A number of major regeneration schemes are already transforming the town centre, with a further GBP3.5bn of public and private funding committed in the next five years. Benefits include an enhanced public realm, new world-class leisure and retail destinations, quality housing, schools and transport infrastructure.
The main plotline in Croydon’s urban renaissance story was when the green light was given to Westfield and Hammerson’s GBP1 billion joint venture to create a world class two million square foot retail, leisure and restaurant destination in the town centre. Alongside being a major source of employment and a catalyst for further infrastructure and public realm improvements, Westfield’s arrival will make Croydon one of London and the Southeast’s most important retail and leisure destinations.
Another key retail and leisure offering will be arriving very soon when the world’s first ‘pop up mall’ opens next to East Croydon station this summer. Sparking a retail revolution in Shoreditch when it opened there in 2011, Boxpark Croydon will deliver 24,000 square feet of mixed-use space across two storeys. Featuring 80 converted shipping containers and a covered courtyard for year-round, 2,000+ capacity events, the venue will be packed with independent shops, street food stalls, bars and café’s.
Growth in Croydon, driven by this significant regeneration investment and an already-bustling economy is putting considerable pressure on the borough’s supply of housing stock. An influx of new residents to the borough’s newly redeveloped areas means a large increase in homes will be required in the coming years to avoid weighty price rises, and such a surge in construction is unlikely.
House prices in Croydon in April 2014 were 40% below the average across Outer South London, and 60% below the Central London average, while rents are 50% cheaper than the Inner London average.
Central Croydon alone is now home to over 100,000 people, and forecasts expect this number to rise by 20,000 by 2020, representing strong short term growth of 16.5%. Across the wider borough, equally strong growth is forecast to push the population to 400,000 by 2021, with further growth expected to take this figure to 426,000 by 2031 – growth of 17.2% over two decades.
With population pressure set to drive higher demand for properties in Croydon, estimates of the required new housing supply in the borough are correspondingly high.
The London Plan originally set a target of 1,330 new homes annually in Croydon, equating to 27,000 completions between 2011 and 2031. However, with the borough falling significantly behind this target in the first three years after it was established, it was subsequently revised upwards to 1,430 per annum in a 2015 update to the London Plan.
Croydon Council has independently set a goal of starting construction on 9,500 units by 2017/18, at an average of 1,900 per annum. The likelihood of this target being met is low however, with the borough recording an average of just 1,077 completions per annum over the past five years. The total of 1,283 completions recorded in 2014 falls beneath even the original London Plan target, and represents just 67.5% of the council’s new target.
Capital appreciation and rentals
Like much of London, Croydon has seen strong house price growth over the past ten years, with average prices up 63% between 2005 and 2015 to reach GBP341,309 by Q2 2015. In the year to Q3 2015 prices grew by a healthy 11.1%.
The situation on the Croydon rental market is similar, with rental rates steadily increasing over the past five years as more residents move to the borough.
This vibrant and evolving town will continue attracting new residents over the coming years. With supply remaining constrained, Croydon is positioned for a perfect storm of strong capital and rental rate appreciation. With stable factors set to drive Croydon’s residential property market forwards, this part of the capital is becoming increasingly hard to ignore as a key investment location.