Dow Jones: DJ Right Turn For 'Wrong Side' Of The Park
Fri 16 Jan 2015
(FROM THE WALL STREET JOURNAL 1/16/15)
By Ruth Bloomfield
To the south of Hyde Park, central London's largest green space, lie some of the British capital's most exclusive
neighborhoods: Knightsbridge, Kensington and Belgravia. To the north of the park, no more than a mile away,
things are very different.
Despite its sumptuous white stucco townhouses and central location, the area north of the park, known by its W2
postal code, has until recently been considered one of the shabbiest areas in the heart of the city. But the
fortunes of these neighborhoods, which include Bayswater, Paddington and QueensWay, are changing.
Thanks to a string of high-end developments, a ripple of buyers priced out of more voguish areas, and the
promise of a new railway line in 2018, W2 is showing signs of catching up with its prime London counterparts.
Leading the charge is the Hempel Collection by developers Amazon Property and British Land. This newly
completed development will feature 34 apartments and townhouses built behind the facade of two former hotels,
including the five-star Hempel Hotel, which closed in 2013.
Prices start at about $3.5 million for a two-bedroom apartment measuring 894 square feet, and about $4.85
million for a three-bedroom townhouse measuring 1,171 square feet.
Another hotel redevelopment, on Leinster Square, will be complete in June 2015. Prices start at about $6.4
million for a three-bedroom apartment measuring 1,673 square feet.
Spurred by this activity, the area now has "arguably the strongest development and regeneration potential of any
prime central London residential market," says Tom Bill, head of London residential research at Knight Frank, a
London-based real-estate agency.
The area's historic inferiority is partly the fault of one of its best-known landmarks: Paddington Station, which
opened in the heart of W2 in 1854. The area surrounding the station was initially envisioned as a grand, central
neighborhood, explained Keith Gorny, head of prime sales of estate agent Marsh & Parsons. "However,
Paddington Station is very busy and it polluted the area with dust and smog. So the Victorians built all these
grand houses but nobody wanted to live in them."
This meant that the large family homes built in the area had to be rapidly carved up into cheap flats, often losing
historical features in the process. Other houses were converted into midrange tourist hotels and low priced
The area also suffered extensive bomb damage during World War II. The houses were rebuilt in the decades that
followed -- and "quality was not paramount," in these rebuilds, says Mr. Gorny.
For all these reasons W2 has -- so far -- missed out on the exponential property price growth enjoyed by
Kensington, Knightsbridge and Belgravia over the last decade.
Though prices can vary from street to street, Mr. Gorny calculates that a typical home north of Hyde Park would
cost around $3,000 a square foot. In Knightsbridge, by contrast, a typical home would cost between about $3,800
and $4,500 a square foot.
And while W2 prices have more than doubled over the 10-year-period ending in June, 2014, according to Knight
Frank, the neighborhoods south of the park have nearly tripled.
"W2 is one of the last parts of central London where prices are relatively lower -- despite being only a 10-minute
walk away from Selfridges," said James Hyman, head of residential agency at estate agents Cluttons, referring to
the famed department store.
Last year, an unnamed investor bought a GBP 500 million tranche of retail property in Bayswater and is drawing
up plans to upgrade it as a rival to London's Covent Garden with high end shops and restaurants -- both of which
the area currently lacks.
The star architects Zaha Hadid and Lord Norman Foster have been approached to redesign the area's Whiteley's
mall, currently mid-range, into a prestigious department store to rival Harrods and Harvey Nichols, both of which
sit on the south side of Hyde Park.
W2 will also benefit from the opening of the Crossrail railway line which opens in 2018. This East to West London
line will pass through Paddington, providing swift links to Heathrow Airport, the West End and east London's
For now, however, W2 remains a mixed bag. It has some lovely houses, quaint streets and gracious garden
squares, but it still has its rough edges, including down-at-the heels hostels.
"W2 is at the moment still a poor relation," Mr. Gorny said. "It has got a way to go yet before it can be considered
as swanky as districts south and west of Hyde Park. But it is on its way."
Three bedrooms, three bathrooms
This apartment in the most upscale development in the W2 postcode has grand reception rooms with ceiling
heights of almost 16 feet. Residents share leisure facilities including a pool and gymnasium.
Four bedrooms, three bathrooms
This period townhouse, measuring 3,062 square feet, has a roof terrace and has been recently refurbished.
Agent: Kay & Co.
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(END) Dow Jones Newswires
January 15, 2015 19:03 ET (00:03 GMT)
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