Buyers flock to the dock

Londoners are looking east in the race for space.

There is a bullishness among London's Docklands residents. Those who had grown used to justifying their decision to live there have seen their numbers swelled by people who like the area for itself - not only for its access to the City and value for money. Over the past year the surge of buyers moving east has brought about a dramatic turnaround in the area.

Second-hand properties which have been languishing on agents' books are suddenly getting offers while developers are seeing half their stock disappear within days of a launch. Some vendors are asking ridiculous prices, according to agents, and anyone who fails to meet a deadline in a popular development will have the frustration of seeing the property sold on for about 5 per cent more. Savills Research, in a survey of major central London residential developments, sees supply drying up there within nine months if the current take-up continues, with those developments in the pipeline or at the planning stage representing only two to three years' supply. Only last year they foresaw an oversupply of new homes in the Docklands.

There is nothing to suggest the trend will slow. The demand for rentals continues to attract investors while good quality flats with long leases, river views and parking are drawing disaffected owners away from the traditional residential areas. The shortage of property on the market is an obvious reason for buyers to look eastwards but Savills suggest that with the arrival of the Jubilee line Docklands may start to look more attractive than Putney or Fulham.

Indeed there are those who have already made their move. Russell Taylor of Savills worked in Docklands for nine years before deciding a year ago to move with his wife and two-year-old son to a house in Limehouse.

"It is only recently that I stopped feeling defensive about the area. We still have an infrastructure problem and there is a massive shortage of things. We could do with a bakery and some small shops, but it is changing fast. After the appalling traffic in the West End it is quite peaceful here. It is also surprisingly good for small children," he adds, citing a new park next door and Montessori nurseries - difficult though it is to picture children in a Docklands lifestyle. He notices that more people are spending their weekends in the area which gives it a new vibrancy.

"It's no longer like a ghost town. Somewhere like Butler's Wharf is always busy now. And in our row of houses there is more of a sense of community than there ever was in Fulham. We can even ring up the pub opposite to book Sunday lunch and they bring it over."

It is in areas close to Tower Bridge like Butler's Wharf, St Katherine's Dock, riverside Wapping and parts of Limehouse, that most people moving to Docklands would choose to live. Also up-market developments near Canary Wharf are pulling in prime central London buyers while Rotherhithe, believes Savills, could start to steal a march on the Isle of Dogs once the Jubilee line is up and running. But sites are becoming scarce in prime locations where already much of the building is in-fill.

Anything out of the ordinary is snapped up. Chimney Court, a 1920s factory in central Wapping, was launched last week, unfinished. Four days later 19 of the 41 flats had sold. It is an unusual building with high ceilings and huge windows, but has little in the way of river views. It is a similar story at Barratt's Hermitage Waterside development, alongside St Katherine's Dock. No one has moved in yet, but half the 76 townhouses and apartments went almost immediately after release. British buyers, normally reticent about buying off plan, increasingly are prepared to put their money down on a good quality development in a prime spot. The 10 to 15 per cent new build premium in these places is better guaranteed if the market does fall than in the cheaper properties. Savills Research finds than 82 percent of new-build buyers in Docklands are from the UK, a higher proportion that anywhere else and quite unlike a development like County Hall which is almost all foreign owned. The criticism that British buyers of new- build are often only offered what is left over from a Far Eastern sales tour does not apply to Docklands, they say.

Owner occupiers and investors do not always want the same things and developers of warehouse conversions know their market to be almost entirely local. However, Tom Marshall of Cluttons does have some concern about so much being sold abroad, especially if it is poor quality.

"If you are selling almost a whole block in the Far East, what happens if the market collapses there? In Docklands he sees the market being fuelled by people with money either to invest or to spend on a second home. "Those not planning to move from other parts of London are being tempted by incredible offers on their homes. In Fulham I get an agent's letter every day."

Increasingly the area is being sold with a lifestyle attached and the integration of hotels, cinemas, shops into residential schemes is regarded as its guarantee for the future. Savills suggest that the hard-learned lesson of Chelsea harbour, completed as the recession took hold, is that an active and imaginative management can see owners through the worst of times and is worth bearing in mind even as they enjoy the best.