According to Reuters London is in the list of the most attractive cities for investment in real estate since 2006. The top five cities for investment in real estate include London, New York, San Francisco, Houston and Los Angeles.
Nevertheless, many experts warn that the growth of local prices has its limits. They are indicating a cyclical development of the real estate market and the potential consequences of Brexit. Currently, we can notice some contradictions in various forecasts.
Some analysts are sure about the absolute profitability of property investments and its constant increase in value. Others believe that Brexit has severely undermined the real estate market in London. The confusion in various ratings does not show investors real situation on the market.
We believe that London will always be an attractive city for investment in a residential real estate. In this article, we will try to understand the main reasons for this.
Convenient transport networks. London has one of the largest urban transport networks in the world. Nowadays most people living in London prefer to travel by public transport because this is a reliable and convenient way to commute to work. The government, institutional and private investors annually invested vast amounts of money for the development of a high-standard transport service. New electric transport is not only eco-friendly but also will significantly reduce noise levels on the streets. In London, you can continuously observe the construction of new stations of high-speed local trains and underground metro, which provide convenient transportation around the city. Also in London, there is no such a problem with traffic jams as in many other capitals of the world.
Low pollution. Although London is a metropolis with more than 9 million population, the government continually invests money in improving and preserving the green spaces of the city. Although the area for the construction of new residential buildings is severely restricted, developers are required to provide a park area for residents. All new cabs in the city should be electric from January 1, 2018. According to the Mayor's Transport Strategy, all public transport will be electric. This change will significantly reduce the level of emissions on the streets of the capital. In general, we can see that the city is actively developing infrastructure for electric vehicles. The number of available rapid chargers for electric vehicles appearing on the streets is growing every year in a geometric progression.
In accordance with the agreements granted by the local municipal authorities developers are implementing projects to upgrade various close to Central London areas. Large regeneration projects are under construction, such as Woodberry Down or Nine Elms. Earlier, the central part of London was more cultural and historical. However, by 2030 there will be excellent and modern living conditions with the necessary infrastructure, which includes nurseries, schools, parks, shopping centres, etc.
In London, many headquarters, head offices of world-famous holdings and corporations are located which provides high level of employment. As a result, this entails high demand for rental properties. According to recent research, GFCI (Global Financial Centres Index), London, New York and Singapore are considered to be the largest international financial centres.
London is the leading economic and cultural capital of Europe, which makes it even more attractive for life. Each year a lot of international and cultural events, such as exhibitions and vernissages happen in London. Various festivals and sporting events are held here also.
An important advantage of London is the availability of the world best educational institutions. Millions of young people from everywhere dream about studying in London. This also provides a steady inflow of the population growth.
After the announcement of Brexit the pound sterling currency rate declined significantly. This resulted to a decrease in the minimum threshold of the possible investment entry for international investors. Banks of Great Britain and international banks offer favourable terms for mortgage lending. It is also important to note that expected rate of inflation remains to be low in the UK.
Moreover, there is a massive shortage of affordable housing in London. Thus, the prices for this type of properties will continue to grow.
Based on all of these factors, we can conclude that long-term stability, high demand and shortage in supply of specific type of residential properties are the main guarantors of the attractiveness and profitability of the London residential market. It is important to note that even regardless of some volatility on the real estate market, the value of real estate in London usually doubles every ten years.
Usually, the period of uncertainty doesn’t last for too long and in our opinion is the best moment for investing as it brings attractive opportunities. Professional investors should adequately evaluate the risks and manage their investments wisely. In this case their financial decisions and results will be positive.
If you want to know more how we helped hundreds of foreign investors to build their London real estate portfolio, contact UK Property Advisors on +44 (0) 755 310 9657. We are a reliable partner and an expert in residential real estate investments in London.