New research from construction consultant Arcadis has revealed that 35,055 luxury new homes are to be built in London alone over the next ten years, a 40% increase on the 2014 prediction of 25,000.
Producing a combined estimated sale value of £77bn, the properties will mostly consist of flats and apartments valued at more than £1m, and will cover upwards of 40m².
Despite this projected surge in construction, the research has highlighted that demand for such properties is actually falling, meaning that a number of the projects could become repurposed as commercial properties or downgraded to become cheaper homes.
The fall in demand is also leading some developers to re-evaluate the money they had planned to spend on areas such as interior design and fit-out specifications.
Mark Cleverly, head of commercial development at Arcadis, said the house-building sector in London is one of the strongest around, but that a number of factors are having an impact on the state of the industry, which could require developers to adapt.
He commented: “Since around 2009, the value of prime residential property in central London has seen dramatic rises, making it one of the hottest markets in recent memory.
“That said, things are changing. Land, materials and labour are growing in price, meaning the costs involved in actually building these homes are growing significantly.
“This, coupled with a recent gradual easing off of buyer demand, could affect margins and mean investors opt to convert their developments to target the more buoyant office and commercial markets.”
The full report can be viewed here