Investors are fast snapping up the new buildings punctuating Dalston’s skyline. But will the East London trendy hotspot retain its value once the fashion for living there fades?

Pretty much every East London rag, magazine and blog – as well as The Guardian, Observer and Evening Standard – has referenced Italian Vogue’s 2009 feature on Dalston. And not just when it came out – I was reminded of it by local Stoke Newington paper N16 just a few weeks ago.

Italian Vogue proclaimed Dalston the “coolest place in Britain”.

Considering that it was only a few years ago that Dalston made headlines for all the wrong reasons, you can see why it got tongues wagging.

Indie band Razorlight wrote a song warning people against the place

Just north of the City, Dalston, E8, is a Hackney ward flanked by Stoke Newington to the north and Shoreditch to the south. To the east lies the achingly hip area of London Fields, and the not- so-hip Clapton – which will, no doubt, become “the new Dalston” within a couple of years (you heard it here first).

West of Dalston lies Canonbury, a charming example of Noughties gentrification, replete with specialist organic grocers with names like “Mother Earth Café & Shop”. Further west you reach the middle-class nirvana that is Highbury & Islington.

But back to Dalston. Amy Winehouse allegedly scored her drugs there. Indie band Razorlight wrote a song warning people against the place. Home to countless Turkish restaurants, pound shops and an outdoor market specialising in tripe and pigs’ trotters, Dalston isn’t glamorous.

Compared to its neighbours it’s really rather shabby. It’s noisy too. On the Kingsland Road, Dalston’s busy high street and part of the A10, a symphony of sirens can be heard day and night.

The new kids on the block

So what does the harbinger of style, Italian Vogue, see in the place? Ian Crawt has been managing property in Dalston and its surrounding areas for 12 years. He says that while it’s always attracted an arty crowd, “there are more City people coming now”.

So much so, that when it comes to investing in property, Dalston has usurped both its northerly and southerly neighbours. “After all, you can be outside Liverpool Street in 10 minutes,” he says. “City boys get their bonus and choose to invest in Dalston and rent out the property.”

According to the Halifax, property prices in Hackney rose by 320 per cent between 1996 and 2006 – the biggest rise in London

Dalston is about 40 per cent investors and 60 per cent owner/occupier says Crawt. “Whereas in Shoreditch and Stoke Newington the percentage of owner/occupier is much, much higher”.

Over the past two decades both Stoke Newington and Shoreditch have enjoyed a renaissance. Stoke Newington, fondly referred to as “Stokey” by its residents, has shed its “no-go area” shackles so successfully that in 2004 it was labelled “the best place to be a parent” by parenting magazine Junior.

As for Shoreditch – well, you don’t need me to tell you about Shoreditch.

Both areas are in Hackney and both have had their paths to glory well documented. According to the Halifax, property prices in hackney rose by 320 per cent between 1996 and 2006 – the biggest rise in London.

Perhaps Dalston then is an obvious choice. Sandwiched between such impressive social climbers, it seems only a matter of time before its turn for gentrification comes up.

Except that unlike Stokey, Dalston doesn’t have a Church Street – Stokey’s equivalent to Islington’s Upper Street – nor decent green spaces (Stokey has Clissold Park), a farmers’ market, Whole Foods, or a historic cemetery (Stoke Newington lays claim to Abney Park Cemetery, one of the “Magnificent Seven” which includes Highgate Cemetery).

It’s not a commercial hub either. While journalists eagerly dub Shoreditch and Old Street the UK’s answer to Silicon Valley, Dalston’s main thoroughfare, Kingsland Road, attracts bargain hunters looking for cheap shampoos and potatoes, not tech entrepreneurs.

In 2007 the GLA ranked Dalston the 21st most deprived out of the 624 wards in London

Edginess aside, Dalston does have some notable merits. Last April, Boris Johnson re-opened the overground station, Dalston Junction, which had been dormant since 1986, and the new East London line was launched.

Starting at New Cross and running all the way to Highbury & Islington, the East London Line stops at Wapping and Canada Water, providing Dalston with fast commuter access to two major commercial hubs.  

Crawt cites both the East London Line and Hackney Council’s regeneration of the area as having “dramatically changed” E8. But it’s not, and never will be, he says, the new Islington – “it has its own specific identity”.

In terms of property prices it’s some way off too: “People realise that what they want in Islington they can’t afford, so they’re naturally pushing out further.”

The Olympic effect

In 2002, midway through the housing boom, the median price for a flat in Dalston was £150,000. For a terraced house it was £249,000.

In April last year, Lloyds TSB published research showing the average price of a Dalston property had jumped to £303,243. This, said Lloyds, was thanks to its proximity to the 2012 Olympic Games. (Of course, Lloyds is an Olympic sponsor.)

Comparing 2010 house prices with those of 2005, Lloyds analysed the 14 postcodes located close to the Olympic Park. Dalston’s residential property prices were shown to have risen 39 per cent, the third highest increase after Homerton and Shoreditch. (See table)

But it’s not just the Olympic effect. A number of new housing projects are under way in Dalston too, including Dalston Square; a £160m development that its builder, Barratt Homes, says will “provide a new community for this vibrant, cosmopolitan quarter of the capital”.

The apartments are marketed as “just two miles from the City”, and the development includes a residents’ gym, 24-hour concierge, library and shops. Prices start at £270,000-£280,000 for a one-bedroom flat rising to £480,000 for a three-bedroom flat.

This type of upmarket development signals a new era for Dalston and a new type of buyer: those with money to spend.

Dalston might be cool, but it’s also one of the most deprived areas in the UK. Unemployment in the area has been stuck around the seven per cent mark for the past 10 years – twice the national average. 

“Gentrification has roared through the area – it’s the yuppies putting their Laura Ashley curtains up that has helped transform it”

Diane Abbot, MP for Hackney North and Stoke Newington

The 2001 census revealed that 56 per cent of residents didn’t own a car or van – compared with 27 per cent nationally and 37 per cent in London. In 2007 the GLA ranked Dalston the 21st most deprived out of the 624 wards in London.

One person charged with helping Dalston become an affluent area is Diane Abbot, MP for Hackney North and Stoke Newington. She moved to Dalston – (which is in her constituency) – from Stoke Newington to afford a bigger house. 

Abbott believes Dalston has been “transformed” and that “gentrification has roared through the area”. She cites the “yuppies putting their Laura Ashley curtains” and the ward’s proximity to the City and now Canary Wharf as being the primary catalysts.

But will it sustain its growth? Abbot
believes so, in fact she has so much confidence in her constituency that she believes it will be comparable to Islington in 10 years’ time.

The bargain basement

Property expert Beverly Hedge, of Currell Commercial Estate Agents, disagrees. It is the area’s reputation as one of the most deprived areas of London that has helped keep commercial property prices and rents low, she says, and she is unconvinced that Dalston will ever become as gentrified as Islington.

But she does believe that it is “following in its footsteps”. According to Hedge, commercial property in the area is comparatively very affordable; she cites brand new, high-end property at £12-£15 per square foot.

In Islington the equivalent would be £20 per square foot, and Stoke Newington at £15-£16 per square foot. As for Shoreditch, “that’s such a wide canvas, it could be the twenties or the teens,” says Hedge.

Despite the low rates, Hedge says she’s not noticed an influx in people looking to buy commercial property and believes that developments like Dalston Square are, ironically, hampering the area’s regeneration. “It looks like a building site everywhere.”

Would she invest in Dalston? “Yes, it’s still very affordable. Do it now, because it won’t be in five years.”

The culture effect

Regeneration in Dalston isn’t new. Long before developments like Dalston Square and Pembury Circus, Hackney Council had made up its mind to clean the place up.

The overhaul of Gillett Square, formerly a rundown car park behind Dalston Kingsland Station, and the decision to house the Vortex Jazz Club there, neatly demonstrates how the council chose to rejuvenate the area by giving critical mass to the arts.

The Vortex began life on Stoke Newington’s trendy Church Street. Its story is a familiar one. A jazz club, it moved to the area in the Eighties, “long before anybody else was there”

As well as the Vortex, Dalston boasts a disproportionately high number of excellent arts venues, including Dalston Jazz Bar, Café Oto, the Rio Cinema and the Arcola Theatre. These have helped the area become a thriving cultural hub and help explain to Italian Vogue’s forthright sentiments.

One of the directors of the Vortex, Oliver Wein, is at the very heart of Dalston’s culture revolution. He arrived in the area five years ago, “when people were frightened of the area”.

The Vortex began life on Stoke Newington’s trendy Church Street. Its story is a familiar one. A jazz club, it moved to the area in the Eighties, “long before anybody else was there”, but was “kicked out” as the area became gentrified and the rents were pushed up.

Having heard of its fate, Hackney Council approached the club and offered to host it in Gillett Square, an area behind Dalston Kingsland Station earmarked for a complete overhaul. The Vortex was exactly the kind of cultural boost the council was looking for.

“At the time Dalston wasn’t a no-go area, it was a vacuum. It just wasn’t on people’s radars,” says Wein.

As for property in the area, Wein believes both residential and commercial rents as well as property prices have risen dramatically. He also claims that “the new wave of City people” is pushing up the prices in restaurants and shops.

Would he invest in Dalston? “I don’t know. It’s gone up a hell of a lot already, so it has been a great investment for some people. Having been here for six years I’ve seen it change a lot.

“All the musicians are moving out. They’re all going to Walthamstow and Tottenham…”

 

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