28 September 2013, The Times
Forget Mayfair, Park Lane and Piccadilly. A new wave of investors is redrawing London’s real-life Monopoly map. Christopher Middleton learns how to load the dice in your favour.
The London Monopoly board is as fixed in our minds as Nelson’s Column or Tower Bridge. From the gritty brown Whitechapel and Old Kent Roads to the green glamour of Oxford and Bond Streets, we know exactly where we stand.
Except, of course, that a century after the much-loved board game was introduced, all that is changing. Where it was once simple to work out where to place your bets on an investment, now it is much more complicated. Parts of London that were distinctly downmarket have suddenly become dynamic and desirable. Never have there been so many simultaneously up-and-coming areas. Brixton is buzzing; Hackney is happening. Even Stratford, once a transport-less desert, has been embraced thanks to two Tube lines, a frequent National Rail, Javelin trains to King’s Cross and even the Eurostar to Paris. Mayfair, Park Lane and Piccadilly no longer top property buyers’ wish lists.
Amid all this, how can the average homebuyer find a vantage point from which to survey this fast-changing metropolitan scene? Where on the revolving board should investors place their houses? How to win an imaginary new Monopoly (and avoid going to jail)?
Of course, as in the game, there is no one answer. Property professionals say we shouldn’t torture ourselves trying to identify when the market has reached its peak or is scraping along the bottom. Instead, we should be guided by our own concrete requirements.
“Trying to time the market is impossible,” says Camilla Dell of buying agents Black Brick Property Solutions. “Many people who sit back and wait end up never getting anything, and then watch in regret as the market rises.”
“The problem is, in London the crash never really happened,” adds buying agent Robert Bailey. “In the wake of Lehman Brothers closing down, prices dipped by 15.9 per cent. But they have since appreciated by 62 per cent.
“Those who were predicting a crash saw their gains eroded by rent, agents’ fees and other costs. It cost them more to get back into the market than they saved by leaving it.”
Prices might be subject to the occasional wobble. But it seems the rock-solid foundation on which purchasers base their calculations is London’s continuing appeal – and not just to British buyers either.
The capital has been on the radar of Asian investors for the past two decades. But it has also become an increasingly safe property haven for Middle Eastern buyers, in the light of the turmoil in Iraq, Syria, Tunisia, Lebanon and Egypt.
In total, it is reported that anything between 65 and 85 per cent of all prime central London properties are being snapped up by purchasers from abroad. No surprise, then, that according to a report by Knight Frank estate agents, London is the only city in Europe where prices have gone up in the past year.
The upshot is that demand has never been stronger for the new London hot spots. The banker-rich territory such as Mayfair and Park Lane has performed strongly, but is being outstripped by uppity newcomers.
According to property finders Garrington, house prices in Hackney (11 per cent), Camden (10.6 per cent) and Merton (10 per cent) have all increased more in the past year than traditionally well-heeled areas such as Westminster (6.9 per cent).
A report from Savills predicts that this “priming” will be at its most pronounced in more outlying parts of London. Prices are predicted to rise by 26.2 per cent between now and the end of 2017, as against just 18.1 per cent in more mainstream districts of the capital.
“If you want to spot where the next prime areas are likely to be, look for places that are new, novel or next door to already prosperous areas,” says Yolande Barnes, director of residential research at Savills. “Good examples at present are Shoreditch, Dalston and Brixton.”
The indicator of an area’s rising prosperity used to be the opening of a Waitrose store. But today’s would-be buyers are advised to look for news of incoming investment.
In recent months the highest-profile up-and-coming area has been Battersea. As well as a new Tube station, more than 20 different residential developments are either being built or are about to be built. Not forgetting the new American Embassy and, it is rumoured, the Chinese and Dutch embassies, too.
“If I were 20, Battersea is where I would buy,” says David Adams, managing director of John Taylor estate agents. “Most people don’t want to live in an area until it is deemed up-and-coming, by which time prices have already jumped.”
If you want to get ahead of the crowds, the Church Commissioners are putting a large amount of money into converting and smartening up their Bayswater and Hyde Park properties.
All of which will serve to improve the surroundings – and thereby house prices. None of these places were on the original Monopoly board, but all could help an investor now pick up a high-performing bargain.
Nor does the list end there. The hot tip these days is to keep an ear out for news of a Westfield shopping centre. Both Stratford and Shepherd’s Bush have one, and Croydon is to follow suit. It’s good news for residents of the 756-home Saffron Square tower being built nearby.
Meanwhile, the once down-at-heel south London area of Elephant and Castle is also getting a long-awaited facelift. Money is pouring into not just jobs and businesses, but New Trafalgar Place, a shopping and housing development.
Don’t forget, either, the new lease of life that the arrival of Crossrail will bring to stops along its route. It may be five years until the line is ready, but already it has kick-started residential property developments in places such as Aldgate, Tottenham Court Road and Bloomsbury. Not to mention Custom House in east London. Once a desolate, uninhabited spot, this will soon (with Crossrail’s help) be just a 17-minute train ride from Bond Street. For the price of a small flat in the centre, then, you could get a roomy town house a little further out.
No question about it: the whole London market is transforming before us. Formerly low-price, low-rent parts of town are being linked to the capital’s transport network and the mainstream property market.
Ever since the announcement that the Olympics were to take place in east London, house prices have risen by nearly £1,000 per month in the 14 postcodes closest to the Olympic Stadium.
Not that we should all rush out and start paying over the odds for properties in these hot spots. The key is to buy not just a place that you like, but in an area that has a proven track record, over not just months, but years.
“Opt for the worst house in the best street, rather than the best house in the worst street,” says Ben Podesta, sales manager at Domus Nova estate agents in Notting Hill.
Don’t expect to make a quick killing, either. At the top end of the market, rich buyers can do up a £10-£15 million mansion, and sell it on for £18 million. But the rest of us are advised to work on a five to 10-year plan to make a profit.
Above all, says Alan Loveday, sales director of Countryside Properties, we should buy a property because we like it, not because we think it will make us money. “There aren’t many people who are happy to live somewhere just because, in a few years’ time, it might appreciate in value more quickly,” he says.
But if your heart is set on making money, the capital’s traditional advantages are as attractive as ever. “London is culturally rich, a major financial centre, and it has an international feel that anyone will feel comfortable in,” explains Mark Parkinson of home finders Middleton Advisors.
“This has resulted in a huge influx of buyers from Europe and beyond. For the foreseeable future, the London market is set fair.”
From all the reams of advice and expertise, from international agents and local specialists, the message about London boils down to one thing: buy now. Perhaps the property game is not so difficult after all.