The international investment property industry has changed significantly over the last 10 years, but Britain has always been top of our investors’ wish lists, and London remains one of the top global investment spots.
London has become the world’s second-most expensive housing market, behind only Hong Kong and significantly ahead of third-placed New York.
A square foot in London will now cost US$1,025, on average, compared with Hong Kong at US$1,411.
A survey of 1,033 adults in Hong Kong, conducted by IP Global and YouGov in January, found that Britain was one of the top three markets Hong Kong residents would consider investing in, alongside Japan and Australia.
With good reason too, as from 2006 to 2016 the capital growth of London property has outperformed the British average by more than double.
Our clients invested £378 million (US$544 million) in London from 2009 to 2013, and that group of investors have since seen over £114 million worth of capital appreciation – a pretty impressive return.
This week, IP Global launched a special report on the British property market that draws out not only key investment trends we have seen over the last 10 years but also current and future buying behavior and patterns.
In general, we have seen prices being driven up by a strong and stable economy, an increasing population and a systemic housing supply shortfall.
Regional cities such as Manchester, Birmingham and Liverpool are also moving higher up the investment agenda, as are the suburban areas around London’s commuter belt.
Across London, continued population growth is placing extreme pressure on the city’s housing supply, with rising numbers looking to outer commuter suburbs for better value.
Owing to this, the outer London population continues to grow at a faster rate than that of inner London, driving significant price growth across the city’s commuter belt.
Many outer London boroughs, particularly those in the east and southeast, are now expected to outperform prime central London.
This uplift is further enhanced in locations that will benefit from regeneration investment.
Crossrail is a new 118 kilometer railway line that will, from 2019, provide a high-frequency commuter service crossing London, from Berkshire in the west, via central London, to Essex in the east.
There is no doubt it will be one of the key drivers of property growth in the city over the decade to come, reducing travel times into London by an average of 15 minutes, and putting 1.5 million more people within 45 minutes of the city center.
As an example, areas such as Ilford and Woolwich, both on the eastern end of the forthcoming Crossrail line, have seen significant regeneration spending in recent years that is playing a key role in powering local property market growth.
From 2016 to 2020, property prices are expected to grow 27 percent in outer London areas.
Undervalued regional cities such as Manchester, Birmingham and Liverpool are also receiving greater attention, with the government-led Northern Powerhouse scheme and infrastructure investment such as High Speed 2 and TransNorth driving growth and opportunity across the North and Midlands.
Manchester, just one example, is seeing ever greater Chinese interest following President Xi Jinping’s visit last year.
It will be a strong beneficiary of the Northern Powerhouse, as well as plans for urban regeneration and increased connectivity, and enjoys the strongest economic growth of any city in Britain.
Despite the current uncertainty over the outcome of the referendum next month on whether to stay in the European Union, Britain is part of a small selection of global property markets that have earned the status of safe haven among international property investors.
The national economy has proven itself to be resilient, and investors are rightly confident in the British property market’s capacity to deliver steady rewards with a comparatively low level of risk.
For buyers looking at Britain now and going forward, the years ahead look to be just as favourable, and our shift in focus to outer London pockets of value and regional city opportunities will present investors with many strong yield and capital growth opportunities.
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