July 20, 2024

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Investing in London Real Estate: A Golden Opportunity for GCC Investors

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Stuart Leslie, International Sales and Marketing Director at Barratt London

London’s real estate market is undergoing transformation in various regeneration areas, and investment in properties within a 750-meter radius of these zones tends to yield higher returns. Several sites, such as Tooting, Mill Hill, and Hounslow, have gained increased interest from Middle Eastern investors due to attractive yields, location, and transport links. The London property market has consistently grown even during challenging periods, making it a sound long-term investment choice.

The market has shown a remarkable history of resilience and growth. Over the past two decades, London’s real estate prices have nearly quadrupled, according to data from the UK Land Registry. This robust performance stands in contrast to the economic challenges the city has faced, including uncertainty surrounding Brexit, the global financial crisis, and the COVID-19 pandemic. Despite these challenges, London’s real estate market has continued to thrive.

One key factor contributing to its strength is its ability to rebound quickly from economic downturns. For instance, the market swiftly recovered after the three-month COVID-19 lockdown in the first half of 2020. Recent reports indicate that luxury homes in London are now 5% above their pre-pandemic levels in March 2020. This resilience reflects London’s status as a trusted and reliable real estate investment.

Investment opportunities in the UK capital

Global investors, particularly those from the Gulf Cooperation Council (GCC), have long been drawn to the vibrancy and opportunities it offers. Renowned for its strength in the face of economic challenges, London’s real estate market offers a compelling investment proposition with a range of facets, making it a top choice as an investment vehicle for GCC investors.

London’s real estate market is dynamic, and one of the key areas of interest for investors from the GCC is the city’s regeneration zones. Properties within a 750-meter radius of these zones tend to yield higher returns, with an average annual growth rate of up to 3.6%. Several of these regeneration zones have become particularly attractive to Middle Eastern investors due to their promising investment prospects.

Tooting in Wandsworth is one such area. Despite being on Lonely Planet’s list of the world’s 10 Coolest Neighbourhoods, property prices in Tooting have seen only a 2% increase over the past five years. This makes Tooting an attractive and affordable investment option for GCC investors. Additionally, its proximity to desirable neighbourhoods like Earlsfield and Wandsworth further enhances its appeal. The average price for an apartment in Tooting stood at USD$582,196 (£480,271) in 2022, compared to USD$665,403 (£548,911) in Wandsworth and (USD$626,738 (£517,020) in Earlsfield, making the southwest London lifestyle more attainable.

Mill Hill in North London is another hotspot. It is one of the most desirable areas in North London, located centrally between Mill Hill East underground station and the traditional village centre of Mill Hill itself. House prices in the Millbrook area have appreciated by more than 80% in a decade, and rental prices in North London have seen a 40% increase. Early investors have the best opportunity to buy affordably in this area and benefit from capital growth as it undergoes rapid transformation.

Another area is Wembley Park Gardens, which is one of London’s most successful regeneration areas, as research from JLL has revealed price growth has achieved over 50% in the last ten years, with rental value expected to grow 3% year-on-year until 2027. Located next to Wembley Park Underground station as well as the legendary Wembley Stadium, the development is set to bring a range of one- and two-bedroom apartments and private outdoor space.

London is more than just a real estate investment opportunity

It’s not just the wealth of potential returns attracting investors from the GCC. London also offers a thriving business environment and entrepreneurial spirit unmatched in the UK. In 2022, despite the challenges of COVID-19 and Brexit, London saw a 2.5% increase in business start-ups, with a record-breaking 275,548 new businesses launched.

The city stands out as the most entrepreneurial region in the UK, with 31 new businesses per 10,000 people – nearly three times the figure of the second-highest region. Part of this growth can be attributed to the substantial support available, with London having the largest concentration of business incubators and accelerators in the UK. This support ecosystem is complemented by 32.7% of available funding being allocated to London, making it an attractive destination for entrepreneurs worldwide and further underscoring the demand for property.

The city’s diversity is also a key marker for many investors from this region. According to The Gender Index, it boasts the highest proportion of female-led companies (18.6%) in the UK. Furthermore, a recent government report highlights London’s leadership in SMEs with leaders from minority ethnic groups, with the percentage rising from 16% to 20%. Successful businesses in London also often have foreign-born co-founders, further emphasising the city’s welcoming and inclusive business environment.

One of the main reasons behind GCC investors opting for London is its world-class education system, particularly at the university level. London hosts two of the top 10 universities in the world, including Imperial College London and University College London (UCL). However, good accommodation for students can be a challenge. Consider buying a London apartment for a student, providing safe, comfortable, and modern living spaces. This can be cost-effective, with accommodation for students in the capital averaging around £800 per month for a basic room. Additionally, London’s excellent public transport system ensures easy access to top universities from various locations within the city.

London offers a wide range of primary and secondary schools, with regular inspections and ratings by Ofsted inspectors. Some boroughs, like Harrow, have an outstanding record, with 42% of schools rated as outstanding. Harrow is also home to one of the country’s most prestigious institutions, Harrow School, founded in 1572. Investing in properties within the catchment areas of top-rated schools can be a sound strategy for GCC investors.

Transport is another important factor for investors. Across London, our development projects have been carefully chosen for their convenience and excellent public transport links. Our projects benefit from being in close proximity to London’s superb transport system with the London Underground, the new Elizabeth Line Crossrail, Overground, Docklands Light Railway and Network Rail services, plus a bus network that runs around the clock.

Looking ahead

The market has faced challenges, however, many investors are keen to explore opportunities as they await the right moment. For GCC investors, the long-term success of London’s real estate market often outweighs short-term gains. Those who invested during the market peak in 2007 and weathered the financial crash and COVID-19 are now reaping significant rewards.

London offers a robust and dynamic real estate market, making it a golden opportunity for GCC investors. Its resilience and the potential for capital growth underline why London remains a golden opportunity in the global real estate market. As Middle Eastern investors explore the possibilities in London’s suburbs and cityscape, they are poised to reap the rewards of a dynamic and ever-evolving market.

Invest in London today and be part of a success story that spans centuries.

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