London attracts investors from more countries than any other city on earth. I’ve just returned from my latest trip to host property investment seminars in Hong Kong and each time I visit, I’m astounded by the ever increasing interest in London property. These events always appeal to a broad mix of investors, from property professionals adding to already substantial portfolios to first time investors dipping a toe in the London property market – but what brings them together is their recognition of the potential of London property.
Finding a good rental investment property
The focus of my recent presentations was to investigate how investors can find new opportunities in a maturing market. Property prices have risen dramatically in recent years and rental demand is very strong (25% of Londoners now rent privately), with the city’s population predicted to grow from its current 8.3m to 10m by 2021. But finding a good rental investment property is now all about identifying areas of the capital that are still relatively undervalued.
Rental investment hotspots
Ealing is a prime example, attracting investors in droves. During my latest trip alone, I met six investors who had each bought apartments at the new Dickens Yard development. Investors who purchased apartments in the first phase of the development are achieving rental yields of 5% – 6%. Even though sales prices are now increasing, buyers in the next phase are still looking at yields of 4% – 5%. Compare this to rental yields in central London, areas like Kensington and Chelsea, where higher purchase prices mean yields are only
around 2% – 2.5%.
Hammersmith is another rental investment hotspot. The area is seeing massive redevelopment and property prices are already soaring. Apartments at the new Sovereign Court development released at £500,000 just six months ago are now selling for £675,000. A great result for investors who bought early on.
These are just two of the areas that investors were keen to discover more about but by no means the only ones – overseas buyers are remarkably knowledgeable about the complexities of the market.
Feedback from our Hong Kong clients
We have an office in Hong Kong (one of five international offices) and our manager there, Louise Ng, who helped to organise our seminars, was again overwhelmed by the level of interest. She had this to say: “We hold these presentations regularly, every three or four months, and each time I am astonished by the increasing level of interest. Even recent changes to Capital Gains Tax for overseas investors seem to have had little effect on demand.”
“One success story that a new client told me about was this. He recently bought his first London property. He purchased in West London because it met his requirement for a high yield and a purchase price of under £200k. Our furnishings subsidiary furnished the property for him and three days later his first tenant moved in. He is already bringing in a healthy investment income, with a property that is already rising in value. He is now planning a further purchase quite soon.”
These are the sorts of anecdotes we hear regularly from our clients, and I think it is these, more than any statistics that you read in the press, that really highlight why London property continues to be such a draw for overseas investors.
I will be going with our Managing Director Anita Mehra to Kuala Lumpur and Singapore in April to continue our series of seminars and it will be interesting to see how reaction there compares. I have a feeling it will be a very similar story…
Marc von Grundherr, Director, Benham & Reeves
Tel: 020 7435 9681, Email: email@example.com, Web: www.benhams.com
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