FOCUS ON: COVENTRY RESIDENTIAL RESEARCH 2018 - AFFORDABILITY DEVELOPMENT PIPELINE - Knight Frank
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RESIDENTIAL RESEARCH FOCUS ON: COVENTRY 2018 AFFORDABILITY DEVELOPMENT PIPELINE INFRASTRUCTURE UPGRADES
FOCUS ON: COVENTRY
Many of the UK’s regional employment hubs are
outperforming the wider market in terms of house price
growth, supported by a combination of affordability, robust
levels of employment and infrastructure improvements.
FIGURE 1
In Coventry, the price of homes has decade, according to Experian. Coventry’s
Coventry outperforms risen 26% since the beginning of 2015, gross value added (GVA), a measure of
House price growth, prices indexed 100 = outpacing the growth seen in neighbouring the value of goods and services produced
Jan 2015 Birmingham, as well as in London and in an area, is set to climb 17% by 2028,
the wider UK market (Fig 1). Gains have outperforming all other local authorities in
been underpinned by a shortage of homes
130 Coventry London the region, other than Birmingham, which is
United Kingdom Birmingham in some locations, the city’s popularity
set to see its GVA climb 18%.
125 with employers from the automotive
and pharmaceutical industries, and a Analysis of resales during the year to
120 growing local economy that has been the February 2018 indicates property prices
driving force behind plans for large-scale across Coventry average £206 per square
115 redevelopment in the city centre. foot. At the top end of the market, looking
Growth is forecast to continue, and only at the top 10% of sales by value, an
110
Coventry’s economy is set to outperform average price of £301 per square foot was
105 the wider West Midlands during the next achieved during the year.
100 FIGURE 2
Residential Pipeline Ten largest residential and student accommodation projects in progress
95
2015 2016 2017
Source: Knight Frank Research, Land Registry
Deedmore Road
Weavers Wharf 52 units
89 units
Spirit Quarters
372 units
The Brambles
Bishop Gate 176 units
1125 Beds Fairfax Street
The Co-operative 995 beds
63 units Godiva Place
801 beds
St.Patricks Road Gulson Road**
& Friars Road 462 beds
Papenham Green 583 beds
Paradise Street
83 units 922 beds
Queen Margarets Road**
72 units
Warwick Student Village
452 beds
Whitefriars Lane**
Deram Parke
The Oaks 778 beds
250 units
Elysian Gardens 382 beds Chace Avenue
35 units 61 units
Cryfield Village
800 beds
Student Accomodation
Residential Housing* *includes phases in larger projects
**Construction scheduled to begin second half of 2018
Source: Knight Frank Research, Glenigan
2 Please refer to the important notice at the end of this report
FOCUS ON: COVENTRY RESIDENTIAL RESEARCH
Pipeline and development upgrades are taking place in tandem with Large local employers include Jaguar
a wider regeneration at Friargate, a 37-acre Land Rover, Aston Martin, pharmaceutical
Housing delivery data suggests that there
site linking the station to the city’s retail core. company Admenta UK, Coventry City
is an imbalance between the supply of new
Here, 25 buildings are planned comprising Council, and the universities of Coventry
homes and demand for housing in Coventry.
3.2 million square feet of mixed-use space. and Warwick. Jaguar Land Rover is in
Some 1,129 net additional dwellings were
the process of recruiting 5,000 engineers
delivered in 2016-2017, down from 1,406 Elsewhere in the city centre, a £200 million and technical staff to its UK workforce by
the previous year, according to data from project to redevelop the shopping district June 2018.
MHCLG. Coventry needs 2,329 additional near Coventry Market has been proposed.
dwellings every year until 2026 in order Coventry City Council has secured a £100 Coventry may soon experience a
to meet demand and clear the backlog, million grant from the West Midlands boost in tourism and investment after
according to official estimates (Fig 4). Combined Authority for the project, which being named UK City of Culture for 2021,
could be anchored by a major department a competition run every four years by the
Residential construction in Coventry is Department of Digital, Culture, Media and
store. The plans include up to 50 new retail
currently largely being carried out by Sport. Coventry beat competition from
units, a multi-storey car park, a cinema,
housebuilders on the outskirts of the Paisley, Stoke, Sunderland and Swansea.
restaurants and a hotel.
city centre and towards the metropolitan
boundary (Fig 2). Data from construction The city is also set to benefit from the
intelligence provider Glenigan indicates 1,156 High Speed 2 rail line. A new Birmingham FIGURE 3
private units were under construction as of Interchange Station, less than 10 miles Prime asking rents for a 2 bed flat
April 2018, largely among three schemes from the centre of Coventry, will provide Based on average of top ten percent of the market
comprising almost 800 units. These are all passengers with access to the NEC and
located outside of the city centre. Birmingham Airport from 2026. Once
open, the journey time from Birmingham
£1,000
Rental market Interchange to London will be 38 minutes. £950
Prime asking rents for a 2-bed flat averaged Funding has been secured for the research
£1,000 per calendar month in Q4 2017, up and development of a Very Light Rail project, £825
from £700 during Q4 2014, according data or tram system that could link Coventry to
from Rightmove (Fig 3). However, there are the proposed HS2 interchange. If it receives £700
pockets where rental growth has been even full funding and approval, the route could be
higher. In a cluster that includes several operational by 2023, though small sections
purpose-built student accommodation of the route could be in place by 2021.
blocks to the east of the city centre, close
to Coventry University, prime rents average Employment and Earnings
£1,400 per calendar month.
Average gross weekly earnings in Coventry
The rental market is underpinned by demand stand at £562, according to the ONS.
from students studying at two of the UK’s That’s the third highest of any local authority
top-rated universities. Coventry University in the West Midlands, after Derby and
was named 12th best university in the Q4 2014 Q4 2015 Q4 2016 Q4 2017
Solihull. For the highest earners, weekly
country in the Guardian University Guide pay averages £1,080. Source: Rightmove
2018, with nearby Warwick University taking
8th spot.
FIGURE 4
Regeneration and Housing supply vs housing need
Infrastructure
Coventry is well serviced by air, road and 2,329
ANNUAL
rail. Birmingham International Airport is a HOUSING NEED
15 minute drive from the city centre. 1,500 2016-2026
Coventry Station has direct services to
Birmingham New Street Station, with an 1,200
average journey time of 23 minutes. There
Net additional dwellings
are also direct trains to London Euston,
900
with a typical journey time of one hour.
Rail services are set to be enhanced further.
600
Coventry Station is to be overhauled, with
the addition of a 644-space multi-storey 794 759 912 979 1,089 1,109 1,406 1,129
car park and a new platform intended to 300
increase capacity and accessibility. Works 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
are due to complete by 2020. The station Source: Knight Frank Research, MHCLG
3
KNIGHT FRANK
INTELLIGENCE
For the latest news, views and analysis
on the world of prime property, visit
KnightFrank.com/blog
FIGURE 5
Achieved resale prices in the year to January 2018 FOR ANY RESEARCH ENQUIRIES:
Patrick Gower
Associate
+44 20 3640 7015
patrick.gower@knightfrank.com
FOR RESIDENTIAL DEVELOPMENT
ENQUIRIES:
Will Jordan
Partner
+44 121 233 6413
will.jordan@knightfrank.com
Jonathan Wish
Associate
+44 178 920 6963
jonathan.wish@knightfrank.com
Up to £150,000
£150,000 - £250,000
£250,000 - £350,000
£350,000 - £500,000
£500,000+
Source: Land Registry Contains OS data © Crown Copyright and database right 2017
Front cover image: Shutterstock
Knight Frank Research provides strategic
advice, consultancy services and forecasting
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RESIDENTIAL DEVELOPMENT UK RESIDENTIAL THE
RESIDENTIAL RESEARCH
LAND INDEX MARKET FORECAST
ENGLISH GREENFIELD LAND
EDGES UP IN Q1 2018
Headlines Dec 2017
UK house price growth has been
UK HOUSE PRICE FORECAST REPORT LONDON All our clients recognise the need for expert
DEVELOPMENT
UK house price growth has moderated from recent peaks, although
The value of English greenfield land climbed 0.9% between January and slowing since the summer of 2014, markets remain highly localised.
although the annual change
March, while land values in prime central London remained unchanged.
remains positive
The average value of urban brownfield land edged up by 0.4%. The momentum in house price growth is observed in the prime housing markets in
HOTSPOTS independent advice customised to their
slowing in many parts of the country, and London and beyond are set to continue,
Key Facts Q1 2018 Average greenfield land values in England
climbed 0.9% during Q1 2018, aided by
Those fundamentals that underpinned
demand in Q4 remain unchanged. However,
Price growth across the UK is expected
to be 1.0% in 2018, reaching 14.2%
we expect price rises to remain muted
overall next year amid increased economic
and we explore this more fully in our blog.
demand for oven-ready sites with access The UK may now be entering a period of
English greenfield land values climbed long-term affordability pressures are limiting
cumulatively between 2018 and 2022 and political uncertainty in the run-up to interest rate rises, but even so, we expect
0.9% during Q1 2018, taking the to infrastructure. This took the annual what customers can pay for homes, which is
Brexit and amid more muted forecasts for rates to be low compared to long-term
change to 2.2%, down from 2.6% in the in turn limiting what developers are willing to
annual change to 2.2%
year to Q4 2017. pay for land. In London, prices are forecast to fall by
wage growth. The market is localised and
we see slightly stronger growth in the
norms by the end of the forecast period.
While development levels are rising across
RESIDENTIAL DEVELOPMENT
Urban brownfield land values rose
Uncertainty over the future of Britain’s Development land prices in prime central 0.5% in 2018, but cumulative price
Midlands, East of England and the North the country, the shortage of new homes is OPPORTUNITY AREAS 2018
specific needs.
relationship with the European Union is London remained unchanged during Q1 growth over the next five years is
0.4%, taking the annual change likely to weigh on future growth in values,
West, a continuation of the trend that has unlikely to be fully reversed in the coming
2018, taking the annual change to -2.1%. positive at 13.1%
to 6.4% with house builders taking an increasingly emerged this year. years, and that will underpin pricing.
selective approach when bidding for land as Though trading volumes remain lower than
in previous years, a number of large sites
Once the Brexit deal is completed, we On the other hand, factors such as
they adjust to perceived risk in the market.
Land values in prime central London have been put on the market following the forecast rising momentum across the deepening affordability pressures and
remained unchanged, taking the The Help to Buy Equity Loan scheme has Christmas lull, which should provide a strong market, with price growth reflecting this in property taxes, will continue to weigh
annual decline to 2.1% continued to contribute to sales rates, indication of the strength of the market, and many locations. The variations currently on pricing.
though developers are now embarking on whether larger developers are re-committing
projects due to complete after 2021 – when to Zones 1&2.
the scheme is currently stated to end. 2017-2022 Forecasts, December 2017
Uncertainty over the future of the policy is The GLA affordable housing policy –
likely to be reflected on English greenfield allowing developers to fast-track through
2017 2018 2019 2020 2021 2022 2018 - 2022
land values in the coming quarters, the process if they hit a threshold of 35%
Mainstream residential sales markets
coupled with house builders factoring Affordable Housing, or 50% on public
into their margins the unclear economic land – is being digested by the market UK 1.5% 1.0% 2.0% 3.0% 3.5% 4.0% 14.2%
picture ahead. and should provide a much need boost London -1.0% -0.5% 2.5% 3.0% 3.5% 4.0% 13.1%
to Affordable Housing in the capital. The
Growth in urban brownfield land values North East 2.0% 2.0% 2.0% 4.0% 3.0% 3.0% 14.8%
spread of prices paid for land sold with
moderated during the quarter, climbing planning, compared to land sold without, North West 2.0% 1.0% 2.0% 4.0% 4.0% 4.5% 16.4%
0.4%. This follows a strong final quarter of
has widened as developers weigh up risk Yorks & Humber 0.5% 1.0% 2.0% 3.0% 3.0% 3.0% 12.6%
2017, when values rose 4.9%, amid positive
in a new planning environment.
sentiment and robust employment growth East Midlands 4.5% 2.0% 2.5% 2.5% 3.0% 3.5% 14.2%
in the UK’s major cities – particularly in We anticipate prime central London West Midlands 4.5% 2.0% 2.0% 3.0% 3.0% 4.0% 14.8%
Birmingham. Values have climbed 6.4% development land values will remain stable
during the past twelve months. moving forward. Methodology Statement: East 1.0% 2.0% 3.0% 3.0% 4.0% 3.0% 15.9%
House price forecasts are based upon time series
regression analysis of relevant statistically significant South East 3.0% 0.0% 2.0% 3.0% 4.0% 4.5% 14.2%
macro-economic variables adjusted in-house to
FIGURE 1 FIGURE 2 encompass externalities such as likely risk factors.
South West 4.0% 1.0% 2.0% 2.5% 3.5% 4.5% 14.2%
Residential development land prices Annual change in average land values The forecast uses the Nationwide House Price Index
Wales 1.5% 1.5% 1.5% 2.5% 3.0% 4.0% 13.1%
as a base. Our forecasts assume a Brexit deal, but
with a two year transitional period.
Prime Central London Urban Brownfield Scotland 1.5% 1.0% 1.0% 2.5% 3.5% 3.5% 12.0%
English Greenfield Prime Central London Urban Brownfield
150
English Greenfield
15.0% Prime residential sales markets
12.5% Prime central London east 0.0% 0.5% 1.5% 2.5% 3.0% 5.0% 13.1%
140
10.0%
Prime central London west 0.0% 0.5% 1.5% 3.5% 3.0% 3.5% 12.6%
130
7.5%
“The market is localised and Prime outer London -1.0% 0.0% 1.0% 3.0% 3.5% 4.5% 12.5%
5.0%
we see slightly stronger
Index
2.5%
120 Prime England & Wales 0.7% 1.5% 2.0% 2.0% 2.0% 2.0% 9.9%
0.0% growth in the Midlands,
110
-2.5% East of England and the Residential rental markets
PATRICK GOWER -5.0%
North West, a continuation UK 1.2% 2.5% 2.5% 2.5% 3.0% 3.0% 14.0%
Associate, Residential Research -7.5%
100
-10.0% of the trend that has London 0.7% 3.0% 2.5% 3.0% 3.0% 3.0% 15.0%
Follow Patrick at @patrickgower
90 -12.5% emerged this year.” Prime central London -1.5% 0.5% 1.5% 2.5% 3.0% 3.0% 11.0%
Jul-16
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For the latest news, views and analysis For the latest news, views and analysis Prime outer London -3.5% -1.0% 1.0% 2.0% 2.5% 3.0% 8.0%
on the world of prime property, visit our on the world of prime property, visit
blog or follow @KFIntelligence Source: Knight Frank Research Source: Knight Frank Research our blog or @kfintelligence
Source: Knight Frank Research
NB. Price forecasts are for existing homes. Property values in the new-build market may perform differently.
AREAS TO WATCH PRICE FORECASTS MARKET UPDATE
1
Development Land UK Housing Market The Birmingham London Development
Index - Q1 2018 Forecast - Dec 2017 Report 2017 Hotspots 2018
Important Notice
UK STUDENT RESIDENTIAL RESEARCH
RESIDENTIAL RESEARCH
© Knight Frank LLP 2018 – This report is published
HOUSING UPDATE
for general information only and not to be relied upon in
MULTIHOUSING
PRS RESEARCH
2017 SEARCH FOR QUALITY UNDERPINS
any way. Although high standards have been used in
CROSSRAIL
APPLICATION NUMBERS
Demand for UK Higher Education remains strong despite uncertainty
over EU funding and the inclusion of international students in
government migration targets. ANALYSING PROPERTY MARKET PERFORMANCE RETIREMENT the preparation of the information, analysis, views and
JAMES PULLAN
Head of Student Property
Student property investment totalled
£4bn in 2017, up 25% on the previous
with Europe contributed to a decline in
applications from within the EU, although
ALONG THE ELIZABETH LINE 2017
HOUSING
projections presented in this report, no responsibility or
year. This strong performance looks set the numbers coming to UK universities
“Demand for Higher to continue in 2018, despite the current
Education in the uncertainty surrounding Brexit. The
remained high due to above-average
acceptance rates. MARKET UPDATE
UK remains strong. enduring strength and quality of the
UK’s Higher Education sector remains In the 2018/19 cycle, applications from Q1 2018
Universities that are the key driver. within the EU were 3.4% higher year-
perceived to offer on-year, with an 11.1% increase in
liability whatsoever can be accepted by Knight Frank LLP
January deadline data from UCAS
applications from non-EU applicants.
the highest quality reinforces this view. Despite a slight drop
Overall, applications from outside of the
courses in locations in total applicant numbers, down 0.9%
UK increased by 7.6%, highlighting the
compared with 2017/18, which reflects
offering the best overall enduring popularity of the UK as a place
the smaller cohort of those turning 18
student experience will over the last year, a record 36% of A-level to study and live.
for any loss or damage resultant from any use of, reliance
increasingly attract higher students across the UK applied for higher The number of students accepting places
levels of students.” education courses in 2018. at UK institutions has increased over
Applications from international students the long-term. In 2017/18, over 200,000
also increased, bucking the downward 18-year olds and 70,000 students from
trend seen in 2017 when uncertainty outside the UK accepted places, the
Key facts surrounding the UK’s future relationship highest on record.
Total applicant numbers for UK
higher education courses for the
2018/19 cycle fell by 0.9% year-on-
year, according to UCAS data
FIGURE 1
University applicants by domicile
Indexed 100 = 2009/10, full year (data for 2018
at January deadline)
FIGURE 2
Applications by university tariff band
Indexed 100 = 2009/10, full year (data for 2018
at January deadline)
on or reference to the contents of this document. As a
general report, this material does not necessarily represent
UK EU (excluding UK) Lower tariff Medium tariff
However, a record 36% of A-level Non-EU Total Higher tariff All
students across the UK applied for 220 130
courses in 2018
200
120
the view of Knight Frank LLP in relation to particular
Applications from within the EU
180
were 3.4% higher year-on-year, with
an 11.1% increase in applications 110
160
from non-EU applicants
140
The number of 18-year olds in the 100
properties or projects. Reproduction of this report in whole
UK is projected to increase by 120
103,000 between 2021 and 2025,
90
underpinning future demand
100
PBSA represents around 30% of 80 80
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
2018/19
or in part is not allowed without prior written approval of
full-time first-year undergraduate
housing choices, up from 22% five
years ago Source: Knight Frank Research / UCAS Source: Knight Frank Research / UCAS HOW HAVE PRICES LOOKING TO THE FUTURE: DEVELOPMENT SUPPLY AND DEMAND FUNDING MODELS POLICY FOCUS
SECTOR UPDATE TENANT SURVEY 2017: RESULTS INVESTOR INTENTIONS PERFORMED? CROSSRAIL 2 PIPELINE
Knight Frank LLP to the form and content within which it
The UK Tenant UK Student Property Crossrail 2017 UK Retirement Housing
appears. Knight Frank LLP is a limited liability partnership
Survey 2017 Report Q1 2018 Market Update Q1 2018
registered in England with registered number OC305934.
Our registered office is 55 Baker Street, London, W1U 8AN,
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