Investors must look at UK regeneration spots

That and the new Crossrail station locations offer any number of options

While 2017 was forecast to be a challenging year, the London property market proved resilient and outperformed expectations ... and setting the pace for this year. Despite widespread political uncertainty, many encouraging high-value transactions took place and international investors can look forward to this momentum continuing.

Recently, a number of trends have emerged indicating a shift towards more sophisticated purchasing patterns, showing that interest in the UK property market has not faltered since Brexit. Investors have instead been altering their preferences to ensure smart purchasing decisions as the weaker pound offers immediate savings on UK property of up to 20 per cent.

There has been a notable increase in institutionalised investment as well as a surge in bulk buying, particularly in larger developments of over 100 units. Meanwhile, these buyers also understand the impact of regeneration, which has been a significant draw for investment in the UK market, with many areas of London and the north receiving substantial funding.

International investors, especially Middle Eastern and Chinese, are particularly in tune with the regeneration activity taking place and see the benefits of investing early. This is because they understand the scalability, due to the volume of regeneration rippling across the capital. There is also a significant lifestyle element to an area undergoing regeneration.

Focus

Overseas buyers are therefore beginning to focus their attention on these emerging markets that pose higher potential yields, rather than the more well-known hotspots in prime central London, which have been most popular historically.

Outer boroughs such as Ealing and Hackney for example have seen prices skyrocket in recent years. Ealing in particular is in the throes of regeneration, with five new Crossrail stations popping up across the borough. In 2019, once the east-west line opens, the commute to the West End is expected to take just 11 minutes. Throughout 2018, I fully expect investment to continue in a progressive movement towards normalisation. Although investment levels may be subdued compared to the peak experienced in 2015, on a historic basis, they fare extremely well, particularly in light of the huge (and unexpected) political change brought about by Brexit, which the UK has quickly come to terms with.

The writer is Director of Residential Development & Investment, UK Sotheby’s International Realty.