Not just for oranges - the four segments of London’s residential market

What does it take to secure work at the next level?

I’ve worked with dozens of firms in the construction industry, of all sizes and specialties and regions. One of the more distinctive is a builder in West London – slightly larger than many of my other clients at £10 million, and with a great track record in high-end Central London residential work. We’re talking real craft and quality, often with technically demanding aspects such as retained facades or very tight sites. These are high value jobs, and they need an unusual degree of skill and expertise. But even if they wouldn’t want to aim quite that high just yet, any aspiring builder will have an eye on higher value contracts. So what does it take to step up a level and secure that kind of work?

In order to make the leap, it’s important to know how the residential market is segmented in London, as architects who do high-end residential work tend to stick within their chosen value bands. I identify four main segments, or classes:

Class A is my entry level category. My guess is that at least 70-80% of all quality residential work falls into what I call Class A –the general £250k to £750k range across London. That would include remodelling, extensions, refurbs, alterations, conversions, basements and more. This is where most of our CMS clients tend to want to work and most architects design here too. Getting work at this level is quite straightforward if you know what you’re doing.

Class B are larger residential projects from around £750k to £1.5 million max. This is probably no more than 10% of the London market, at most. The larger London architects that we work with tend to score contracts up to around £1-1.25m and then stop there. Our clients want more of these sorts of jobs, but identifying projects of this scale isn’t easy. We use Planning Pipe extensively, and we’ll also spend a lot of time on the planning portal for the London Borough in question, poring over drawings and making assessments of possible build costs.

Class C projects are the really valuable high-end residential schemes. I’d see this value band as starting around £1.5 million and topping out at about £5 million. For my client, these sorts of jobs are the real prize – but they account for less than 1% of planning applications in London and they’re hard to find. At this level, projects can be highly localised, turning up in specific parts of the city or even particular streets. There’s also a smaller pool of architects who handle these jobs, and building good relationships with them takes real commitment and skill – they are naturally very protective of their clients and they have a reputation to maintain. You won’t get anywhere near a tender opportunity until your credentials and skills are well and truly proven.

Class D is a further category that I use to segment the London residential market, and it incorporates high-end new-build houses in Greater London and the M25 ring. Values range from £750 to £5 million or more, and projects could include country residences, contemporary homes, luxury housing developments, and even the occasional new-build in Central London. Once again there are architects who specialise in this sector. I can’t divulge those names here – that’s for my client – but you’ll be able to find them if you look. You can also use the HERO (High End Residential Opportunities) leads service which is a Planning Pipe/CMS facility. The more you talk to architects, the more you’ll come across these sorts of schemes. Over the last few weeks I found two new £2 million projects just through conversations – an eight-bed mansion in Essex and a fine contemporary home in Kent.

You might take a look at these segments and decide that you’re satisfied with Class A. But if you’re an ambitious firm that’s building a portfolio of high quality work, then it might be time to step up a level. In which case you’ll need to understand the market, identify the relevant specialists, and start building contacts with the key players. And if you want a hand, give us a call.