In London, Luxury Rises in the East

East London’s Shoreditch section may seem a surprising home for chef Nobu Matsuhisa’s first European hotel, due to open next year, for those used to eating black cod at his existing locations in Mayfair and off Park Lane. The once gritty district, overtaken by artists and hipsters in the 1990s, is at the heart of east London’s rapid “luxification.” Here, shiny new apartment blocks pitched at buyers traditionally attracted to areas such as Kensington or Fitzrovia are popping up as quickly as experimental cocktail bars, designer fashion boutiques and Michelin-starred restaurants. Forecasts by property agent Knight Frank predict that new builds in the east of the capital will significantly outperform the wider London market by 2018, with prices rising by as much as 71% over the next three years. Its 2015 London Hotspots report, published in April, is dominated by districts that until recently were unchartered territory for international buyers: Dalston and Hackney, Stratford and the Olympic Park, Canary Wharf Estate, Royal Docks, Greenwich, Woolwich and, most significantly, the City Fringe, within walking distance of the financial district, which includes Farringdon, Shoreditch and Whitechapel. In Farringdon, whose new Crossrail train station is expected to attract 3 million passengers every month from 2018, new build prices are forecast to rise from current average values of between £1,100 and £1,300 a square foot, to £1,600 a square foot. Whitechapel will have a Crossrail station linking to Heathrow airport in 39 minutes and the office blocks of Canary Wharf in three. The improved infrastructure and resulting master plan development, including seven new public squares and open spaces, are predicted to push prices up from £900 a square foot to £1,500 a square foot by 2018. “Five or ten years ago you wouldn’t buy in a place like Shoreditch unless you were a young Web designer, a bit cool and groovy,” says Raul Cimesa, partner in Knight Frank’s City New Homes team. His office opened three years ago to cater to new demand for high-end residential in the east, including from foreign buyers. “What lacked in this part of town was a good quality luxurious product. You tended to get refurbished warehouses, but not much else. Suddenly with new builds such as the Heron Tower, one of the first residential blocks in the City, you have an influx of really interesting modern architecture, interiors and the amenities--pools, spas, gyms and 24 hour concierge--that you would expect from a development in the West End.” Last year there was a 15% rise in the number of private units under construction across London compared with 2013, an overall 43% increase on the previous pre-Lehman 2007 peak. Just under 40% of these are clustered in east London, as are over a third of the capital's 192 buildings of 20 or more stories either in application, or with planning permission. Take City Road Corridor, or “skyscraper corridor” as Cimesa refers to it. It runs off “silicon roundabout,” so-called for its concentration technology businesses, the third most dense in the world after San Franscico and New York. Prices in this area, where most of the skyscrapers were non-existent just three years ago, have already exceeded Knight Frank’s predictions in its 2011 Hot Spots report of £1,000 a square foot by 2016, with £1,300 now achievable for the best prime new-build plan, says Jo Cosham, of Knight Frank’s residential research team. These include the 31-story Canaletto tower, designed by Dutch architect Ben Van Berkel, whose 190 apartments start from £890,000, and the 36-story Lexicon, with 146 apartments priced from £715,000. Penthouse 127, on top of one of the two Bezier towers, is the most expensive apartment in the area, which comes with a 1,372 square foot wraparound balcony, outdoor kitchen and hot tub, for £4.75 million. Even with such hefty price tags these homes represent fantastic value for money, according to Matt Cobb, of east London agent Hatton Real Estate. Prime central markets such as Mayfair fetch an average of £5,500 a square foot for a similar quality of build.