20 per cent premium to house prices in Cambridge tech cluster
House prices across the world’s technology hubs are 20 per cent higher than local averages as employees from the likes of Apple, Amazon, Arm and AstraZeneca grapple for space, new research from Bidwells reveals.
Cambridge, as the UK’s leading science & technology business hub, has seen house prices rise by 73.4 per cent in the last 10 years – almost level with Seattle and London, on a par with Austin, Texas and ahead of centres such as Paris, Oxford and Amsterdam.
And with Cambridge’s A-list companies – principally Apple, Amazon, Arm, AstraZeneca and Abcam – all scaling fast in the city Bidwells warns that more affordable house and commercial property need to be built fast and the infrastructure improved if the tech clusters are to maintain their upward surge.
Bidwells, which specialises in the science and tech sector, studied 30 of the world’s most prominent global cities containing well-known technology hubs and the highest ranked universities.
The research found house prices across those 30 cities grew by 61.3 per cent on average between Q4 2009 and Q3 2018, compared to local national averages of 40.5 per cent.
Certain tech hubs with restricted housing supplies have seen disproportionately large increases in house prices as young millennials flood into cities for work, particularly on the American West Coast.
San Francisco, which has the headquarters of Facebook, Google and Netflix nearby, has seen house prices rise by 113.7 per cent since 2008. Seattle to the north – HQ to Amazon and Microsoft – has seen prices increase by 74.3 per cent.
In Cambridge, which has seen a similar surge in house prices to Seattle, Apple is moving to a new research hub eight times the size of its current base, Amazon is taking on extra jobs at its Station Road operation, while Arm, Abcam and AstraZeneca are scaling massively from their new or extended HQs in the cluster.
Bidwells has now called on policymakers in the UK to be more pragmatic on relaxing planning so that economic growth can be better supported, particularly in Cambridge and Oxford, which are seeing fast growth in their tech economies off the back of their world class universities.
It says to solidify London, Cambridge and Oxford as tech hubs on the global stage far more needs to be done to increase the supply of new homes and new commercial space.
Patrick McMahon, senior partner at Bidwells, said: “The downside of a booming global city is that house prices in many of those hubs are becoming so high – due to inflation and migration for work – that there is risk of curtailing growth or even a decline in the quality of life, especially in smaller markets with very limited supply.
“Bidwells has conducted this research to show what might happen to Oxford and Cambridge if we don’t start taking infrastructure seriously.
“They are small cities seeing major booms in their burgeoning tech and research economies off the back of their world-class universities and while they are not yet on the same scale as other major global tech hubs, they could be. We need to start planning for that now.”
The rapid growth in house prices is starting to provoke drastic solutions to curtail growth – from both governments and the private sector.
Microsoft is investing $500 million into the Seattle affordable housing market to boost supply and affordability, while in the UK the Wellcome Trust has submitted plans in Cambridgeshire for a major expansion of its Genome Campus in Hinxton, which includes 1,500 homes reserved for campus staff.
From governments, demand side measures aimed to slow demand are most common, particularly from overseas.
Bidwells has set out a number of methods that could ease the affordable housing crisis in Cambridge and Oxford:-
- Allocations in local plans for key worker housing in the affordable mix
- Designated funding from Homes England to aid development of affordable and key worker homes
- Encouraging science park and other business space providers to look at live/work models
- Tie-ups with big businesses to provide cheaper loans for housing in return for tax breaks
- Encouraging higher density development in sustainable locations e.g.next to transport hubs
McMahon added: “Cambridge and Oxford are now on the global stage thanks to their world class universities and burgeoning tech centres. We want to attract more companies, we want more growth, and we want to cement the position of Oxbridge as a viable alternative for large tech companies moving out of London.
“Housing must support that: to attract the best and brightest we need to be able to offer them the best and brightest places to live and this means a massive investment in housing.”
Business Weekly this week exclusively revealed Apple’s growth plans in Cambridge – moving from 10,000 sq ft in Hills Road to a 79,000 sq ft new building in Station Road inside the next two to three years.
It is understood 30 Station Road is under offer to Apple; the current building will be demolished and a new one of circa 79,000 sq ft will replace it.
An Apple insider tells us that 90 Hills Road was full pretty soon after moving in following the acquisition of Cambridge speech technology startup VocalIQ.
At the same time Amazon has announced that it will create more than 2,000 permanent new jobs in the UK this year. Over 170 of these will be spread across its development centres in Cambridge, Edinburgh, Manchester and London.
Amazon’s Doug Gurr said: “We are delighted to be able to continue to invest and grow our UK business. The UK is a fantastic hub for global talent and the exciting, innovative work that takes place here benefits Amazon’s customers around the world.”