach of E14. Boarding a flight to New York, Dubai or Hong Kong within 30 minutes of stepping out of your office at One Canada Square or your home at Pan Peninsula is sure to revolutionise Canary Wharf as much as the Docklands Light Railway did in the Nineties.

If you would like to discuss the investment opportunities currently available in the area, please contact Marc von Grundherr on 020 7319 9780 or email us.

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