Samir Salya on the Future of the London Property Market

London’s property market has seen a great deal of instability in 2017. Although figures dropped significantly at the start of the year, the sector has seen some recovery towards the end of 2017.

Growing Strength

By the end of September, investment into London offices reached £12.5 billion. This is the strongest nine months on record, up 44 per cent year on year according to a report from property consultants JLL.

The end of the year is expected to show investment volumes hit £18 billion, making it one of the highest ever years. Prime yields and capital values have remained stable throughout the year, with London still remaining a hotspot for property investment. The capital is top of all global gateway cities in terms of yield.

Fall in 2018

Despite the success of 2017, a decline is predicted for 2018 onwards. The threat of oversupply has decreased rapidly in the city, as the likelihood of new projects has fallen significantly. From 2018 to 2020, there are only 12.1 million square feet in the development pipeline. In perspective, the period of 1990 to 1992 saw 35 million square feet of development. Vacancy rates remain low, at 5 per cent below the 10-year average. In the current property market, 2018 looks unlikely to deliver widespread growth.

2018 will also see a fall due to new rates introduced. With a period of adaption needed, the Property Tax changes and Interest Rates rising more quickly than expected could work to curb activity in the market.

Future uncertainty

Knight Frank’s UK Housing Market Forecast predicts future struggles in the area. 2018 is set to start an era of poor house price growth in London, expected to last until 2022.  The forecasted growth of 13.1 per cent will fall being the national high growth, expected to be around 16.4 per cent.

Knight Frank comments: “The momentum in house price growth is slowing in many parts of the country, and we expect price rises to remain muted overall next year amid increased economic and political uncertainty in the run-up to Brexit and amid more muted forecasts for wage growth.”

Adding: “Once the Brexit deal is completed, we forecast rising momentum across the market, with price growth reflecting this in many locations. The variations currently observed in the prime housing markets in London and beyond are set to continue.”

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.