London is facing a series of major challenges. Yet among the long to-do list sitting on the Mayor’s desk, two items are particularly pressing if the capital is to maintain its position as a leading world city – boosting housing numbers and improving the city’s ageing infrastructure. These two are inexorably linked as the city’s head count grows.

While the regeneration triggered by the Olympics has played a huge part in bringing investment into the area, there is potential for further growth with the arrival of the new Crossrail line from 2018, which will open up new parts of East London.

The Greater London Authority (GLA) expects London’s population to surpass its previous 1939 peak of 8.9 million within the next few months and continue climbing to 11.3 million by 2050. The further 31% increase is the equivalent of adding 2.5 Birminghams to the city’s population. This rate of growth will place additional pressure on London’s limited housing stock and its overburdened transport system.

In previous documents, we argued that we need to be building at least 50,000 new homes a year across all tenures and that 82% of these homes should cost no more than £700 psf with the bulk of the requirement for homes under £450 psf.

We must open up more affordable parts of London in the outer boroughs to deliver these aims. As a starting point, this requires improved journey times and new stations in neighbourhoods that have been so far overlooked for development.

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How much?

To deliver the transport infrastructure needed by 2050, London is facing a bill of at least £95 billion.

The cost of Crossrail 1 (running West to East) is expected to come in at £14.8 billion. Proposals for a second Crossrail running diagonally from South West to North East and cutting through Chelsea have been costed at £12 billion.

Smaller projects are no less crucial. There are proposals for a £3 billion extension of the Bakerloo line and a £1.7 billion extension of the DLR between Bank and Victoria. Extending the new Overground line to Barking Riverside should cost about £200 million. This would add up to £32 billion.

However, figures by Arup for the GLA (July 2014), list a further £63 billion for road improvements including a Hammersmith “fly-under”, Silvertown tunnel, Gallions Reach bridge and a portion of the cost for HS2. It also mentions the possibility of a third Crossrail line.

Northern Line

The announcement of Government support for the extension of the Northern Line into Battersea via Nine Elms in 2012, provided a significant boost to development in that area. Construction is expected to start next spring and complete in 2020, subject to permission.

This new neighbourhood has already secured its place on the prime property map not least because of Rafael Viñoly’s vision for the power station and the US government’s decision to relocate their embassy to the area.

Away from the limelight, upgrades to the rest of the line are to deliver 20% more capacity, allowing an additional 11,000 passengers at peak hours. Work is underway and expected to be complete later in 2014.

Value uplift potential

However, opening new stations must go hand in hand with place improvement if we are to see the full potential value uplift come to fruition.

Our analysis of price changes along the Crossrail line shows that property prices in the areas immediately around the four stations in the “centre west” part of the line which include Hanwell, West Ealing, Ealing Broadway and Acton, have outperformed the rest of the borough by almost 23% over the last five years.

This outperformance is not a clear trend throughout the line. Growth in property values in the areas immediately surrounding the cluster of stations in the “north east” tranche of the line continue to lag behind the borough average.

However, we calculated that it is around these stations (Manor Park, Ilford, Seven Kings, Goodmayes and Chadwell Heath) that the greatest value uplift could be delivered within London tranche of Crossrail, provided the station opening is combined with place improvement.

Crossrail has a significant part to play in boosting housing numbers. Almost 61,000 new homes (22% affordable) are set to emerge along the new Crossrail line which is due to open from 2018.

However, we believe that with bolder planning, particularly building at greater densities around transport nodes, there is potential for many more.

BUILDING ABOVE THE STATION

One of the key ways of delivering higher densities is by building over and around transport nodes. Areas around stations deliver opportunities not only for retail and leisure development but increasingly housing.

Crossrail is the first scheme of its kind to be part funded by the revenue generated from above station property development at its own sites. The contribution to Crossrail’s core funding from the sale of development opportunities is £545 million. This must be raised from 12 key over-station developments spanning 3 million square feet of residential, retail and office space.

There are currently eight sites where permission has been granted including Woolwich station (where Greenwich council recently gave approval to plans for 400 homes), and Paddington where permission has been obtained for a 305,000 sq. ft office building.

Taken from
Spotlight: London Infrastructure - Connecting Opportunities