Sales data reveals that buyers in London are willing to pay more for access to a communal roof terrace. Research by Dataloft and HomeViews suggests that a roof terrace can command an 8% price premium and correlates with higher ratings by residents.
Dataloft research showed that the price per square foot for new developments with a communal roof terrace was an average of 8% higher than for comparable new build sales in the same postcode district.
In addition, HomeViews looked at the resident ratings for 431 new build developments in London, of which 99 offered a roof terrace. Residents are asked to rate their buildings out of five on a range of facilities and the ratings make up a Facilities score. The Facilities ratings achieved by developments that offered some form of communal outside space (roof terrace and/or garden) were compared against buildings with no communal outside space.
HomeViews found that developments with both a roof terrace and a communal garden achieved a Facilities score 8% higher than developments with no communal space. In comparison, developments that had communal gardens but no roof terrace achieved a 5% higher score for Facilities than developments lacking any communal space.
This suggests that communal outdoor spaces make a development more attractive to residents and that when that space comes with a view, it is appreciated more than a garden at ground level.
A similar preference was evident in the rental market. The HomeViews 2020 National Build to Rent Report analysed reviews and ratings from 84 Build to Rent developments. A third of the developments offered their residents the use of a communal rooftop area. This was found to correlate with a 7% higher Facilities score for those buildings compared to buildings no communal rooftop.
The premium was calculated using data from HomeViews. 18 new build schemes in London were analysed, all of which were for sale and had a communal roof terrace. These were drawn from the 25 schemes with communal roof terraces that were rated highest for Facilities by residents on HomeViews.
The achieved price per square foot was calculated for these 18 developments and compared to the achieved price per square foot of other new build sales in the same postcode district, in the same time frame.
Analysing by price per square foot rather than average values was important for a clearer view of communal terrace premiums. There are of course other variables which need to be considered as having an impact on sale price, even after allowing for location, date and size. These include the reputation of the developer, leasehold terms, aspect, design and so on.
However, as much as was possible, the study controlled variables by using price per square foot as the comparator, comparing developments in London and only including new build apartments. This made it possible to isolate, as far as possible, the attraction of a communal roof terrace and the premium it commands.
HomeViews provides verified resident reviews of the UK’s housing developments. We’re working with developers, landlords and the Government to recognise high performers and help to improve standards in the built environment.
Dataloft is a tech-driven research consultancy specialising in residential property and delivering in-depth analysis of local, national and international housing markets. www.dataloft.co.uk