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October 18, 2013 7:18 pm
We are all familiar with estate agents’ hype about demand for apartments overlooking London’s river Thames, where buyers pay a 50 per cent premium for an uninterrupted view. But new research shows that while paying a premium for a river view is common in many major cites, buyers in some popular locations won’t pay the high price normally associated with riverside living.
In a survey of seven world cities with prominent rivers or harbours, conducted by estate agency Savills, the locations with the highest premiums were Paris and London where “best in class” examples could add as much as 50 per cent to the sale price. The research looked at prime riverside properties and compared them with those of a similar size, age and condition just a few streets “inland” in the same cities.
Savills says London properties offering views of the Thames range from a low £900 per sq ft in the Nine Elms area, where a neighbourhood around the new US embassy is being built. In more established Bankside a view of the Thames pushes values to £1,500 per sq ft, while some newer schemes on the north bank approach £2,000 per sq ft or, along the popular South Bank, even more.
London’s high riverside premium is enhanced by its increasing appeal to international buyers and by shrewd developers tailoring new developments to a global market.
|Source: Savills||* Premium over nearby properties|
“For example [new developments] NEO Bankside, One Tower Bridge and One Blackfriars are redefining the offer in the South Bank,” says Samuel Blake of BNP Paribas Real Estate. These schemes, all built within the past five years, differ from older developments by having facilities like porterage, secure parking and high internal specifications as demanded by many wealthy overseas buyers. “The Thames is so enthralling that some buyers insist on being right on it, so riverside developments will have a larger target market that will pay a premium,” says Charles Leigh of estate agent CBRE Residential.
Although there are a few new schemes on the prime northern bank, notably the high-specification Riverside Walk development of 113 apartments near Vauxhall Bridge, the north is considered less desirable to some purchasers because of the noise and congestion caused by the Embankment, the major east-west road alongside the Thames.
London has high riverside values despite the virtual absence of private moorings in prime central areas. In outer London and rural stretches of the 215-mile Thames, as well as on other UK rivers, moorings and pontoons boost asking prices. “Moorings in central London aren’t hugely desirable and are not really a draw. The Thames is so tidal you only really benefit from a mooring in St Katharine Docks or Chelsea Harbour,” says Dominic Grace, Savills’ head of London residential development.
Rivalling London for premium are apartments overlooking the Seine in Paris. There are relatively few of these, however, because there are more public buildings on the Seine’s banks and only a handful of major new developments. In addition, many central Paris riverside areas are near busy roads created during the 1960s.
But while river views in “old Europe” are rare in its congested cities, there is more supply, and so lower premiums, in more modern places like Shanghai, Hong Kong and Sydney.
Shanghai has some of the largest stretches of riverside accommodation in the world along the Huangpu, attracting 20 per cent premiums. Properties on the older Puxi side have dramatic views of the ultra-modern Pudong development; buy in Pudong itself and you can see across to the older semi-colonial Bund. “Shanghai is undergoing large-scale waterside redevelopment. We’re likely to see more and more high-end developments taking advantage of riverfront views,” says James MacDonald of Savills’ China desk.
In Sydney, near the mouth of the Parramatta river, a modern three-bedroom apartment, on sale for £3.52m, overlooks the harbour and Sydney Opera House, and, as a result, rivals London at £2,000 per sq ft.
Water views, of course, have long been recognised as adding value to property. Research earlier this year by Knight Frank showed that in high-end leisure destinations, such as Italy’s Lake Como or the Caribbean, premiums can be 100 per cent.
However, Savills’ research has revealed that some popular urban centres, such as Moscow or New York, carry almost no riverfront premium. In prime parts of Moscow, homes overlooking the river Moskva enjoy premiums of only 13 per cent at best (and sometimes nothing at all) because of the noise from busy roads, while others are blighted by industrial development. “We have a luxury scheme on Savvinskaya embankment. People refuse to buy apartments looking at the river due to a huge development by a heating factory,” says Kristina Tomilina of estate agency IntermarkSavills.
Property overlooking New York’s Hudson also carries no premium, while a typical East River apartment sells for between £800 and £1,400 per sq ft according to Savills, scarcely half the price of a comparable apartment on Park or Fifth avenues. “The riverside was historically a luxury area and is rich in beautiful residences. The popularity of these areas faded in the 1920s and 1930s so these houses started to lose their appeal,” says Kirk Henckels of Stribling, a Savills associate in New York. Even modern properties offer relatively good value here: an apartment at Riverside Boulevard with four bedrooms is on sale at £3.02m, a rate of £1,085 per sq ft – or little more than half the value of a prime central London Thames-side equivalent.
The situation may change, however, with New York set to create small waterfront parks instead of roads along parts of the Hudson. And Paris this year replaced a stretch of road on the Seine’s Left Bank with a pedestrian boulevard. Rivers, it seems, are becoming desirable and attractive in their own right: and with that the tide of prices for properties with views is likely to rise as well.
Debate over global warming continues, but there is widespread agreement that major cities could face significant flooding.
Scenic Hudson, a conservation group, says 9,000 acres in the Hudson river valley could be underwater by 2100, if tidal levels increase, as forecast, by 6ft.
Ice2sea, a pan-European scientific forum, says central London could be prone to flooding if river levels rise one metre by 2100 and current defences, located downstream at Greenwich, are not bolstered.
Some 90 per cent of the Paris floodplain is urbanised with Île-de-France considered to be particularly vulnerable; the Louvre has moved some of its collection out of Paris, citing flood risks.
Western Sydney is “close to [being] the worst flood risk in Australia”, according to a spokesman for the New South Wales state emergency service. This may be exacerbated by some 200,000 homes predicted to be built in the city over the next 15 years, according to the University of Western Sydney.
Civic Exchange, a research body based at the UK’s Leeds university, says water levels in Hong Kong may rise 20cm by 2050, obliging residents to move to higher areas.
But most vulnerable may be Shanghai. Scientists, writing in the journal Natural Hazards, use 19 criteria to measure potential flood risk, including rising sea levels. Shanghai emerged as the most vulnerable of seven cities studied, partly due to its long coastline and concern over flood management procedures.
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