Why now is the time to invest in Central London real estate

Real estate investment in Bloomsbury, Holborn, St Giles, Clerkenwell and Farringdon is on the up and, as the Central District Alliance’s new report ‘Destination Holborn & Clerkenwell’ makes clear, Central London is currently going through a purple patch, one that has a lot to do with a new, similarly hued underground line.

Investors and developers who have weathered the storms of Brexit, Covid, a rise in home working and other shocks to the London economy are investing more than £1bn in these superbly located central London neighbourhoods with their rich and varied histories and fundamental strengths of location and transport infrastructure.

While the Square Mile and sometimes development-constrained West End have performed well against their counterparts in other world cities such as New York and Hong Kong, the Camden and Islington parts of Central London are showing that they too have something special to offer: culture, thriving research and educational communities, remarkable places to stay and headquarters for knowledge intensive companies.

A major factor behind this renewed momentum is the Elizabeth line. Mainly paid for by London businesses and London farepayers, this £19bn railway is now carrying more than 200 million passengers a year and according to TfL, adding more than £42bn of economic value to the UK economy over time.

Farringdon and Tottenham Court Road stations lie at the heart of this railway marvel and are gateways to the Central District Alliance (CDA) BID area. Together, the two stations handled more than 66 million passengers in 2022/23. That number is set to rise as more trains are added to the system and further growth takes hold.

But it is not just improved transport that has enabled the most central part of London to recover and thrive. Steeped in history, Bloomsbury offers longevity and a heritage that is unrivalled. Its squares and Georgian architecture and, of course, the British Museum are prime examples.

Often overlooked, St Giles has a remarkable church (of the same name) that can trace its history back at least 1200 years. Today, Outernet, a hi-tech immersive experience venue for cutting-edge music and performing arts, has become a top UK visitor destination in its own right.

Next door, GSK, the pharmaceutical and bio-tech giant has just opened its global headquarters for 3,000 people on New Oxford Street. It wanted to be closer to educational and research institutions that form part of one of the world’s leading life sciences and health care clusters. A little further east, work is well underway to renovate Sicilian Avenue near Holborn station.

Further towards the City, close to Chancery Lane tube station and Hatton Garden, refurbishment and redevelopment projects are now underway to provide high quality, sustainable office at scale.

To help make this all happen, two local business improvement districts – the Central District Alliance and Hatton Garden BID – have been working in partnership with Camden and Islington councils and residents. Our activities range from patrolling the streets to improve public safety, through to seasonal lighting and commissioning street-based activities for workers and visitors.

The BIDs fund planting to make the environment greener and more pleasant. Placemaking at Princes Circus outside Shaftesbury Theatre and Clerkenwell Green near Farringdon Station have both received significant financial support. Our frontline services such as street cleaning and jet washing complement provision by Camden and Islington councils. And the BIDs work closely with the GLA and Metropolitan Police Service on a range of programmes ranging from skills academies for young people to crime prevention on the streets.

While this is all hugely positive, challenges with adequate provision of day-to-day services pose a significant risk to the sustainable growth of central London’s economy. Phone robbery, pavements littered with waste and hire bikes, alongside traffic congestion caused by unending road works, conspire against attempts to attract investment and jobs. Too often, central London residents and employees experience a poor quality environment.

Reductions in local government funding do not make it any easier to tackling these problems. Despite the recent Budget, councils in inner London and elsewhere are still suffering the effect of real-term reductions in spending power of 20% or more over the past 14 years. The same is true for the Metropolitan Police.

The resources required for street cleansing, street lighting and road maintenance have been put under major pressure. As a result, we risk creating an environment where private prosperity lives side by side with an unacceptable degree of public squalor.

Tackling these shortfalls can only happen if we look for longer-term solutions to the way in which we organise and provide our local public services. For starters, we need a devolution of fiscal powers to reconnect London government with its local commercial property taxes. This would mean that when new development happens and the tax base increases in value, councils’ income would rise.

The present complex system of local government funding means that any such growth is cancelled out by central government. Reform would not only generate resources to pay for better public services, but also lead to a stronger incentive for the boroughs to seek out good growth opportunities that the private sector can generate.

Then there is the issue of how Central London government is currently arranged. The present system, which sees the city centre shared between perhaps 10 local authorities, hits its sixtieth anniversary in 2025. This provides a good moment to reflect on what has worked well and what could be done better.

Alongside a successful BID sector, improvements in how central London is looked by government will help to deliver on a local and national requirement to generate more well paid jobs and economic growth. Creating the right incentives to turn more private sector plans for investment into reality can help create a better, more prosperous city for all Londoners.