Are you a Dubai/UAE expat looking to invest in the UK property market? As interest grows in the Midlands and North-West, many of our clients are asking about the London property market. Here's an insightful overview addressing the popular question: Is now the right time to invest in London's buy-to-let properties?
London's population is set to increase to 9.8 million by 2043, a 10% rise from today. This significant growth will naturally boost housing demand. Yet, current housing development rates in London are not sufficient to meet even half of this expected growth.
London’s Expansion vs. Housing Supply Shortage
A Savills graph starkly illustrates the mismatch between supply and demand in London—more so than anywhere else in the UK. This shortage is particularly acute in London and the South East, likely peaking over the next decade. For investors, this suggests that demand driven by population growth will probably push property values up due to the limited housing supply.
Trends in London House Prices
Savills forecasts a 1.8% increase in London house prices by 2024, with Knight Frank offering a slightly more optimistic 2% increase. From 2025 to 2028, prices are expected to jump by 17.5%. Without a significant increase in housing supply, the competition for available properties is set to drive prices even higher. According to Savills and the Financial Times, only 40% of the needed new housing developments were achieved in 2023, a 9% decrease from 2022. Despite these figures, London continues to attract global property investors, having recently overtaken New York as the world's leading financial centre. The influx of US institutional investment into London's property market has fueled a robust Build To Rent (BTR) sector, making it an attractive option for investors, particularly as homeownership in Greater London has dropped to a record low of 36%.
Rising London Rents
Over the past year, average rents in London have increased by 6.9%. Savills reports that rents are now 17.4% higher than in March 2020. By 2024, rents are expected to rise by 2%, and by 6.7% in the prime commuter zones by 2028. Mainstream rents in London could see even stronger growth, forecasted at 18.2% from 2024-2028, mainly due to severe supply shortages.
Investment Opportunities in London
Investors might consider properties like the Barratt Homes development in North London, Hendon Waterside, which is set to complete in June 2024. Located just a five-minute walk from Hendon Station and surrounded by picturesque water and parkland, this development is expected to yield up to 6% with promising rental growth of over 18% by 2028. Starting prices are at £392,000, making it an appealing option for the mainstream rental market.
For those looking for more upscale options, the Canary Wharf development, Aspen at Consort Place, offers luxury living with top-notch amenities, starting at £550,000.
Where to Invest in London
Given the widespread supply crisis, it’s wise to look beyond the typical "hot-spots." Key considerations should include a property’s proximity to public transport, its appeal to working professionals or families, and the presence of green spaces or water features, which enhance living quality.
Is it a Good Time to Invest?
Given the stark mismatch between the supply of and demand for quality new builds, now is indeed a promising time to invest in London's buy-to-let market. Investors could not only see a significant uptick in rental income but also realise considerable capital gains in this buyer's market.
If you are considering an investment in the UK's lucrative property market, partnering with a knowledgeable and experienced real estate broker like Exclusive Links can significantly enhance your investment journey. As a leading real estate firm in Dubai, Exclusive Links specialises in offering tailored guidance and comprehensive support to help you navigate the complexities of international property investment. Whether you're looking to capitalise on London’s dynamic buy-to-let market or exploring other promising UK regions, our team of experts is dedicated to ensuring a smooth, successful investment experience from start to finish. Connect with Exclusive Links today to discover how we can help you maximise your overseas property investments and secure your financial future in the thriving UK market.
This blog post is based on the blog post - What is happening in the London property market at the moment? This is the repurposed version with permission from the owner and made modifications to fit the style and audience of our blog.
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