AS AN academic and a paid consultant, I spend much of my life judging the merits and failings of new residential developments. Only rarely do I find wholeheartedly in their favour. The dividing line between genuine research and sales-driven propaganda dressed up as research is thin, believe me. So before going any further, I should say that I have been paid by the developers at Paddington to tell the world that it is a great place to live and work, but that message is one to which I also totally subscribe when wearing my objective research hat.
The redevelopment of the canal basin and railway land around the station began in earnest in 2000, after 35 years or so of dereliction and decline. It’s hardly surprising that Paddington had gained a reputation for shabby buildings and seedy people, epitomised by telephone boxes stuffed with the cards of “working girls”. So despite being within walking distance of Mayfair, and between two of Central London’s highest-value residential locations, Little Venice and Hyde Park, the first battle that the development team had to win was credibility for Paddington as a respectable, safe, stylish and efficient place in which to live and work.
The catalyst for the change of image of Paddington from “no go” to “let’s do it” was, of course, the Heathrow Express. Not much of London’s transport infrastructure is world class, but this is. Critics argue that it gets you only to Paddington, not the West End or the City, and so major corporate occupiers like Marks & Spencer, Orange, Nissan, Visa and Prudential decided that, if the express didn’t come to them, they would go to it. The three largest office lettings in the West End since 2001 have all been at Paddington, where nearly one million sq ft of offices has been built, and that’s just the start.
I am convinced that Paddington’s current and future success as a residential location is underwritten by its role as a high-quality office location and international transport hub. This is not just for the obvious reasons of proximity to jobs and efficiency of travel, it’s also about the creation of a new urban quarter, founded on Westminster City Council’s inspired vision of a genuine mixed-use place, where residents, workers and visitors complement each other. This mix of uses, including in due course a totally rebuilt St Mary’s Hospital, all sharing a very high-quality “public realm”, is the key to residential value growth at Paddington.
Paddington has the potential for at least another five million sq ft of offices, sufficient to support 30,000 or more well-paid jobs and supporting retail and leisure. This potential scale of employment growth will take another ten to 15 years to happen, but it far outstrips anticipated volumes of new housing supply. Crossrail might have arrived by about 2015. Major corporate office occupiers are very demanding organisations. To continue to grow as an office centre of excellence, Paddington will have to offer not just state-of-the-art offices, but outstanding-quality public buildings that will last. The normal housebuilders’ ethos of love it while you’re selling it, and then leave it the next day, simply will not do.
The latest residential development to be launched will be Paddington Walk, a development by Chelsfield and European Land, comprising 232 flats, 79 of which will be “affordable”. Asking prices will average £550 per sq ft, which is attractive for two reasons. First, typical prices in comparable Westminster locations such as Victoria are 10 to 15 per cent higher, implying the potential for capital growth at Paddington above long-term market norms for Westminster.
Second, on the evidence of current rental levels at West End Quay, the first major residential scheme to be completed and occupied at Paddington, gross yields of 5.5 per cent to 6 per cent should be achievable, highly competitive in today’s market.
It all looks good, but there is no such thing as a risk-free investment. So, in the spirit of impartiality, and to assist prospective purchasers in their research, I suggest a few questions that you might ask the developers:
The sites on either side of Paddington Walk are earmarked for eventual redevelopment. How can I be certain I won’t end up being overlooked by a huge tower?
If they can provide satisfactory answers to these, then the case for investment at Paddington is very strong. Above all, it’s a place where long-term growth will be achieved through the continuing efforts of the development and investment teams over many years to come, not just relying on general market performance. Geoff Marsh is director of London Residential Research and a professor at the University of Westminster
Well developed
MORE than 1,100 new flats will be built on the land around Paddington basin over the next five years. About three quarters will be for private sale and, judging from the first developments, a substantial proportion will go to investors. Today’s buyer has a choice of three schemes:
Paddington Walk: Joint venture by Chelsfield and European Land, both companies with a strong commercial property pedigree, whose rare forays into the residential sector have produced high-class homes. Expect some clever design extras such as storage slots for umbrellas and discreet night-lights in the bathroom. Flats from £295,000, designed by Munkenbeck + Marshall, with interior-design packages from B&B Italia. The parking spaces are on offer from £25,000. 08709 907592 www.paddingtonwalk.com
West End Quay: Only a handful of flats remain out of 468 in a scheme that caught investors’ imaginations. They include six of the largest, priced from £870,000-£975,000 and the penthouse at £1.7 million. Hamptons has some smaller flats for resale (020-7723 0023). Two of the three blocks in the scheme are complete. One-bedroom flats are fetching rents of £300 a week. 020-7706 1222, www.west-end-quay.com
Paddington Central: The developer St George has sold all but the penthouses in this 154-flat scheme at the western end of Paddington basin. The flats, which come with roof-top hot tubs, cost £3.25 million. 020- 7706 7137 www.paddington-central.com
