Half of unsold new-build luxury flats may turn London into city of posh ghost towers
Unsold luxury new-build homes has hit a record 3,000 units as rich overseas investors turn their backs on such properties
More than half of the 1,900 ultra-luxury flats built in London last year failed to sell, raising fears that the capital will be left with dozens of “posh ghost towers”.
The swanky flats, complete with private gyms, swimming pools and cinema rooms, are lying empty as hundreds of thousands of would-be first-time buyers struggle to find an affordable home.
The total number of unsold luxury new-build homes, which are rarely advertised at less than £1m, has now hit a record high of 3,000 units, as the rich overseas investors they were built for turn their backs on the UK due to Brexit uncertainty and the hike in stamp duty on second homes.
Builders started work last year on 1,900 flats priced at more than £1,500 per square foot, but only 900 have sold, according to property data experts Molior London. A typical high-end three-bedroom flat consists of around 2,000 sq ft, which works out at a sale price of £3m.
There are an extra 14,000 unsold flats on the market for between £1,000 to £1,500 per sq ft. The average price per sq ft across the UK is £211.
Molior said it would take at least three years to sell the glut of ultra-luxury flats if sales continue at their current rate and if no further new-builds are started.
However, ambitious property developers had a further 420 residential towers (each at least 20 storeys high) in the pipeline, said New London Architecture and GL Hearn.
Henry Pryor, a property buying agent, said the London luxury new-build market was “already overstuffed but we’re just building more of them”.
“We’re going to have loads of empty and part-built posh ghost towers,” he said. “They were built as gambling chips for rich overseas investors, but they are no longer interested in the London casino and have moved on.”
Pryor said developers of luxury blocks lining the Thames had failed to sell homes despite offering discounts, incentives and freebies – including free furniture, carpets and curtains, and even cars. He added that new-build towers were proving hard to sell because while they offered luxuries including concierge, gyms and spas, “they’re all the same”.
Some developers have delayed construction of projects while others have taken properties off the market. All 10 of the flats at the top of the Shard – priced at up to £50m each – remain unsold more than five years after the Duke of York and the former prime minister of Qatar officially opened “Europe’s first vertical city”.
Steven Herd, founder and chief executive of MyLondonHome, an agency that specialises in new-build homes for investment, said his firm was struggling under the weight of overseas investors who bought in the last couple of years and are desperate to sell.
He said hundreds of Asian investors who had bought London developments off-plan in 2015-2016 in the hope of making a quick profit by selling flats on closer to completion had instead lost hundreds of thousands of pounds.
“They intended to flip [buy and sell on] the flats and make big profits, but it hasn’t worked out like that, and now they are trying to get out at the smallest possible loss.”
He added that in one case a Russian investor bought an off-plan property in 2014 for £3.1m, but could not afford to complete and sold it for £2.55m.
Herd said the Nine Elms development, near the new US embassy in south London, was one of the best redevelopment schemes in Europe but consisted of “the wrong properties that Londoners don’t need”.