(Oct 7): Plans to build luxury homes in London have increased to the point where it will become difficult for some developers to find builders for their projects, consulting firm EC Harris LLP said.

Developers aim to construct more than 25,000 luxury properties in the city worth more than 60 billion pounds ($96 billion) over the next decade, compared with a pipeline of 20,000 homes a year earlier, EC Harris said in a report today. That’s expected to lead to a shortage of qualified workers in a market where construction costs are seen rising as much as 8 percent this year, the company said.

Luxury-home developers are aware that “some projects may be undeliverable in quality and program terms unless they get to the front of the queue to secure the right resources,” Mark Farmer, head of EC Harris’s residential team, said in the report.

About half of the luxury homes planned for the next 10 years will be developed in the district of Chelsea and Fulham and in the South Bank area, stretching from Battersea to Tower Bridge, EC Harris said. In August, prime residential properties in central London districts including Chelsea climbed 7.7 percent from year earlier, the smallest increase in four months, according to data compiled by Knight Frank LLP.

American Residents

The number of prime homes planned for South Bank has risen 34 percent from a year earlier to 4,861 and by 45 percent in St. John’s Wood, a district favored by Americans living in the U.K. capital, to 323.

Values across London’s residential property market will fall 2.6 percent next year, the first decline since 2009, the Centre for Economics and Business Research said yesterday.

EC Harris, based in London, defines luxury homes as those that will sell for 1,350 pounds a square foot or more. That’s up from 1,250 pounds last year.

Glass Ceiling

“As capital values have increased, the ability to raise rental levels in parallel will hit a glass ceiling of domestic market-led rental affordability,” Farmer wrote. “As questions remain over the sustainability of recent levels of sales value inflation, the fragility of this market is brought into focus.”

Still, a cooling Chinese property market may attract more Asian buyers and developers to London, Farmer said.

There is increasing interest from developers in building homes valued at 500 pounds a square foot to 1,000 pounds a square foot, particularly those near the Crossrail line that will link Heathrow Airport to Canary Wharf, EC Harris said.