New evidence has suggested to Simon Morris that London property development volumes are set to reach new heights. Buyers are rushing to snap up land which they can develop in the UK capital.
Residential and commercial property
There is an urgent need for new residential and commercial property in London. Figures suggest that the UK Capital is currently experiencing a housing shortage, with its population expanding by roughly 52,000 households per annum. However, only 18,260 new homes were built in London in 2014.
Meanwhile, research conducted by BNP Paribas Real Estate indicated that core central London markets have less than one year’s supply of office space. The head of the firm’s London office, Daniel Bayley, was quoted by Property Magazine explaining that “Q2 proved to be very strong for the London office market, with take-up being 38% above the 10-year average.”
London property development
New figures from global real estate company CBRE indicate that London property developers are rushing to fill these gaps in the city’s central market. This data shows that buyers spent £1.8 billion on land for property development in central London in the second quarter of 2015.
This means that land buying activity in the UK capital has hit its highest volume since 2007; the year the UK property market crashed, according to the Financial Times. Furthermore, this means that London land buying activity increased a staggering 118% year-on-year. Therefore, as the senior director of CBRE’s central London development branch Alastair Perks recently commented, London land buying activity “is accelerating at a rate of knots” right now.
The CBRE figures also revealed that almost three quarters of these buyers were backed by overseas money in the second quarter of 2015. This means that foreign investors are playing a significant role in driving London property development at present.
Research before you invest
This CBRE data suggests that now is the time invest in London property development. This could prove especially true because as Simon Morris recently explained, UK Chancellor George Osborne’s emergency summer budget could aid property development in the UK capital.
However the property specialist would urge caution. There are a number of factors, including the announcement that buy-to-let mortgage interest tax breaks will be capped at 20%, which could stymy activity in the London property development sector. This is why investors should conduct extensive research, and seek professional advice before they invest in London property development.