As a leading global financial centre, London has historically housed the headquarters of many of its financial institutions in the City. However, in the 1980s a modern high rise business district in east London started to appear. Called Canary Wharf, it tempted many of these companies to relocate away from the City centre to some of the UK’s newest and tallest buildings in the east.

A history lesson

From the 19th century, the east of City was home to the world’s busiest port. Its fortunes changed dramatically in World War II when the Blitz, from September 1940 to May 1941, saw mass bombings destroy one million homes and kill 40,000 civilians throughout London, many of these in and around London ports.

After the war, the area became run down, and by the 1970s new technology and increasing competition made many of the warehouses and industrial buildings in Canary Wharf surplus to requirements. The area became vacant and buildings fell into decay.

To overcome this, a new initiative was founded by the British government in 1981. The London Docklands Development Corporation set out to find a new purpose for the 5,190 acres of disused docks.

In Wapping, the derelict warehouses began to be redeveloped to create luxury flats for residential use. Yet in Canary Wharf it took until 1988 for construction to begin. The first tower was completed in 1991 and for a short time One Canada Square was the tallest building in the UK, standing at 235 metres.

However, more than this impressive tower was needed to attract British companies to relocate to what was still perceived as a remote site. With poor transport links and no leisure amenities, the 1992 recession and subsequent property collapse made many think that the redevelopment project had been a failure.

All was not lost

In fact, the 1992 recession was not the fatal blow for the area that many had thought. The end of the 1990s saw the property market spring back into life and the Docklands Development project was revived. The new Jubilee Line extension was critical to the evolution of the area, making it accessible from central London, and attracting financial institutions which would not previously have considered relocating.

The recent Census highlights how far gentrification of the area has come, indicating a quarter of employees in Canary Wharf are employed in higher managerial, administrative and professional occupations, compared to 14% across all of London.

As Canary Wharf evolved, it was only natural it would become an attractive place to live. The number of privately owned residential dwellings in Tower Hamlets has risen from just under 2,500 in 1981 to nearly 27,000 in 2011, an increase of 1004%.

Over the same period, the number of private rented households has increased by 645% to 34,000.

Residential market

Geographically, the prime east of City market is made up of two districts, Canary Wharf, at the former West India Docks on the Isle of Dogs, and the Docklands, comprising Wapping and St Katharine Dock.

Canary Wharf and Wapping have very different styles of housing stock – new build towers dominate Canary Wharf while converted warehouses characterise Wapping. This period conversion and redevelopment have allowed these once thriving industrial locations to embrace their architectural roots and take advantage of the proximity of the river to develop into new prime areas.

Property prices vary across the region. In the second half of 2013, the average value of all property sold in the ward of St Katharine and Wapping was £627,000. This is 62% more than Canary Wharf and the Isle of Dogs where the average sale price was £414,000.

Across the entire east of City market, there is a significant premium for a residence on the waterfront. Flats within 100 metres of the river command an average premium of 29.1% when compared to the surrounding area, up to 1km away.

Emerging area

Over the past decade, Shoreditch has become a thriving area of London. Considerable gentrification has meant the average sale price has increased from £229,000 in 2003 to £485,874 in 2013.

In turn, new and innovative businesses have been attracted to the area and located here in the East London Tech City or Silicon Roundabout. Shoreditch has now become a significant and world renowned tech start up location.

While this fashionable area may sound a million miles away from the traditional financial institutions that dominate Canary Wharf, Piren, a security technology company has just secured a five year lease in the heart of Canary Wharf.

As such, the gap between the two locations seems to be narrowing as the area opens up to more diverse demand, a trend we have already begun to see in our buyer and tenant profiles.

Taken from
Spotlight: East of City Residential Market - Spring 2014