LONDON: A record number ofLondondevelopers looking to build bespoke neighbourhoods from scratch will be emulating the success of centuries-old aristocratic landowning dynasties who have helped transform the capital city in the past 50 years.
Developments like the 67-acre scheme in the King's Cross district and a 2,818-home plan for the Olympics site are among a dozen projects that have taken lessons from the likes of Grosvenor and Cadogan Estates, areas formed hundreds of years ago that have boosted property values in recent decades by being picky with tenants and improving public areas.
"Everyone increasingly realises that design and maintenance of the environment around the buildings is as likely to improve property values as anything else," said Sir Terry Farrell, who designed a 77-acre masterplan of shops, offices and homes in theEarls Courtdistrict of westLondonthat will be ready in 2032.
"There is a much stronger move towards estate management, the kind of custodianship the great estates have done extremely well," he told Reuters.
A partnership between British developer Delancey and the development arm ofQatar's sovereign wealth fund, which will start work on the 67-acreEastVillagescheme once this summer's Olympic Games are over, is adopting a similar "placemaking" approach.
It has even hired the former chief executive of Cadogan Estates, which owns much ofLondon's trendyChelseadistrict, as its chairman after paying 557 million pounds ($883 million) for the site last August.
"I was one of the relatively small numbers of people with experience managing a chunk ofLondonwith a long term view," Stuart Corbyn told Reuters. "The approach withEastVillagewill be long-term though I'm not suggesting we will be there for 250 years."
King's Cross is being developed by British firm Argent, backed by Hermes Real Estate on behalf of the British Telecom pension scheme and led by Roger Madelin, an athletically-built champion of green issues who cycles to work every day.
Once dotted with villages and manor houses,London'sWest Enddistrict, where much of the English aristocracy's land is located, became a string of neighbourhoods in the late 18th century as a population boom spread beyond the financial zone to its east.
Grosvenor, the estate that today covers swathes of the upmarketMayfairandBelgraviadistricts, is controlled by theUK's fourth richest man, the Duke of Westminster, currently Gerald Grosvenor.
It was formerly undrained marshland and first acquired through the 1677 marriage of Thomas Grosvenor, a landowner from north-westEngland, and 12-year-old Mary Davies, heiress to the Manor of Ebury inLondon.
Such histories created a land ownership structure not seen in many other major global cities.
Companies like private equity firms own blocks rather than whole neighbourhoods inNew YorkwhileParis' top shopping streets have many landlords, said Mark Burlton, a retail expert at property broker Cushman & Wakefield.
As guardians of ancestral good fortune rather than profit-led developers, the estates were content to sit back and collect rental income. But that changed in 1967, when the law was revised to give residential leaseholders the right to buy the freeholds, shrinking the size of the estates and shifting their focus to increasing value.
Rents on Cadogan'sSloane Streethave risen 175 percent to 550 per square foot since 1987 in a push by the estate to make it a high-end shopping street that precluded more downmarket retailers from taking space.
Rents on nearbyKensington High Streethave only risen 108 percent over the same period, data from property consultancy Colliers International showed. They are both served by the same local population but the street's fragmented ownership produced a mix of shops including low-cost stores like TK Maxx.
In a similar vein, the Howard de Walden Estate, which controls 92 acres of the Marylebone district, doesn't always seek the highest rent onMarylebone High Streetso independent retailers can thrive, raising both the tone and overall value of the estate, which has grown by almost 40 percent to 2.1 billion pounds since 2008.
"We have absolutely had aspirations to learn from the great estates," said Robert Evans, director of Argent, which says it will prevent some retailers in its Kings Cross development from selling on leases and restrict changes made to shop fronts and signs, rules typical of estates like Cadogan and otherwise laid down by local authorities.
In all, the city's 12 regeneration sites cover more than 50 million square feet of houses, shops and offices, the equivalent of 670 s o ccer pitches. It's the highest number of large schemes on record, said global property consultancy CBRE's head ofLondonresearch Kevin McCauley.
Most were drawn up with political backing in the boom before the 2008 financial crisis and also took inspiration from the 97-acreCanaryWharffinancial district.
The forest of glass and steel skyscrapers, completed on previously derelict docklands in 1991, is home to Citigroup, HSBC, JP Morgan and other financial heavyweights.
"Economic stagnation is good for regeneration projects as local authorities are less inclined to put obstacles in the way of developers," he told Reuters, referring to the often arduous British planning system.
Argent is courting Google, to take 725,000 square feet of office space for its UK headquarters in King's Cross, a former fish, coal and grain goodsyard, a deal that would boost rents as others scramble to be neighbours with the Internet search giant.
"These types of deals are very important as tenants are not exactly swanning around at the moment," said Marx. "Placemaking is where good developers can make even more money."