By Clare Hutchison
LONDON (Reuters) - Canary Wharf Group's plans for high-rise living in London's transformed financial centre mark a new departure for it and workers in Britain's capital who have til now preferred to live at a distance from their offices.
Having successfully revamped what were derelict docks into a gleaming collection of skyscrapers, the group is confident it can persuade bankers and lawyers to call the area on London's eastern flank their home as well as their place of work.
Songbird Estates (L:SBDE), which owns 69 percent of the Canary Wharf Group, is one of the front runners in the race to capitalise on an expected explosion in London's population with a plan for luxury high-rise apartments that could double the size of the original wharf development estate.
"People are working differently now. They might come in and work until small hours in the morning and want to be able to get home," said Nick Parr, a partner at London estate agent Knight Frank. He added that modern living now had a "south east Asian influence – where everything goes on 24 hours a day and is all on your door step when you need it."
Canary Wharf Group's first foray into residential development has already attracted would-be buyers to it: Last week the company rejected a 2.2 billion pound takeover approach from the Qatar Investment Authority and Brookfield Property Partners, saying it significantly undervalued the group.
The plans for Canary Wharf living include a 60-storey residential skyscraper and Wood Wharf, a 20-acre riverside development complete with a school, apartments and a medical clinic on the banks of the Thames.
Canary Wharf Group is betting that workers are increasingly willing to jettison the traditional British commute via train and bus from suburban areas encircling the capital in favour of high-rise living in the metropolis.
Its build coincides with a rapid growth in London's population, which will shortly hit 8.6 million people - its pre-World War Two peak - and grow by a further 2.7 million by 2050, according to estimates from the Greater London Authority.
RENTS AND TRANSPORT
After a hiatus following the financial crisis, the number of new residential developments in London has started to grow again in recent years.
Some 6,600 developments were launched in the first half of 2014, more than double the 3,000 units started in the same period two to three years ago, according to investment management firm Jones Lang LaSalle which specialises in real estate.
Canary Wharf's development stands out for two reasons.
First, its office space is much cheaper than the rest of London with rents of 38.50 pounds per square foot, compared to 107.50 in the West End, 58.50 in the City and 52.20 on the Southbank, according to real estate consultancy CBRE.
Secondly, a new high speed transport link - Cross Rail - connecting east and west London could rid the estate of its image as a peripheral destination.
The 15 billion-pound railway will transport people from London's major international airport Heathrow to the estate in under 40 minutes and to commuter hub Maidenhead, roughly 30 miles from the capital, in just 55 minutes, with no change of train required.
The estate is already connected to the city's transport network through the Dockland's Light Railway and Jubilee underground rail line, churning out 100,000 commuters on weekdays and around 50,000 people on Saturdays.
TECH IN TOWER HAMLETS
While some Londoners baulk at the prospect of living in the city's East End, once more famous for slums than skyscrapers, Canary Wharf's development is likely to appeal to overseas professionals unperturbed about living outside the city centre.
Songbird is also counting on its cheap rents to lure the creative industries - media, technology and telecommunications firms - away from their traditional base around London's Old Street, and the developing hub around King's Cross, soon to be home to Google (O:GOOG).
The so-called TMT sector is famously footloose in its search for premises at good value and has already driven up demand for office space in London.
Some firms, mainly financial technology ones, have already migrated to Canary Wharf's "Level39", a space for start-up and high growth companies in the estate's flagship Canada Square building.
"What we've noticed in the last 12 to 18 months is the amount of tenants who are actively looking in Canary Wharf for office space as an alternative location to their traditional search areas," said Sarah Shell, a director at Jones Lang LaSalle.
"It's a viable and more acceptable location partly because of cost, the quality of buildings down there, and also the different types of tenants."
Tower Hamlets, the London borough in which Canary Wharf resides, is already the fastest growing borough in London. Its population rose 29 percent in the ten years to 2011, boosted by an influx of people from overseas, in particular south Asia.
Average house prices in Tower Hamlets have risen to almost 600,000 pounds, making it the twelfth most expensive borough in London, but the area hosts large disparities in wealth: bankers and lawyers drive luxury cars past council estates where unemployment and child poverty are high.
Local politicians are hoping Canary Wharf's Wood Wharf development will create more local jobs.
It may also spur more takeover offers for its owner.
(Writing by Carmel Crimmins; Editing by Sophie Walker)