Will £2bn makeover of London’s Victoria boost its real estate?

The central London district of Victoria is not a good place to visit on a hot summer’s day. Arrive by over- or underground train and your passage through Victoria station will be frustrated by sweaty knots of travellers negotiating diversions in place during improvement works. Emerging from this tangle offers little relief as you now find yourself on a construction site. Stacks of Portakabins greet arrivals, dust mingles with bus fumes and there is the spine-jolting clatter of jackhammers.

“It’s not a pretty picture,” admits Tom Eshelby, whose employer, the developer Land Securities, is responsible for much of the mess as it carries out a £2.2bn overhaul of the area, where it is the dominant landowner. ‘We’re aware that while we’re knocking seven bells out of Victoria, there’s also [redevelopment] going on at the train station, so it ain’t that calm and oasis-like a place right now. But I think in two years’ time most of the heavy lifting will have been done and it will have a very different feel.”

Eshelby is overseeing the construction of four high-end apartment blocks which collectively account for about a third of the 3m sq ft of retail, office and residential space that Land Securities is redeveloping in Victoria. Sales revenues from the 329 flats in the first three blocks – the fourth is still being planned, while one is complete – are forecast to total £650m.

Victoria has always had the location and transport links – but not the looks. Boasting a prized SW1 postcode, it rubs shoulders with Buckingham Palace and leafy royal parks, abuts Belgravia to the northwest, and gives way to the splendour of Westminster Abbey to the east. Yet the dominance of its commuter and tourist-clogged train, Tube and coach stations, plus drab 20th-century architecture, have stymied its potential as a super-prime residential neighbourhood. New upmarket residences are a key part of Land Securities’ ambition to create an area to challenge premier London districts such as Belgravia, Knightsbridge and Mayfair. It is not alone: high-end developer Northacre is planning 69 apartments in a Grade II-listed building opposite Buckingham Palace; while the Grosvenor Estate hopes to secure the relocation of Victoria’s grimy coach station and build 500 homes, plus shops and offices, in its place.

“[Victoria] is an area that is ripe for development and completely ready for a super-prime Northacre residence,” says Niccolo Barattieri di San Pietro, the developer’s chief executive. “The location is unparalleled, the architecture exciting and the local landmarks are world famous.”

Local estate agents incline to the view that redevelopment is sending Victoria up in the world, citing the arrival of better shops and restaurants, upmarket businesses and amenities, such as a new Curzon cinema. They describe a rising market that at present offers decent value given its location, coupled with the potential for considerable capital gains.

“In my mind, Victoria still offers you good value for money,” says Richard Klein, a residential development partner at Knight Frank. “You’d probably be paying twice the price on a good quality new-build in Knightsbridge. But there’s a lot more to come in Victoria. It’s an area that will continue to change and will look even more different in three to five years’ time.” He adds that by 2018, homes in Victoria could exceed the 20 per cent growth that Knight Frank predicts for prime central London prices over the same period.

Knight Frank is selling apartments in Land Securities’ forthcoming Nova Building. The sizeable, mixed-use construction is a few minutes’ walk from the train and Tube stations and is due to be completed in 2016. Prices start at £595,000 for a studio, while penthouse prices are available on application, all with 999-year leases.

“There are 170 private units which we started selling at the end of 2013,” says Klein. “We’re about 75 per cent sold already and there are no studios or one-beds left.”

Still available is a three-bedroom, two-bathroom apartment available for £3.26m. The seventh-floor property is kitted out with a designer kitchen and underfloor heating throughout. Communal facilities include a landscaped roof garden, cinema room, gym and 24-hour concierge. Secure parking with lift access is available for £85,000 a year.

Eshelby says his developments are attracting “wealthy, overseas buyers”, particularly from southeast Asia. “The vast majority are buy-to-let purchases and, on the whole, they aren’t buying them for their primary – or secondary – residence. Otherwise, they’re buying them for their kids. Lots of people come in with kids in prams – they have ambitions for their children to go to university in London.”

New properties trade at a premium. According to LCP, a London property investment company, Victoria’s newbuilds command an average price of £1,815 per sq ft, compared with £1,118 for an older property.

James Bailey, chief executive of agents Henry & James, says second-hand properties generally attract British buyers who “are not naive and very much look at pockets [like Victoria] because they’re priced out of Belgravia, but they still want to be totally central”. Generously proportioned Victorian and Edwardian mansion flats are one option for such buyers. Prices range from £500,000 to £3m and vary considerably according to location, floor level and condition.

Alternatively, there are “resale” apartments in more recent developments. Henry & James is asking £2.3m for a two-bedroom flat in Palace Place, a four-year-old concierged block opposite the Royal Mews, where the Queen keeps her carriages. Both bedrooms are en suite, offer inbuilt storage and look out on to a private roof terrace.

For something older still, Foxtons is selling a five-bedroom, Georgian townhouse convenient for both Victoria and St James’s Park Tube stations, priced at £4.62m. Outside space is limited to a balcony and small patio, although a flat roof offers potential for a roof garden. Foxtons sales manager Joe Divito says a four-bedroom Georgian house in a neighbouring street was recently bought by an overseas cash buyer for £3.67m.

“In the past, Victoria was maybe a secondary choice for people priced out of Mayfair and Belgravia. Now people set out to buy in the area,” says Divito. “The prime, luxury apartments are pulling prices up if anything. It just gets better and better.”

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Buying guide

● Nonstop trains from Victoria to Gatwick airport take 30 minutes, while Heathrow airport is 30 to 40 minutes away by public transport

● Victoria is on the proposed Crossrail 2 line running across the capital, expected to open after 2030

● There were 153 crimes recorded in the area around Victoria station in May this year

● Flat prices in Victoria have risen 181 per cent over the past decade to an average of £1.04m (Knight Frank)

What you can buy for . . .

£350,000 A 164 sq ft, ground-floor studio in a portered block

£1.8m A three-bedroom mansion flat with a double reception room

£10m A four-bedroom, off-plan penthouse apartment with a roof terrace and views of St James’s Park

Photograph: Bernd Tschakert/Robert Harding