London development driven by specification over location

Demand for residential development in London is no longer driven primarily by location, according to Knight Frank’s latest London Development Design Study. Thoughtful design, efficient layouts and the right mix of amenities, service and specification are now the key drivers for maximising buyer demand and value for developers. Working together with cost consultants Core Five and MSMR Architects, Knight Frank has analysed how design and specification can influence development costs, as well as the desirability of schemes.

Following an exclusive survey of buyers in prime and super prime new-build developments in London; space, layout, architecture and views were all found to be an increasing focus for purchasers.  As the market has become more product-led, developers have focused on improving the quality of their building and the facilities on offer. 88% of respondents to the survey said that specification was an important or relevant factor in their decision making when buying, while 64% said they would be willing to pay more for higher quality finishes and better specification.

In terms of technology in new homes, buyers ranked their internet usage, television, heating, cooling and security as more important than built-in speakers and tablet integration. More than 43% said super-fast broadband is the most important technology for them. Broadband is also the most used technology for 63% of respondents, with the least used being built-in surround sound speakers and full home automation systems.

Ian Marris, Knight Frank’s joint head of residential development, commented:

“There are instances where specification can add to the desirability of a development, but this needs to be balanced against the additional cost.

“Buyers today are increasingly looking for best in class product, crucially where they see value, not a specific area or post code. As the market becomes ever more product-led, the importance of getting the units mix, apartment configuration and quality right has never been more relevant. The best performing developments follow a clear methodology, combining good ceiling heights, quality specification and a considered approach into how individuals use the wider building and its amenities.”

Amenities can help to differentiate schemes, as 46% of respondents who purchased in a building with amenities confirmed that they appreciated having access to them. Security, concierge services and underground parking are judged to be the most important for prime buyers – suggesting a minimum standard needed across developments.

However, the report also shows that design and specification can be more important that extensive amenities in prime development. 69% of respondents to the survey said that given the choice between a larger apartment in a building with a concierge only, or a smaller apartment in a building with extensive facilities and amenities, they would opt for the former. This suggests that buyers do not view communal areas and facilities as a substitute for internal living space. A notable proportion of respondents were also willing to sacrifice additional facilities such as a steam room, spa or wine cellar in order to reduce costs.