East Village scheme aims to tap demand for homes to rent from Londoners priced out of centre
With its £557m purchase of London’s Olympic athletes’ village last year, Delancey took a big step into the residential market. “We need to position ourselves in areas of the sector we think have both opportunities to create value, but at the same time have good defensive qualities, too,” says chief executive Jamie Ritblat.
For Delancey, this area of interest equates to what Ritblat calls the “domestic London” part of the market. “It is about structural shortage, structural need in London and the nature by which markets evolve,” he says.
“We’re getting a pyramid effect in London because the centre is very high up the scale, which pushes those who used to live in these places further out. These are the people who live and work here, not those who fly in for three days and fly out.
“In this area, structural demand is not being met. At the very smart end there’s no ceiling, in theory, to price, but at this end there is more of a ceiling; the return is probably more constant, but not as high. So it’s more defensive. I prefer that.”
The Olympic village – now rebranded East Village – is Delancey’s highest-profile housing venture and a big first step into the private rented sector. East Village will have 2,818 homes, with 1,379 sold to Triathlon Homes to run as social housing. Most of the other homes will be available for rent, ranging from one-bedroom flats to four-bedroom townhouses.
East Village aims to attract young married couples and other London “inbetweenies” who want or need to rent. “In the area, £400 a week rents are not uncommon. Gross it up and it works out at about a third of a couple’s joint earnings for London. It doesn’t seem totally out of whack,” says Ritblat.
Delancey’s partner in this venture is Qatari Diar, the property arm of Qatar’s sovereign wealth fund. The joint venture will be the first large-scale UK private sector residential fund to be owned and directly managed as an investment. Qatari Diar says its investment and long-term rental plans for East village “guarantees residents the benefit of a responsible landlord.”
Designed as a series of large-scale garden squares, East Village will also include smaller-scale shops and restaurants, a medical centre and the 1,800-student Chobham Academy. “It’s all about creating a place that isn’t too impersonal; it’s about realm, environment,”says Ritblat. “That’s the challenge.”
Stuart Corbyn, who ran the Cadogan Estate, has been recruited to set up and head East Village’s management company. “It’s important to have internal control of the branding and interaction between us and our tenants,” Ritblat says. “We’re in a service business. The people representing East Village in lettings and services should be our people, with only our interests and those of our tenants at heart.
“You read about the decline of home ownership, but it won’t decline forever. It will recover a bit, but the balance between rental and home ownership won’t go back to where it was 15 years ago. There’s an inevitability about this. The question is, have we got the timing right?”