London is the world’s capital city, a thriving metropolis where everyone is welcome. It’s the UK’s centre for investment and opportunity and it has unparalleled cultural and historical significance. There are so many reasons why London property investment is the best in its class so let’s take a look at the top ten.
Did you know that in the long term, London property has outperformed investments in shares and commodities, even gold and oil? The property market is of course subject to the same vagaries as these markets however, it has the potential for greater stability in the long term and this is especially true for London which has shown no reduction in its popularity or tenant demand.
For many clients, foreign investment in London’s property market offers an opportunity for a diverse investment portfolio. For overseas buyers, it offers good investment away from local markets and to help spread portfolio risk. For investors who choose only to buy in London, the increasing growth of some outer areas can supplement the long-term popularity of Prime Central London.
In the wake of Britain’s exit from Europe, the housing market has reacted with uncertainty. The result is some great deals for buyers, property in prime locations at affordable prices. What’s more, the interest rates are low (0.5%) and have been kept low for 10 years. That has meant the cost of borrowing is also low providing some great deals for property buyers.
London has never wavered in its popularity as a city for work and play. As a consequence, professionals are prepared to pay a premium for the right property. On average Londoners allocate 50% of their incomes to rent and we have seen letting transactions up by 31% in 2017 from 2016 figures.
For landlords, the annual rental yields can be between 3-5%, and in conjunction with capital growth on the value of the property, this brings enviable returns on investment. It is also important to note that properties in London tend to let quickly, typically just a few weeks or even a few days in some cases, and that this is much quicker than in other cities around the world. The result is fast income turnaround and fewer void periods, all good news for landlords.
There is a strong demand for rental property, in fact, property comparison site Rightmove noted that demand was not being met by supply as far back as 2011. Demand continues to outstrip supply and even with 46,500 new build completions last year, it is still well below the 64,000 new homes needed to keep up with the demand.
London’s universities and educational institutions lead the world according to QS World University Rankings and it has been deemed the third best city in the world for student life. With such historical gravitas, it is little wonder that many overseas students seek out places to study here and in so doing, bring £20bn worth of revenue to the UK economy. Many overseas parents plan ahead and buy property for their children to use during their studies (perhaps beyond that should their child settle in the city beyond their studies). For overseas parents educating their child in the UK, it’s a win/win scenario: their child lives rent-free, any extra rooms can be let to study friends to generate income and the property will also increase in value too.
London may have great historical precedent but it’s always been a city that has innovated and rebuilt. Grand urban regeneration projects such as Nine Elms around Battersea Power Station and £14.8bn investment in Crossrail (one of Europe’s largest infrastructure projects) are great examples of its evolution. It is this constant reimagining and reinvention of forgotten areas that gives London that investment buzz.
Brexit has undoubtedly caused business, specifically international business, concern but financial giants such as Bloomberg, McKinsey, Wells Fargo and Deutsche Bank continue to invest billions in London. Furthermore, international tech pioneers such as Google, Facebook, Amazon, Apple and Snapchat have set up headquarters in London, attracting £2.5bn worth of investment last year alone and earning London the title of the ‘New Silicon Valley’.
London is a great place to live and work with a unique vibe. It attracts professionals and students from all over the world, keen to wonder in its historical significance, cultural richness and modern opportunity. It is also one of the most cosmopolitan cities in the world where everyone is respected and welcomed. Because of this it will continue to attract people from all over the world.
View all posts by Marc von Grundherr