Samir Salya discusses investment in London property

Residential property prices in many boroughs of London have dropped year-on-year from September 2016 to 2017.

Many of the areas that are seeing falling prices are the traditional premium strongholds. For example, the Royal Borough of Kensington and Chelsea has seen prices fall by more than 10% year-on-year. Furthermore, the price drop has almost solely affected high end property towards central London. Hammersmith and Fulham have seen price falls of 8% as well.

Caution from investors

The slowdown in investment for high-end property in central London is due to a couple of factors. One is the increase in second home stamp duty charges, which has bumped the overall cost up. This has affected the more expensive homes in particular.

In addition, low oil prices have helped to deter buyers from Russia and China is actively attempting to limit the amount of money being invested overseas. This means that the already limited pool of super wealthy investors has become smaller.

On top of all of these elements, the spectre of Brexit looms over any investment decisions. Many people are simply reticent to go for it with investments during such uncertain economic times.

Resilience found elsewhere

While central London prices are dropping, other areas have remained remarkably resilient. These include eastern boroughs of London, due to more affordable stock and the impact of the Crossrail development.

Areas such as Woolwich have seen an increase in average property price of 5%. It’s likely that we will see further lifting of prices in the future, with some predicting they could increase by a further 20%.

Investing outside of London

More overseas investors are heading away from the capital. There are many cities with more affordable housing stock, which is also less impacted by stamp duty charges on second homes.

Manchester and Birmingham offer cheaper stock, as do many other cities throughout the country. Improved transport links will also help to put a positive spin on future price rises.

Sectors less affected by Brexit

While residential property is probably the most affected by the economic uncertainty caused by the UK’s imminent exit from the EU, other sectors are proving more robust.

These include student property investment and retirement home investment. Regardless of the political situation, the country has an ageing population with an ever-increasing demand for high end retirement property.

In terms of student housing, the UK boasts ten of the world’s Top 100 universities, and hasn’t lost its appeal to international students. There is a real boom in purpose built student accommodation, which is being snapped up by discerning investors from overseas.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing