It has been an interesting time for the UK of late, none more so than within London’s property market. First there was the Brexit vote and subsequent deal negotiations that have caused some uncertainty among buyers, both from domestic and overseas investors.
Then there have been successive tax increases especially on the purchase of second homes and for non-UK domiciled buyers. Then there was the snap election in June which saw the government lose its Commons majority, further unsettling potential property buyers. These factors have contributed to a market which has seen property prices drop 15.2% since their peak in 2014.
However, as experienced property investors will know, property as an asset class is one for the long-term and amid that backdrop, we can share the latest industry report which predicts a 20% rise in price growth over the next five years. From 2019 to 2024, property values are expected to experience significant growth, especially in London which is likely to see 20% growth in the prime central London market. Despite Brexit, London is still a key, global financial centre attracting financial talent from all over the world. This industry alone generates domestic wealth and attracts professionals from the UK and abroad who will also be seeking appropriate property to rent.
The technology world too has turned its attention to London, setting up head offices in locations all over the city: Apple in the Battersea Power Station development, Google in King’s Cross, Shazam – Hammersmith Grove, Bloomberg in the City, Facebook – One Rathbone Square, Amazon – City/Shoreditch borders, to name a few. This growing wave of global technological powerhouses choosing London for their headquarters shows that it is keeping pace with several European tech sector hubs and holding its own in a competitive global marketplace. Not to mention the technological talent from all over the world that will be making their home in London.
As we frequently say in our regular trips to visit overseas clients, London continues to be the world’s capital city and a top destination for property investment, both residential and commercial, from a global point of view.
Against this backdrop it is easy to see why central London property prices are expected to rise 20% in the next five years. Projected rises in other London areas that aren’t as attractive to foreign investment (and consequently, the workforce) are only expected to grow by 10.2% over the same time period. It is also worth noting that it is the luxury properties in prime central locations that will see most growth. According to a recent report, Britain has 394,000 properties that are valued at more than £1m and 63% of these are located in London.
So, while it is too early to feel completely confident (the same reports predict that the property market will remain flat for one more year), the signs are good. Even with Brexit uncertainty and the continued negotiations, London is clearly still capable of attracting global business and professionals seeking high-calibre property.
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