London Property Investments
Whether you are looking to invest in one property or are building an extensive property portfolio, our experienced property investment team can advise you on the best investment opportunities available in London.
Property Investment London
Savvy investors have long been aware of the advantages of property investment. Unlike other forms of investing (such as shares or bonds), the property market is less affected by the financial and political climate. UK property prices also typically rise rather than fall, making buying a property a lower-risk proposition.
What is property investment?
The term refers to the purchase of any type of property, from a studio apartment to an industrial warehouse, with the intention of making money from it.
You may choose to invest in one house or commercial premise, or to build an extensive portfolio, consisting of numerous properties. Some investors make money from capital growth (the profit made after the property is sold on), while others choose to generate a rental income. Of course, it’s also possible to achieve both.
Investing in London property is a particularly smart move. The capital is a magnet for investors, and there are plenty of financially viable properties in the city. Rental demand is high, and market prices generally keep rising, ensuring a good profit from capital growth.
In this guide, we’ll outline why London’s properties are great investments, where to start your search, and also provide information about commercial premises. Read on to learn more.
Is London property a good investment?
London is an excellent place to invest in property. Everyone who lives in London requires somewhere to live and with over 8 million people in the capital and a growing population, you will never be short of potential tenants. In fact, landlords will be pleased to note that rental demand is higher than ever. In 2019, the number of tenants and occupiers registering with us were up significantly from the previous year. This demand is driving rental prices up, which means more profit-making potential.
Likewise, those who want to generate good long-term capital growth should look no further than the capital. There is always demand for houses to let in London, and commercial properties often benefit from high rental values and strong covenants.
The commercial property market is also performing strongly. One research firm estimated that close to £50bn of commercial property was sold in the West End, Canary Wharf, Midtown and the City of London from the start of 2017 to June 2019 (1). This shows that, in spite of Brexit uncertainty, investor faith in London premises hadn’t diminished.
There are several other benefits to investing in London property:
- Tourism and footfall. Whether you want to buy a holiday rental or commercial premises, you’re likely to have plenty of interest all year round.
- Regeneration and improvements. London receives major investment throughout the year, and is in a continual process of regeneration. This means that once-downtrodden areas swiftly become sought-after locations, resulting in plenty of capital growth for investors.
- Transport links. London is remarkably well connected; not just for getting around the city, but for reaching far-flung places too. Train routes take passengers all over the country and the Eurostar takes them even further! There are several major airports in the vicinity, including Heathrow and City Airport both within Greater London and other London airports with high speed rail links such as London Gatwick and London Stansted. This is something that appeals to residents, tenants and businesses alike.
Where in London to invest?
The best place in London for property investment depends largely on what sort of investor you are. If you’re focused primarily on longer term trophy assets, then Central London locations (such as Soho, Marylebone and Fitzrovia) are always going to be popular and are likely to attract high rental prices. If you are looking to add value to a property through change of use or planning permission, London is also a good investment location as there is a wide range of land and property with the potential to redevelop and change use. This can rapidly increase the value of an investor’s asset.
Affordability is another major factor to consider. If you’re working to a budget, then properties that are further away from Central London tend to be more affordable. However, the drawback of these is that tenants will expect to pay a lower rental rate. Ultimately, it’s a balancing act, and one that your estate agent will be able to help you with.
Demand should be considered too. Look for areas that have a proven track record of retaining their property value, and which have a solid rental market, such as Bayswater or St John’s Wood. However, if the market is overly competitive, this can drive prices up, which may eat into your profit from capital growth.
It’s a wise idea to examine historic property prices. Steady growth indicates continuing popularity. However, a decline in value could indicate that it’s the ideal time to snap up a bargain, while property prices are lower. The market has experienced a slight downturn during the lead-up to Brexit, which many investors are making the most of.
Residential property investment London
As London property prices rise, increasing numbers of people are unable to afford to buy their own home. As such, the buy-to-let market is booming. If you purchase in the right area, you’ll be ideally placed to take advantage of this rise in demand.
There are many other benefits to investing in buy-to-let property in London:
- Good future forecasts. Our property investment experts have predicted that letting values in the capital are likely to rise over the next five years due to increased demand.
- Range of tenants. Landlords often choose to appeal to one type of tenant. Student accommodation is always in demand, for example (there are over 400,000 people studying in the city) (3). Alternatively, you may want to appeal to the higher-paying professional.
Commercial property investment in London
London is a great place to invest in commercial property, regardless of what class it is. Types of commercial premises include:
- Although the UK’s high streets have struggled in recent years, demand for retail space remains high in the city, even in secondary locations. The footfall is substantial, particularly in Central London, which means plenty of potential customers.
- London is the UK’s main business hub, which ensures that demand for office space is always high.
- Industrial units. For many years, London industrial property has been one of the top performing sectors in the UK property market (4). It’s always sought-after, and as such, makes a great investment.
- Hotels, bed and breakfasts, and hostels do well in the capital, due to the thriving tourist trade. Around 30 million people visit London every year – that’s a lot of people looking for accommodation for a few nights (5).
Although some commercial property sectors suffered slightly in the wake of the EU Referendum, most experts agree that take-up is likely to increase after Brexit occurs. Indeed, London’s commercial market remained fairly resilient in spite of the political upheaval. In recent years, Asian buyers have been key players; with domestic buyers increasing their market share due to Brexit uncertainty. Interest from overseas markets has once again begun to increase as a result of renewed political certainty.
Should I invest in London property?
Here are a few things you should consider before you invest:
- To invest in property in London, you need to factor in the price of the deposit. However, there are other costs to think about too, such as agency fees, taxes, mortgage fees and legal fees. Ensure that you get your figures right before committing to anything.
- Take the time to research the capital, as every London location offers something different. Some areas might have great transport links. Others might be more appealing to your chosen tenant demographic. Work out which area is right for you.
- An investment is only worth as much as it’ll generate in terms of profit. Before you buy, check that the rental income, capital growth, or the value you can add to the property is in-line with the income you expect to generate.
To explore your property investment options in London, talk to the RIB Property Investment Team today.