Meeting London’s potential: unlocking opportunity and growth

Making London tick

Central London remains the primary hub for employment and development activity, with new projects concentrated in the most accessible areas. However, these locations remain unaffordable for a significant portion of the population, limiting the economic potential of the city and wider UK.

Previous Savills work has identified the economic benefits of development. For every 100,000 new homes, 200,000 jobs are created, and tax revenues are boosted by over £2bn. In 2024 values, that would add £18bn to the UK economy every year. And of course there are the wider benefits of development, including its contribution to community and social value and improving the built environment.

To meet London’s housing needs and support economic growth, we must prioritise large-scale development in outer London - where demand is highest and homes are more affordable, yet development has been constrained by limited transport connections, green belt restrictions, and the most acute viability challenges. Central London, despite having the highest job density and projected job growth, remains unaffordable for most, and inner London lacks sufficient land to meet housing targets.

The current delivery model is not meeting demand. Our analysis shows that over three-quarters of London residents can afford to rent or buy homes priced below £700psf, yet only 47% of new homes delivered in the past five years fall within that range. The majority of demand is for Affordable Housing and more affordably priced homes but, under the current status quo, delivery remains a major challenge, particularly building above 18 metres.

However, London also needs homes to be delivered across a range of solutions – not just large-scale high-density blocks. Key workers or those in sectors such as construction or logistics, who often work irregular hours outside of office settings or the standard public transport network, need to live close to their jobs and may require car access. Their proximity supports productivity and retention in vital sectors like health and education and the wider economy. Enabling SMEs to re-enter the market and deliver lower density, lower value homes on smaller, less connected sites is a critical part of the solution – we need more supply delivered across the board.

Can these challenges be overcome? Viability remains weak and delivery is challenging, as building to policy-compliant standards - particularly at lower price points – means that insufficient value is generated to justify the development. Some sites require huge investment in infrastructure; if that outweighs the return to the landowner, it won’t happen. Landowners will sell at the best value, which is currently more likely to be for an alternative use to residential in many locations.

There is plenty of land available to boost delivery, at least in the short to medium term. But mostly at currently unaffordable values, and nothing like enough to bring forward homes to meet the Mayor’s ambitious target. Alongside a review of the Opportunity Areas in the new London Plan, the Greater London Authority are now exploring the potential to release parts of the Green Belt for development, which covers large parts of Outer London, alongside potential transport improvements such as new stations, extending existing lines or increasing frequencies.

Investing in infrastructure works

Since the 1920s Metroland era, infrastructure has played a vital role in connecting London’s housing needs with jobs. This legacy continues with the regeneration of former industrial sites into thriving mixed-use areas like King’s Cross, Stratford, and Nine Elms. Canary Wharf has evolved since its 1980s inception, with strategic energy planning now central to its growth and goal of becoming a carbon-neutral neighbourhood. This is unlike parts of west London, where a lack of access to the grid network in boroughs like Hillingdon, Hounslow, and Ealing, is causing delays to residential development.

What next? Work is underway at Old Oak and Park Royal for the new HS2 station, a crucial interchange for reducing congestion in central areas like Euston, with plans for up to 25,500 new homes and 56,000 jobs. Brent Cross West station helped facilitate Related Argent’s Brent Cross Town, with a vision for 6,700 new homes and workspaces to accommodate over 25,000 people. But essential projects that facilitate potential large-scale delivery, such as the Bakerloo Line extension and the DLR extension to Thamesmead, remain unfunded and uncommitted – preventing up to 50,000 homes and 20,000 jobs.

Furthermore, the recent London Plan consultation proposes dropping Crossrail 2 due to unlikely funding within the next decade. Major infrastructure projects require long-term planning, creative financing, and political commitment, often spanning decades. Positive developments are underway, such as the British Library’s 2026 construction, which will incorporate initial Crossrail 2 elements, even as the wider project awaits full approval and funding.

This is more than just rail connections. New bus routes, roads, sewage networks, electricity and water all need to be provided for, requiring investment and strategic planning.

Can London meet its potential?

The clear link has been made between jobs, homes and infrastructure, and the potential for projects to be unlocked by certainty of delivery in infrastructure. The cost of not doing so means the system breaks down and a worse quality of life for London’s residents.

We need to see the case for investment for the next big infrastructure project, to make sure the work force can grow in line with business investment. New office buildings and more homes are required, at price points average London residents can afford, including significant volumes of affordable and intermediate housing. Creative investment solutions need to come from both the public and the private sector, but both require political commitment to give investors confidence. This isn’t just about bricks and mortar; it’s about unlocking opportunity, enabling growth, and creating places where people and businesses can thrive.