In the heady months after London won the race to host the 2012 Olympic Games in the summer of 2005, it was widely supposed that Stratford would swiftly become a property powerhouse. House prices were flying, and it was confidently forecast that this unloved, unvisited suburb would flourish as buyers and investors rushed to claim a piece of history.
Eight years on, and the much vaunted “Olympic bounce” has failed to materialise. Prices across the east London borough of Newham are stagnating 11.6 per cent below their 2007 peak, and trailing the rest of London.
Harry Handelsman’s high-end development – the Manhattan Loft Gardens, which overlooks the Olympic Stadium – is not launching in the perfect climate. The building has been designed by architects SOM (currently engaged in redeveloping Ground Zero) and is a £200m, 42-storey statement in glass and terracotta, incorporating 248 apartments and a series of communal “sky gardens” sheltered beneath cantilevered sections of the building.
When it completes in 2016, it will be the tallest and most expensive building in Stratford, with prices double the local going rate. Handelsman has a track record of breaking price ceilings with schemes such as the St Pancras Renaissance hotel and apartments in King’s Cross, and he feels he can do the same in Stratford – despite early reservations when he bought the site in 2009.
“At the time I had very little faith in the Olympics,” he says. “It reminded me of the Millennium Dome … but coming here I was impressed by the incredible infrastructure.”
Stratford certainly has good transport links. Commuters can be in Canary Wharf in 15 minutes and in 2018 the area will be given a direct link to Heathrow via Crossrail.
Handelsman, chief executive of the Manhattan Loft Corporation, was also taken by the Westfield Stratford City development, claimed to be the largest urban shopping mall in Europe, which opened in 2011. His plan was, quite simply, to go big with a premium high-rise, hoping the current enthusiasm for skyscraper living – most notably The Shard at London Bridge – would draw buyers in.
Entry price at the Loft Gardens will be around £360,000 for a 440sq ft studio (£818 per sq ft). A one-bedroom flat will cost from £565,000 for 618 sq ft, and a two-bedroom unit will cost from £695,000 for 810 sq ft.
Although the apartments are not yet officially for sale, a “soft launch” at the end of 2012 resulted in just over 20 one- and two-bedroom flats being sold to a mixture of UK and overseas buyers.
Handelsman is just one of many developers pouring cash into Stratford. Taylor Wimpey and L&Q are building 850 homes at Chobham Manor, where the games’ basketball tournament was held. They go on sale, off-plan, in the autumn. Work on The International Quarter, a £2bn mixed scheme by Lend Lease and London and Continental Railways featuring 350 homes, is due to start in April.
LandProp, Ikea’s property arm, is scheduled to break ground on Strand East, featuring 1,200 new homes late next year.
Meanwhile, the former athletes’ village, rechristened East Village, is being converted into some 2,800 apartments by QDD, a joint venture between Qatari Diar and Delancey. With all this activity on the ground, the big question is: who will want to buy into Stratford? Because it is, without doubt, an odd sort of place.
The games were fabulous but the Olympic park and athletes’ village are, presently, devoid of residents. Westfield is huge but soulless, and the concrete concourses around the station are hard to navigate. But Clive Dutton, regeneration chief at Newham Council, says change is coming.
“There is a whole critical mass of development underway or committed,” he says. “We are creating a city within a capital city. The scale of what is happening is extraordinary and the Olympics has been like magic dust, providing that uniqueness and authenticity to the area.”
A major section of the park will open this summer, and the University of East London and Birkbeck University are opening a new Stratford campus (there are hopes that University College London will join them). Meanwhile, West Ham football club is poised to take over the Olympic stadium, and Dutton believes a community will begin to flourish.
Independent experts also rate Stratford’s chances. Yolande Barnes, director of residential research at Savills, says: “I am pretty optimistic. There are extraordinarily good transport links there and clearly the housing offer is changing substantially. It is also one of the few places that indigenous Londoners can still afford.”
A new report by property consultant CBRE points out that the redevelopment of the Press and Broadcast Centre by Delancey and Infinity SDC, into a £350m centre for technology, design and research will bring up to 6,500 skilled full-time jobs to the area.
However Mark Farmer, partner and head of residential at EC Harris, harbours concerns. “The reality is that London is being driven by foreign investors and the clamour hasn’t quite reached the east of London,” he says. “Stratford will need a leap of faith from investors.”
Despite Farmer’s caution, there is some evidence that Stratford is catching on. In November, the 25-storey Stratford Plaza by Telford Homes launched. By early December, its 198 units had fully sold out off-plan. Around three-quarters of the flats sold to overseas buyers, and the total revenue for the development topped £60m.
According to Newham Council, there are some 20,000 new homes in the Stratford pipeline but two of the biggest 2013 launches will adopt a significant new model. The Stratford Halo, a complex of six new buildings with a central tower of 43 storeys, is due to complete in late summer.
Around 294 of its 706 apartments are earmarked as affordable for low-income Londoners. The remainder will be rented privately by developer Genesis. East Village will also be a mix of social and private housing and, again, the strategy is to rent rather than sell.
Charles Holland, a director in the planning, development and regeneration division at GVA, an international property adviser, believes this strategy is thanks to the well-documented difficulties young buyers are having in finding mortgage finance.
“The rental market is evolving,” says. Holland. “As people get older and more affluent they demand higher standards. Stratford ticks a lot of boxes in terms of transport and infrastructure and Olympic prestige.
“At East Village they are creating a premium environment, with facilities like concierge services and private gardens and are looking at five-year tenancies. This is viewed as a gap in the London market.”
Matthew Leitch, an associate director at Savills, is fielding considerable buyer interest in Stratford, mainly from first-time buyers and small-time investors. Consumer interest plus slow supply should, Leitch feels, bring capital growth over the next five years. “I have high hopes,” he says. “It is exciting compared to the likes of Canary Wharf and the City because in a sense they have had their day.”
Barnes agrees, but thinks it unlikely that the name Stratford will one day be whispered in the same breath as Knightsbridge or Belgravia. “I think it will mature as a location but not in the way that parts of southwest and west London have,” she says. “The stock is different; flats rather than houses. It is perfectly possible that there will be premium buildings but it is unlikely ever to be called prime central London.”
● There were 2,623 recorded crimes in Newham in January 2013, according to the Metropolitan Police
● The average house price in Stratford is £234,222, almost 12 per cent below values at the peak of the market in 2007 (source: Savills)
● Distance from central London: six miles. Some 195 trains per hour serve Stratford
● The Queen Elizabeth Olympic Park will open in stages from July 2013 to spring 2014. The aquatics centre and velopark will be opened for public use
● Westfield Stratford City has 250 shops, 70 places to eat, a 17-screen cinema and a casino
What you can buy for …
£1m A detached, three-bedroom former lock-keeper’s cottage a mile from the Olympic park
£650,000 A two-bedroom apartment in Manhattan Loft Gardens, with use of adjacent hotel facilities
£425,000 A two-bedroom flat in a new-build development close to Stratford High Street
Other former Olympic villages: one failure, two successes
1. Athens (2004): the nightmare scenario
Greece’s Olympic village was built 12 miles northwest of the capital and the athletes’ accommodation was converted into 10,000 low-cost homes after the games. Would-be homeowners had to enter a lottery to win the right to live there and initially the development was wildly oversubscribed. However, those who did move now find themselves in limbo. The economic situation in Greece means there is no funding left over for further developments in the former Olympic village. Maintenance of the site is non-existent, while much of the promised infrastructure simply never materialised. The Olympic venues have been abandoned and selling a property here is out of the question.
2. Sydney (2000): the suburban success story
The 2000 games set a new standard for razzle-dazzle, but the Olympic legacy has been more of a slow-burn. However, over 13 years, the Olympic park and village have emerged as a successful mixed neighbourhood, incorporating sports facilities and parks, hotels, offices and homes. The area is 16km from the Central Business District, with good transport links, and has become a destination in its own right.
The Telstra Stadium, now renamed the ANZ Stadium, hosts Australian football and cricket, while the Olympic park is the scene of regular festivals and concerts.
The nearby athletes’ village, renamed Newington, was converted into some 900 townhouses and 700 apartments, while another 300 modular homes were built after the games. Most property is in the lower- to mid-price range, and has found strong demand among young workers and families priced out of established city suburbs.
According to research by Savills, the current median house price in the suburb is Aus$770,000 (£534,000), up two per cent over the past year, compared with 0.9 per cent across the city, and 20.7 per cent over the past five years.
3. Barcelona (1992): the shining example
Barcelona’s Olympic village was sited in the city’s derelict dockyards, an area now known as Port Olimpic, and it has been transformed with a 740-berth marina, a beach and two landmark skyscrapers.
The athletes’ village was converted into some 2,000 flats, a hotel and office space, and the waterside location has attracted upmarket restaurants, bars and nightclubs. The area is now one of the most fashionable in the city. A study completed a decade after the games by the Centre d’Estudis Olimpics found seafront apartments had increased in price fivefold since they were first put on sale – although Barcelona’s property market has since been battered by the recession, with average prices down around a quarter since the start of 2007, according to a study by Idealista.