The Royal Docks should be given over to housing, with plans to develop large-scale business on the site flawed.

That’s the warning from a think-tank which says the use of public subsidies to attract business to east London, through an enterprise zone status, was distorting the picture.

Instead, says Centre For Cities, planners should listen to business which wants to be in central London, with the Royal Docks an obvious answer to the chronic housing shortage in the capital.

The think-tank’s senior economist Paul Swinney said: “You can build as much business space as you want in Silvertown but if businesses want to go into central London that’s where they want to go.”

The London Assembly is investigating parallels between the Royals and Canary Wharf.

Already ABP is looking to build a major Asian business park north of the Royal Albert Dock with Silvertown Quays, to the south, housing “brand pavilions” to showcase products.

Mr Swinney told members: “This part of London is key to solving the housing crisis. I don’t really see why the public sector should be giving incentives for business to invest in this site.

“The research that we’ve done doesn’t suggest there would be huge take-up on that site without that incentive. We should be concentrating on increasing the supply of office space in central London because that’s where the demand is.”

He said that if businesses couldn’t be in central London they wouldn’t choose the Royals“they will go to Berlin or Munich. It’s that density, that proximity that they look for”.

“What we are seeing is an increasing concentration of jobs in central London because that’s where businesses want to be so the supply response should be to increase the supply in Central London.

“Businesses don’t say ‘there’s not enough space in London I’m going to go to Coventry’ they just push up the price in central London.”

His argument was challenged by Eric Sorensen, former chief executive of the London Docklands Development Corporation. He said: “Housing round the Royal Docks doesn’t seem right. There is, quite rightly, a strong demand from Newham Council for jobs and business rather than more housing. I don’t agree with proposition that there is business and there is housing and they have simple location preferences.”

GLA development manager Dan Bridge said: “There is genuine excitement that we aren’t creating dormitory residential settlement.”

He also said that commercial land around the Royal Docks was perhaps 50% of Central London, which was a key motivator for businesses to move. “That’s not a subsidised incentive, that’s a market incentive.”

He added: “Anyone who has been to Beijing will know that travelling 20 miles to a business park is a normal done thing. So when potential investors are looking at the Albert Dock and seeing it’s 15 minutes to the West End on Crossrail they think it is central London.

“Everyone knows about the agglomeration of businesses around Heathrow and the M4 corridor directly related to the airport. That was one of the significant reasons ABP decided to locate there because it’s five minutes’ walk from an airport than can get you anywhere in Europe.”

“With Silvertown Quays, the market is coming from brands and businesses that aren’t able to access that kind of building typology at that kind of cost in the West End – we’re talking about interactions, auditorium and experiences. They’re very different.”

Mr Sorensen said: “The important point is the virtue of competition and choice. The Royals are a good compromise as far as inward investors are concerned about price, location and other benefits. What we’re talking about is what sort of market responses can we make for people who want to be in London.”

London First’s Jonathan Seager said: “Ultimately, businesses will end up where they want to be. The reality is some sites, pretty close to central London, have lain derelict for a very long time and the market hasn’t gone there so we have to ask how we can stimulate some activity. I don’t think you can artificially push the market where it doesn’t want to go.”

Royal Docks Floating Village
Royal Docks Floating Village cgi

What else is happening on the Royal Docks?

■ As well as the ABP Business Park, Silvertown Quays and housing at Albert Basin, Greater London Authority principal development manager Dan Bridge outlined a number of other plans for the Royal Docks to the London Assembly.

Floating Village

“This was something the mayor was very keen on doing,” said Mr Bridge.

“It will be the country’s first floating development. It is going be a mixture of some 50 residential units but, more importantly, it needs to become a visitor destination.

“One of the criticisms that we have to date about the cable car is that people come over from Greenwich Peninsula where there’s interesting things around the Dome and they get over to the Royal Docks and there’s a very poor offer. The idea is that the floating village will become a visitor destination.”

What next? Planning application end of this year, start on set next year.

Commercial boatyard

Albert Island is a small plot of land, at the far east of the docks directly under the flight path. However, it is, says the GLA, a “significant level of opportunity”.

Mr Bridge said: “There’s a real desperate need for a commercial boatyard and we are about to seek approval for a procurement exercise.

“There are so many vessels on the river now but the operators claim that they either have to use poor facilities or go for miles, either to the south coast or sometimes to Holland, to get their boats repaired.

“There’s a strategic need within the city for a new boatyard. We’re not sure yet whether it is commercially viable.

What next? Seek feedback from the market as to its viability.

Transport upgrades

Around £200million of investment was needed to upgrade the facilities around the dock, including making it easier for pedestrians and cyclists.

Mr Bridge said: “We’re fortunate that a lot of the strategic infrastructure is in place – so we have the DLR, we will soon have Crossrail, we benefit from a cable car and the roads aren’t bad.

“There are a number of elements of infrastructure that are required and they are broadly around station upgrades to the DLR and capacity upgrades to the DLR rolling stock.”

Custom House needed upgrading to include escalators because of the likely increase in traffic and an upgrade to Crossrail station at Custom would be necessary “because there is a requirement for a new interchange between Custom House and DLR.”

He said the funding would be a mix of that already allocated and contributors for developers although there was still a shortfall to tackle.

What next? Commit expenditure by second half of next year.