While the media frets over Brexit and the UK political situation, the country’s real estate market has opened up. In London, property prices have fallen from their 2014 peak with transaction levels remaining low in 2019. But this doesn’t tell the entire story.
The falling pound has given overseas buyers newfound financial strength. International investors who may have not been able to afford London properties in the past can now enter the market. Before jumping in head first, there are a few things you should understand about London property investment.
1) Brexit equals opportunity
On the surface, there is a lot of negativity surrounding Brexit. But for London property investment, it has actually turned into a great opportunity. As mentioned earlier, the significance of the falling pound should not be understated. International buyers who were priced out of London earlier in the decade are now finding it to be full of exciting, affordable real estate opportunities.
And while Brexit has been a drag on housing prices, this is only a short-term situation. A poll conducted by Reuters found that most economists believe Britain will eventually agree to a free trade deal with the EU and this will see London home prices rise by one percent in 2020 and 2.5 percent the following year. Meanwhile, Savills is forecasting 5-year price growth of 12.4 percent between now and 2023.
Looking at the situation from a historical perspective can also provide some context. Stats from the UK’s Office of National Statistics show that the average London house price has increased by 580 percent over the past 30 years.
2) London’s central areas remain a target
London property investors have a lot of options when it comes to where they should invest. Fringe areas around the UK capital have grown in appeal, but London’s central areas, Zone 1 and Zone 2, remain the best areas for real estate investors wanting to rent out their property.
Rental yields vary from two to five percent for central London residences depending on the neighbourhood. This isn’t as high as fringe areas around the city, but demand in Zone 1 and Zone 2 is far stronger. Some real estate agencies are reporting as many as 14 aspiring tenants registering for every rental listing they have in prime London. However, it is a renter’s market on the outskirts of the city with more supply than demand.
The reasons for the strong demand in the city centre are straightforward. Many people can’t afford to buy property in central London, but still want to live here. Additionally, the UK government cut tax relief landlords were eligible for in 2017 and that led to a huge sell off of rental properties. This squeezed supply and saw demand surpass supply in Zone 1 and Zone 2.
3) Project quality must match the location
Overseas buyers must understand that location isn’t the end-all, be-all when it comes to London property investment. It is important, but people willing to rent properties in prime London are expecting the best. If the quality of a residence doesn’t match the location its in, letting it out will prove difficult.
With more than 20 years’ experience, Regal London has an unbeatable track record of delivering outstanding residential-led, mixed-use schemes in central London.
Each of the developer’s more than 3,000 residential units completed and underway boasts Regal London’s hallmark of quality, with superior specifications. From elegant building designs to interiors created with innovation, detailing and craftsmanship, Regal London projects do not compromise on quality. The firm has even partnered with renowned interior designer Kelly Hoppen OBE on past developments.
Projects from Regal London include The Atelier in West Kensington, a stylish development embracing the sophistication of London’s most prestigious neighbourhood, and The Compton in St. John’s Wood, a luxurious project designed to be chic, comfortable, luxurious and functional.
Thanks to its meticulous attention to detail, Regal London isn’t just building places to live, but capturing what makes central London special. For investors, they can rest assured that they are buying from a developer who knows the market inside and out.