Is investment in the UK real estate market still the best move? If so where are sophisticated investors putting their money now?
Investment in real estate is again one of the hottest topics on the lips of many. From aspiring new property investors to international corporate conglomerates it is understood that much of their wealth and income in the future will rely on their investments in property right now.
However, as better educated investors hunt for opportunities for investment in real estate today, they are ever more cautious, and demanding. This mindset is certainly seen in excited discussions about the future of the UK property market. Some feel it may be becoming a little too warm, while others see a continued safe haven and years of positive growth.
So is investment in real estate in the UK still a savvy move? If so what factors are intelligent investors betting will carry their nest eggs safely through to victors’ spoils, and where do these insights suggest to invest?
Spotlight on the UK Property Market
British property values as a whole are expected to rise 8% this year, after appreciating 11% year over year to April 2014, to an average of $262,594 pounds. According to the Financial Policy Committee some property analysts expect the 2014 increase could be high as 17%.
Reuters coverage shows London property prices are anticipated to rise as much as 22% in 2014, with ongoing increases above 6.5% through 2016.
We’ve even seen a new record set with the 140 million pound apartment sale at One Hyde Park.
Some consider this too high too fast, others consider it a great sign of further growth to come.
Market Intelligence: Economic Factors Creating Bullish Investors
Under the surface there are various other factors at work which experienced real estate investors and property investment advisors recognize as positive indicators, spurring them to increase investment in real estate in the UK.
According to Bloomberg on May 14th, 2014 wages in the UK are also rising at a faster rate than inflation for the first time since the financial crisis.
For a start the Sunday Times reminds us that Britain has more billionaires per capita than any other country.
New figures from the Office of National Statistics report unemployment has retreated to the lowest level in 5 years, falling to just 6.8% in the first quarter of 2014.
Should there be any concern over managing sustainable housing growth there is likely no one preferred to be holding the reigns at the Bank of England than Carney. Some credit him with being the first finance minister to have successfully helped a nation avoid a housing bubble and maintain growth for his recent work in Canada. Carney has held the key bank rate steady, with expectations there will be no increase until at least 2015.
The UK’s second largest REIT just posted new financials showing earnings up 8.4% on higher rents, and the value of projects up 14.5% suggesting growth is really just now kicking in following recent crises.
Via The Guardian, a professor at London School of Economics reminds us “Just less than 10% of England is built up, but gardens cover nearly half that area.” This equates to plenty of room for building and growth, while recent low interest rates and prices mean homeowners will give up less of their paychecks than before, for years to come, meaning greater economic strength and increased consumer spending.
What’s Next for the UK Property Market?
In the short term it is expected that investment in UK real estate will continue to experience substantial volumes, especially to do movements in China, and a desire by British nationals and expats to lock in affordable prices on residences at home ahead of higher prices and new tax rules.
While prime central London property is expected to moderate, and property further afield pick up pace, sophisticated investors and leading property investment advisors are focusing on Greater London opportunities such as in Deptford, Southeast London. These areas are expected to deliver the maximum benefits on a combination of high demand, faster capital growth and sustainability, along with attractive yields to become the next bastions of wealth preservation.