Construction of luxury new-build flats in central London dropped by a quarter last year, with apartments housed in developments dubbed “posh ghost towers” struggling to sell.
New-build starts in the capital in 2017 dropped by 25.4% compared to 2016, according to research by the property experts Lorema and the luxury estate agents London Central Portfolio (LCP).
Ghost towers: half of new-build luxury London flats fail to sell
The number of new-build starts fell in seven of the 11 inner London boroughs in the research, with a 62% decline Southwark (where there has been significant development around Elephant and Castle), and 42% falls in Wandsworth (which includes the developments along the Thames in Battersea and Nine Elms) and Westminster. In total, new-build starts in the inner boroughs fell by 3,810 units.
Naomi Heaton, the chief executive of LCP, said developers were scaling back their ambitions after realising there is “a huge oversupply of over- commoditised new-build boxes” in the capital.
“An awful lot of what was built was generic and overpriced and they struggled to sell it,” she said. “Historically a lot of properties would have been bought by overseas investors in the assumption that they could flip it and sell it on at a huge profit. But now there is huge nervousness following increases in stamp duty and the the impact of Brexit.”
The new figures come after the Guardian revealed that more than half of the 1,900 ultra-luxury £1m-plus apartments built in London last year failed to sell. Speaking in January, one property buying agent in the luxury sector, Henry Pryor, warned that the capital would be left with a legacy of “part-built posh ghost towers”. Builders have delayed work on an additional 13,800 units they had planned to build, according to the Lorema research.
Developers have slashed prices to shift stock but despite prices of luxury London properties falling by 14% from their 2014 peak, the number of £1m-plus sales has fallen by 24%, according to Coutts bank.
The number of 20-storey or higher blocks under construction in London has fallen by 32% from 46 in 2016 to 32 in 2017. The total number of flats in tower blocks has fallen from 8,200 to 5,500.